NEW DELHI: India has begun an exercise to identify critical sectors where dependence on imports is making them vulnerable to supply chain disruptions, as part of an agreement under the 14-member Indo-Pacific Economic Framework (IPEF).The government has zeroed in on chemicals, automobiles, pharmaceuticals, advanced technology, electronics and critical minerals, which are important from the perspective of national security and economic stability, under the IPEF Supply Chain Resilience Agreement, which came into force this February.Officials said discussions are on to finalise more sectors and inputs are being sought from industry on the issue.”Discussions are on to work on sectors where supply chain concentration and vulnerabilities are crucial to be addressed before they become bottlenecks,” said an official.As part of the exercise, industry has been asked to share data related to critical imports and domestic production capacity besides issues related to supply chain within the IPEF and likely solutions, diversification and investment proposals.Last year, the 14 IPEF nations inked a supply chain resilience agreement to reduce dependence on China and shift production of critical sectors and key goods to member countries. The IPEF includes India, Australia, the US, Japan, Fiji, South Korea, New Zealand, Singapore and Thailand, representing 40% of global gross domestic product and 28% of the global trade in goods and services.The framework is structured around four pillars: trade, supply chain resilience, clean economy and fair economy. India has joined all the pillars except the one on trade. The selection of the critical sectors assumes significance as the supply chain resilience agreement focuses on identified products which have a high level of dependence on a single supplier, country, region or geographic location besides low availability and reliability of alternative suppliers or supply locations.”Any effort to make the auto supply chain seamless through IPEF agreement would help India’s auto and auto-component sector. Going forward, industry has to play a major role in leveraging the IPEF for its integration into the global production network,” said Deep Kapuria, chairman, Hi-Tech Gears Ltd.The bloc’s concerns also stem from significant imports required to meet domestic demand, lack of availability of adequate domestic production capacity, high interconnectedness with other critical sectors and goods, and challenges on account of actual or potential transport constraints.While the supply chain council set up under the pact has adopted terms of reference and discussed initial work priorities, these will be further explored at its first in-person meeting to be held in Washington in September on the margins of the Supply Chain Summit.
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