United States

https://www.aviation-defence-universe.com/democracy-meets-diplomacy-vances-visit-highlights-indias-growing-global-role/ Democracy Meets Diplomacy: Vance’s Visit Highlights India’s Growing Global Role PM at delegation talks with the Vice President of the United States, Mr. JD Vance, in New Delhi on April 21, 2025. • India First : Vance’s Delhi Stop Reinforces US Pivot Amid China Tensions • Beyond Counterbalance: US Courts India as Key Ally for Global Stability By Jai Kumar Verma New Delhi. 26 April 2025. In a symbolic gesture reinforcing the growing warmth of Indo-US relations, U.S. Vice President James David Vance began his four-day visit to India on April 21, 2025, with a red-carpet welcome and ceremonial guard of honour in New Delhi. Received by Union Minister Ashwini Vaishnaw, Vance’s visit carried deep diplomatic and economic undertones. As the first Asian stop in his tenure—and notably, a choice over long-time allies like Japan—his decision to visit India first highlighted the Trump era’s pivot towards New Delhi as a strategic partner, market powerhouse, and counterweight to China. His Indian-origin wife, Usha Vance, added a personal dimension to a visit closely tracked by both nations’ media. The Indian media gave the expected limelight to the visit as Vance was accompanied by his Indian origin wife Usha. The Vice President of the United States, Mr. JD Vance inspects the ‘Guard of Honour’ at AFS Palam, in New Delhi on April 21, 2025. The visit is significant as it came after President Trump imposed 26 percent reciprocal tariff on India. At present India and US have very cordial relations, although in foreign relations there are no permanent friends, no permanent enemies, only permanent interests and at present India and US interests are analogous. The acrimony of Biden era is over and present US government is supportive of India’s target of becoming a great power. Before President Trump, US policy planners viewed India as a balancer to China. In 1949 Indian economy was better than China, again in 1980 economies of both India and China were similar in size but afterwards China’s economy grew very fast and at present Chinese economy is about five times bigger than India. In 2024 China’s GDP was valued at $18.53 trillion while India’s GDP was $3.93 trillion. China is a big country, large population and more than needed armed forces and have solid defence infrastructure, hence in Asia only India can counter China. Therefore, US strategic planner always viewed India as a counter balance to China. The US planners were averse of the idea of multi-polar world and they want to remain the lone super power. US always wanted that India should work under the umbrella of a US super power. In 2024, US deep state overthrew Bangladesh elected government which was friendly to India but refused to give airbase to them. Now in Bangladesh radical forces have become very powerful and an unelected person is ruling the country. The Indian government does not accept the role of a counter balancer to China, as India is a legitimate independent leading power in international arena. Prime Minister Modi has initiated several leading programmes. India is rapidly moving towards self-reliance in defence and becoming a defence exporter. India is speedily developing massive infrastructure in the country and aims to cross $10 trillion GDP in coming decades. Modi’s “India first” policy is the precursor of Trump’s America “first policy’. As both these policies do not counter each other and can work together both Modi and Trump inculcated good understanding. Although Biden administration became unhappy with Modi government because later has refused to snap all ties with Russian government. Trump administration understands India’s prerogative and also waved sanctions when India procured S-400 missile system from Moscow. Trump administration understood that S-400 missile system would intensify India’s defence against China. Trump administration also revived Quad and ratified ‘Indo-Pacific’ as an important strategic area and accepted that India has a special role in the security of ‘India-Pacific’. The Vice President of the United States, Mr. JD Vance inspects the ‘Guard of Honour’ at AFS Palam, in New Delhi on April 21, 2025. As the rivalry between US and China is becoming bitter hence Trump administration’s choice is India. Trump administration also views India as big market of 1.4 billion people and not merely a counter balance to China which is threatening its lone super power status. The present US administration does not consider India’s independent policies as a threat to Americanism. Trump administration also contemplates that several countries of Europe survived under the security umbrella of America as they were spending very less money on their defence while India is spending on its defence independently as a country with self-respect. Hence Trump administration appreciates India’s independent attitude and considers it as positive. At present Beijing is constantly challenging lone super power status of US and its close allies have also adopted belligerent attitude hence Washington needs friends like Delhi. India has become an important player in the long-term strategy of USA. Trump put devastating tariff on China while US industrialists are considering India’s vast young and cheap labour, its enormous middle-class market hence Trump is soft on India. A trade agreement between both the countries was an important purpose of the visit of Vance. Both countries agreed for the basic guidelines for the trade agreement negotiations. The basis of trade agreement would be Catalysing Opportunities for Military Partnership, Accelerated Commerce & Technology’ (COMPACT) programme which was launched during the visit of Modi in Washington in February 2025. It was the most comprehensive effort between both the countries to inculcate close relationship with regard to defence, trade and transfer of technology. US would be benefitted by selling armaments to the biggest purchaser of arms. US wants to sell more defence equipment to India. US is also interested in selling energy to India as US exports energy while India imports lot of energy. India would get some latest technologies which US does