US treasury secretary Janet Yellen on Friday pushed for a “friendshoring” strategy with India, which aims to align trade and investment within a group of like-minded nations and diversify away from countries that present geopolitical and security risks to the global supply chain. The move is seen as undermining China’s dominance in the global supply chain.
Yellen–who is on her maiden, one-day visit to India–also flayed Moscow for what she called the weaponization of the Russian natural gas supply against Europe.
Speaking at Microsoft Inc’s facility in Noida, Yellen stated that the US and India are natural allies who can show the world that democracies can deliver for their citizens even in times of volatility and war.
“For too long, countries around the world have been overly dependent on risky countries or a single source for critical inputs,” she said. For the purpose of “friendshoring”, or manufacturing and sourcing components and raw materials within a group of allies, “we are proactively deepening economic integration with trusted trading partners like India”.
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“Our strategy will also create redundancies in our supply chain to mitigate over-concentration risks. And we are also addressing our reliance on manufacturers whose approaches clash with our human rights values,” the secretary said.
The treasury secretary stressed the plans by the US firm First Solar Inc to build a manufacturing facility in Tamil Nadu and Apple Inc’s plans to shift some iPhone manufacturing from China to India.
“We are also seeing signs that Western firms are diversifying their supply chains beyond China. Technology companies like Amazon and Google are investing in India and Vietnam,” she said. “The US will continue to deepen our business and commercial ties with India as we pursue our friendshoring agenda.”
In a veiled reference to the Russia-Ukraine war, she said, recent disruptions have contributed to higher prices in both India and the US and sapped economic output. Since countries like the US cannot make, mine or manufacture everything themselves, there is a need for building a trusted supply chain with strategic allies through “friendshoring”.
Asserting that the US-India ties are “stronger than ever before,” Yellen said, “We are working with our allies and partners to tackle global challenges through the Quad and the Indo-Pacific Economic Framework.”
Successful G20 Presidency of India crucial
Yellen said a successful Indian presidency of the G20 nations is key to global economic recovery. It’s also a chance to accelerate global coordination on debt restructuring. She indicated how a Common Framework established in G20 two years ago to bring all the major bilateral creditors together for co-ordinated and timely debt relief for low-income countries didn’t quite deliver mainly due to lack of meaningful cooperation from China.
Speaking on climate action, the treasury secretary said both the US and India have a shared responsibility to cut greenhouse gas emissions. “A global challenge like climate cannot be solved by any one country. It requires all of us to work together.”