The U.S. Treasury Secretary Janet Yellen, who was in New Delhi recently, said the US will pursue the ‘friend-shoring’ approach with trusted allies like India.

 

What is ‘friendshoring’?

  • Friendshoring’- the term is shorthand for the practice of relocating supply chains to countries where the risk of disruption from political chaos is low.
  • It is a strategy where a country sources the raw materials, components and even manufactured goods from countries that share its values. The dependence on the countries considered a “threat” to the stability of the supply chains is slowly reduced. It is also called “allyshoring“.

 

Problems with friendshoring

  • Friendshoring may push the world towards a more isolated place for trade and reverse the gains of globalisation. It is a part of the “deglobalisation” process.
  • While moving supply chains away from east Asia could increase security in the long run, an ill-conceived implementation of this friendshoring strategy could result in price hikes and a stronger China over time.