Leveraging India’s G-20 presidency for a new architecture on global supply chains

The world over, corporations and countries have been forced to confront the fragility of their supply chain ecosystems and reimagine their strategies in the wake of COVID-19 and the consequent economic turmoil ranging from manufacturing disruptions in China and Vietnam to the demand-shrink from the closing of economies worldwide. With India poised to take on the G20 presidency from December 2022, it finds itself with the opportunity to shape the policy agenda around a complex issue in the new world order – countries seeking to build back better in a post-pandemic environment– developing resilient and secure global supply chains.

The G20 presents an ideal forum for states to work together to develop policies relating to supply chains that take into consideration both multilateral cooperation as well as private sector participation. In order to ensure the long-term feasibility of its strategy, India must ensure that its plan is aligned with the objectives of other member states. It can achieve this by focusing on a plan that adopts the following three principles: developing trusted and resilient supply chains in tandem with private actors, promoting regional and multilateral cooperation through diplomacy and engagement groups at the G20, and focusing on pathways to ‘build back digital’ and ‘build back green’

Developing trusted and resilient supply chains along with private actors

At the outset, any attempts to develop policies to ensure that supply chains are trusted and dependable in the face of disruptions must take into consideration three key principles: partnerships, security and resilience.

First, both states and businesses must work closely together to evaluate the factors that make a supply chain successful, identify key points of failure, ensure consistent and focused investment, as well as develop regulations that facilitate business certainty. Second, to build resilience, supply chains must be future-proof and agile enough to adapt to disrupting circumstances as and when they arise. This would require global efforts to digitise supply chains as well as make use of interoperable standards to ensure that supply chains across the world are able to integrate and communicate effectively with each other – all of which must be a priority for India’s agenda. Finally, supply chains are a critical security consideration for both states and businesses. Preserving security throughout the supply chain is a balancing act of variables and there is potential for India’s strategy to examine a variety of possible solutions – including leveraging new structures such as the Supply Chain Resilience Initiative (SCRI) comprising India, Japan, Australia or the Indo-Pacific Economic Framework (IPEF) in areas such as cybersecurity standards or diversification of supply chains across trusted corridors.

Promoting regional and multilateral cooperation through diplomacy

Recent disruptions to supply chains have shifted the focus of businesses from bilateral supply chains to regional cluster-based ones such as IPEF. The emergence of these regional clusters will help reduce reliance on an individual state and thereby potential to increase resilience.

Keeping in mind the rise of economic protectionism as a response to the pandemic, India can play a critical role in establishing a framework and appropriate capacity both within government and outside of it, for supply chain diplomacy initiatives moving forward. India’s agenda must seek to articulate a common set of principles for supply chain design and management that all G-20 members are amenable to. It must also ensure that larger economies such as India and the United States lead the way in making key commitments to the principles of free and open trade, thereby ensuring a global economic order that embraces fair and transparent principles whilst countries may still choose to be self-sufficient in certain areas.

Private actors must also look to establish connections across jurisdictions and across sectors in order to develop mutually beneficial economic relationships. They can also take the lead in building capacity across a variety of jurisdictions, thereby creating incentives for states to work together to maximise these benefits.

Build back digital and build back green- pathways in technology and energy sectors

Another focus of India’s strategy must be the prioritisation of sectors such as technology and energy. Energy represents a critical sector for both states and corporations – particularly given India’s ambitious near-term renewable energy targets as well as the 2070 net-zero goal announced at COP26. The government, along with India Inc, has the opportunity not only to fast-track clean transitions in hard-to-abate industries domestically and become a key manufacturer and supplier of alternative fuels like hydrogen, but also to facilitate international cooperation on energy transitions and shape the global clean energy mandate going forward.

On a secondary level, making supply chains energy efficient while also increasing the use of renewables in their operation is a key ingredient to creating thriving supply chains of the future. By taking the reins, India can establish itself as a facilitator of energy diplomacy as exhibited with the International Solar Alliance (ISA) and use its presidency to foster a spirit of collaboration. This can lead to the sharing of information and capacities between states, thereby ensuring that various jurisdictions have the ability to develop energy-efficient supply chains.

India’s position as a future leader of the G20 forum imbibes it with the power to shape global policy agenda around a plethora of key issues that will mould the new economic order as we know it. By focusing on supply chain resilience and management, India can take leadership in ensuring that integrated solutions to such global disruptions are in-built into our supply chain strategies going forward.

Subhodeep Jash is Director and Devanshu Jain is a Consultant at FTI Consulting.

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