- November 22, 2022
- Posted by: OptimizeIAS Team
- Category: DPN Topics
The US is ‘friendshoring’, and a key beneficiary could be India.
- In the post-pandemic world and geopolitical challenges-the concept emerged as an alternative model for international trade.
- Friendshoring or Allyshoring is a concept derived from onshoring and nearshoring but it goes beyond that by limiting supply chain networks to allies and friendly countries.
- “Reshoring”, “allied shoring”, “onshoring” and “nearshoring” which is a practice of relocating supply chains to countries where the risk of disruption from political chaos is low.
- In June 2021, Elaine Dezenski and John C. Austin used the term “allyshoring”. Also, they gave credit to Bonnie Glick (ex-Deputy Administrator of the United States Agency for International Development)for introducing it for the first time.
- Friendshoring aims to encourage trade and deepen economic relations among trusted trading partners; strengthen supply chains; and diversify away from nations which could pose geopolitical and security risks to the global supply chain.
- It would reduce overdependence on countries that are a single source of critical inputs and raw materials.
- Relocating to nations with favorable politics could make products more expensive.
- It may push the world towards a more isolated place for trade and reverse the gains of globalization– being a part of the “deglobalisation” process.
India-US trade relations:
- In 2021-22, the US re-established itself as India’s largest trading partner.
- Bilateral trade between the two was worth $119.41 billion.
- India’s trade surplus with the US stood at $32.8 billion in 2021-22.
- In terms of exports, the US is India’s largest trading partner, while in terms of imports, the US ranks third.
- Also, the US is the top source of foreign portfolio investment in India.