The Supply Chain Resilience Initiative (SCRI) was first announced in October 2020 in response to supply chain disruptions caused by COVID-19. Last week saw India, Japan, and Australia announce the formal progression of the initiative and we explore how it will affect Australian supply chains.

What is the Supply Chain Resilience Initiative?

Trade ministers from India, Japan and Australia formally launched the Supply Chain Resilience Initiative (SCRI) last Tuesday, April 27 via videoconference. The purpose behind the initiative is to build more resilient supply chains in the indo-pacific and prevent the future reoccurance of problems that were faced during initial global outbreaks of COVID-19.   

“The SCRI aims to create a virtuous cycle of enhancing supply chain resilience with a view to eventually attaining strong, sustainable, balanced and inclusive growth in the region.”

Joint statement – Department of Foreign Affairs and Trade

In a joint statement released on the Department of Foreign Affairs and Trade website, it was noted that risk management, utilisation of digital technology, and supporting trade and investment diversification could all play a part in strengthening supply chains in the future.

The ministers agreed on two initial projects to further develop the SCRI. The first is to share information and best practices on supply chain resilience. The second is to hold “buyer-seller matching events” which provide opportunities for decision-makers to diversify their supply chains.

China responds

While it was not explicitly mentioned as a reason for the Supply Chain Resilience Initiative, rising geopolitical tension is widely reported to be one of the main catalysts for the official launch of the initiative. India, Japan, and Australia are trying to counter China’s dominance of trade in the region.

China does not view the SCRI favourably. Zhao Lijian, Chinese Ministry of Foreign Affairs spokesman said:

“The push to enact an artificial supply chain programme will not be favourable to the stability of the global industrial supply chain, nor to the recovery of the global economy.

We hope the countries involved will continue to be part of a free-market economy and honour trading rules, while carrying out activities that are beneficial to mutual trust in order to achieve a sustainable, balanced and inclusive global economy.”

What the SCRI could mean for Australia

With the recent alliance and growing bilateral trade tension between Australia and China it has been reported that both nations are seeking to diversify their trade. It is likely that there will be more investment in India for manufacturing purposes, . Australia would therefore not be reliant on China as its sole manufacturing hub.  

The Australian government plans to work with local industries and academics to address domestic and international supply vulnerabilities. This will start with identifying essential goods and services needed in times of crisis and determining Australia’s manufacturing capabilities. From 1 July 2021, businesses that have relevant solutions can apply for funding support to establish or scale a solution that addresses supply chain vulnerability. The exploration of new technologies such as artificial intelligence (AI) and blockchain is also underway, with $3 million available to a successful critical minerals pilot that can prove the origins of locally produced minerals in an international export supply chain.

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