”GS Paper – 2 & GS Paper – 3 : Growth & Development”
Why in News?
On the sidelines of the G20 summit in Rome, several world leaders including Prime Minister Narendra Modi participated in a summit on strengthening global supply chains.
Why was this summit held?
- When the first wave of Covid-19 rolled around the globe, it caught most businesses off-guard as it disrupted supply chains on an unprecedented level.
- Whether in responding to acute shocks of the kind we are experiencing in global trade today, or addressing the chronic long-term challenges in sectors critical to our security, more resilient global supply chains are fundamental to sustainable economic development for all.
Which Issues Discussed?
- The US President Joe Biden discussed ways in which governments can alleviate pressure points in the global supply chain ecosystem by working together and with the private sector.
- Prime Minister Modi underlined three critical aspects of a trusted source, transparency and time-frame for improving the supply chains.
- While India is already a trusted source in the IT and pharma supply chains, the prime minister conveyed that India is keen to participate in the clean technology supply chain.
- All participating countries discussed strengthening key pillars of global supply chain resilience namely transparency, security, sustainability, Diversity, openness and predictability.
- Supply chain disruptions have become a major challenge for the global economy since the start of the Covid pandemic.
- According to the OECD, higher commodity prices and global shipping costs are currently adding 1.5% to inflation across G20 nations.
- By December, it could increase by 1.75% and further up by 1% in 2022. OECD estimates also suggest that the drag from the pandemic and supply bottlenecks is unlikely to ease in 2021.
Ways to Improve Global Supply Chain:
Digitization – Trade needs to move away from paper documentation into digital record keeping.
Improve Data Security – International trade is extremely competitive, and businesses are always looking for an edge. As a result, maintaining operational security is of the utmost importance against competing companies.
Incentivize Data Sharing – It is often said that money talks, and that can be the main driver for sharing data. For example, more competitive rates can be offered to incentivize companies to share their supply chain data.
Begin Preparing Now – supply chains can take a long time to initiate changes, the improvements mentioned above need to be implemented in the very near future.