Multilateral supply chains to be made more resilient in the face of COVID-19 impact

India has formed key supply chain alliances with France, Japan, Australia and the G20 nations to make sourcing infrastructure and COVID-19 responses stronger

November 27, 2020

Multilateral supply chains help reduce tariffs and lobbying, and increase production across sectors concerned.

The Indo-France supply chain is to strengthen cooperation in Healthcare, Industry, Agriculture as well as Oil and Gas.

The Indo-Japan-Australia supply chain is to strengthen cooperation in Healthcare, Banking and Finance, IT/ITes and Tourism.

The Indo-G20 supply chain is to curb the spread of COVID-19 and set up centralized institutions to monitor trade and investment volumes

The COVID-19 pandemic has brought about the need to re-evaluate the current supply chain mechanism that exists across the globe. The global supply chain setup which has been designed to facilitate free trade through multilateral market interconnect became vulnerable to a concentration of production networks becoming restricted to certain market ecosystems. Furthermore, the asymmetry between end-user expectations of ecommerce engagements and shipping capacities as well as uncertainties in geopolitical workings also contributed towards the upending of the trade mechanism. 

As the first half of 2020 saw the widespread imposition of shutdowns in order to curb the spread of the virus, it became imperative to find alternative mechanisms to maintain the current volume of multilateral trade. Gaps in the healthcare supply chain and several other domains required to be filled through creative multilateral cooperation as a response to the pandemic. Emerging economies in Malaysia, Taiwan, Vietnam, Bangladesh and Indonesia exhibited potential to become significant sites of manufacturing prowess. 

As a nation of multiple sectoral strengths, an emerging MSME ecosystem and strong macroeconomic fundamentals, India continues to strengthen multilateral rapport through the consolidation of supply chains. The opportunity would require coordination among multiple government, private sector and citizen stakeholders to strengthen capacity building, equip industries with requisite technology and skilled manpower, as well as access to important international markets. Regulatory hurdles will require to be smoothed out in order to attract international investments and maintain quality trade relations.

The Emergence of the Multilateral Supply Chain

Multilateral Supply Chains have historically helped in lowering unilateral trade tariffs, increasing the production of commodities across locations, increasing Preferential Trade Agreements (PTAs) among developing nations as well as promoting anti-protectionism.

The proliferation of anti-protectionist attitudes has enabled the growth of trade outside the purview of the World Trade Organisation. Developing nations and economies can continue to tap into the favourable tide of industrialisation through the institution of export promotion zones.

Nascent sectors of developing economies thus see more growth and their products, more competitive pricing. Given that supply chains are bound to experience shocks from geopolitical shifts and pandemics, experts point to there being greater scope to make them more resilient. The incorporation of risk management principles into supply chain operations, in addition to putting in place a predictable order of supply and manufacture can help elevate the scope of multilateral operations.

India-France global supply chain

India and France enjoy a Strategic Partnership anchored in the pillars of space cooperation, defence cooperation, and civil nuclear cooperation. India and the European Union are also in the process of identifying arenas through which globalisation can be actualised meaningfully. The COVID-19 pandemic saw increased bilateral cooperation in the healthcare sector with France providing emergency equipment and India exporting medical aid to France. Under President Macron’s leadership, France is positioning herself as the leading destination for Indian FDI and industrial expertise in the wake of Brexit negotiations. Furthermore, the nation looks to develop competencies in sectors including healthcare, connectivity and agriculture. 

Franck Riester, Minister Delegate for Foreign Trade and Economic Attractiveness expressed France’s interests in contributing to the clean energy space and the Smart Cities Mission. He also highlighted opportunities for greater engagement within the context of the Indo-Pacific multilateral coalition in the domain of infrastructure and marine development.

India-Japan-Australia supply chain

The latter half of 2020 saw the commencement of trilateral talks between India, Japan and Australia and the launch of the Supply Chain Resilience Initiative (SCRI). The initiative will look at strengthening trilateral supply chain dynamics in the domains of Oil and Natural Gas, Steel, Healthcare and Pharmaceuticals, Automobiles, Banking and Finance, Skill Development, Textiles as well as Travel and IT/ITes. A formal series of mechanisms is to be put in place so as to monitor supply chain resilience, sectoral growth, volume of FDI as well as the concretisation of a layered sourcing framework. Official sources reveal that institutions including  Trilateral Trade Promotion and Facilitation Cell, Mechanism to address barriers to trade and investment and Sectoral Groups are to be set up in order to identify sectors of trade and streamline operations.

India-G20 Supply Chain

The G20 Summit conducted from November 21-22 saw representatives discuss the need to strengthen the multilateral trading mechanism against the backdrop of the COVID-19 disruption. The nations are to participate in creating a financial backbone for the effective production, distribution and R&D in connection to the COVID-19 vaccine as well as treatment. Curbing of the spread of the COVID-19 virus was identified as the key to economic revival.  

Within the framework of the G20 Actions to Support World Trade and Investment, the nations have agreed to facilitate global economic revival through the establishing of a transparent, mutually beneficial and predictable trade ecosystem. Representatives also advocated for the perfection of the logistical intricacies of trade and the streamlining of individual supply chains so as to remove barriers to effective trade relations.

Future-proofing global supply chains

As multilateral supply chain initiatives take shape among India and her global allies, it is imperative that gaps in the process be filled. Experts point to greater technological integration being the pathway to streamlining irregularities. AI, ML and Robotic Process Automation are some of the technologies that can be infused into operations so as to reduce redundancies. Furthemore, the trickling down of technologies into the daily production and manufacturing processes of each sector can help increase overall efficiency. The use of data mining strategies and pattern recognition can help each participant in the sector improve the quality of business decisions made and shape approaches towards improving long-term growth. 

Furthermore, e-governance is to assume greater prominence as businesses take on the digitisation wave. The speedier processing of documents, institution of checks and balances and the smarter removal of barriers can help strengthen the existing investment and trade ecosystem. The introduction of blockchain technology into the trading mechanism can help improve stakeholder communication and increase transparency among all parties involved.