not transfer to several countries. However, agriculture products are a difficult area. US wants to have greater access to India’s agricultural market but it is a politically sensitive area, it is heavily subsidised, it employs millions of Indians and if US products enter freely in the Indian market, farmers would lose their livelihood. Beijing which is also keeping an eye on Indian market is watching the results of Vance visit to India. Beijing has issued a stern warning that no country should have trade agreement with US which jeopardises the interests of China. Both US and India have exchanged high level visits as National Security Adviser Mike Waltz visited India in February, Director of National Intelligence Tulsi Gabbard visited in March, Vice President Vance came to India in April. Tesla Inc chief executive adviser Elon Musk is also expected to visit this year. President Trump is planning a visit to India in 2025. Several Indian dignitaries including Prime Minister Modi visited USA in February while Commerce minister Piyush Goyal visited US in March, Finance Minister Nirmala Sitharaman in April 2025. These visits highlights that both countries are eager to resolve the tariff issue and want to enhance trade and strengthen the relationship. However, the impact of tariffs imposed by Trump have far reaching effect on India. Trump administration has mentioned that India is one of several countries with whom US is negotiating for a trade deal. US is India’s biggest business partner. Vance’s visit creates a hope that India and US would secure a deal before the deadline (8 July) and India would get a relief from heavy duties levied by Trump. Vance is very active and a close lieutenant of Trump, he was very hard on Ukrainian President Zelensky in Washington and criticised bluntly to European countries at the Munich Security Conference. He also referred Chinese manufacturing workers as “peasants”. In view of accelerating US China tension Vance‘s visit to India becomes more important. Vance was soft in India. PM meets the Vice President of the United States, Mr. JD Vance, Second Lady Usha Vance and their children at his residence, in 7 Lok Kalyan Marg, New Delhi on April 21, 2025. India has also reduced tariffs on American products including Kentucky bourbon and Harley-Davidson Inc motorcycles. India is also considering to cut off duties on several other products too. The reduction of duties on US products would shake off Trump’s allegation that India is a “tariff King”. Modi in his last meeting with Trump agreed to buy more American goods including LNG (Liquified natural gas), crude oil, high-tech weapons including F-35 so that India’s trade surplus with US lessens. India also readily accepted undocumented deportees. US also extradited convicted terrorist Tahawwur Hussain Rana, to stand trial in India on 10 criminal charges including his role in the 2008 terrorist attacks in Mumbai. US has also arrested Khalistani Harpreet Singh, also known as Happy Passia, as a member of an alleged foreign terrorist gang. Both India and US discussed to double their trade to $500 billion by 2030 and also integrate supply chains so that more jobs are created in both countries. As US views India as a significant strategic ally which can counter the rising influence of China in Asia Pacific Region, and has a big market, Washington would certainly like to have close relationship with Delhi. It is one reason that Trump renders great importance to Quad and it is expected that he would be attending Quad summit in India later this year. Modi has also inculcated a close relationship with Trump during his first term as US President. Modi was one among the first leaders who held talks with Trump after he was elected for the second term. India also understands that China is an expansionist country and though it wants to export more and more goods to India but does not want to solve border problems as its intentions are to occupy more and more Indian area. Hence it is in the interest of India to have cordial relations with US. Now the important question is, can two biggest democracies of the world would agree on a fair deal which is beneficial to both the countries? Vice President Vance’s visit to India marked a strategic and symbolic turning point in the evolving Indo-US partnership. From trade and defence cooperation to technology sharing and people-to-people ties, the visit reflected a mutual desire to move beyond traditional roles of alliance and establish a future-ready relationship built on shared democratic values and economic ambition. As both nations gear up to double their trade to $500 billion and deepen strategic cooperation in the Indo-Pacific, Vance’s visit was not merely diplomatic—it was a reaffirmation that the world’s two largest democracies are inching closer to a comprehensive, fair, and mutually beneficial partnership. The upcoming months, with high-level exchanges including a possible visit by President Trump and the Quad Summit in India, will likely set the tone for a redefined Indo-US equation. (Jai Kumar Verma is a Delhi-based strategic analyst and member of United Services Institute of India and The Manohar Parrikar Institute for Defence Studies and Analyses,. The views in the article are solely the author’s. He can be contacted at editor.adu@gmail.com) https://www.aviation-defence-universe.com/modis-us-visit-to-further-cement-indo-us-ties/ Modi’s US visit to further cement Indo-US ties • Is NATO Plus a great idea? By Jai Kumar Verma New Delhi. 20 June 2023. Countdown to Indian Prime Minister Narendra Modi’s forthcoming four-day state visit has begun from 21st to 24th June 2023, all eyes geo-politically will be on this visit and on Indo-US ties. The first summit level meet during Joe Biden’s presidency, is not the first time the two leaders will meet, as both have met several times earlier and have initiated many positive developments between both the countries. The visit would also include a state dinner hosted by US President and First Lady on 22nd June. Biden has invited French President Emmanuel Macron and South Korean President Yoon Suk Yeol and Prime Minister Modi is the third world leader who was invited for a state visit. The forthcoming Modi visit is also the time for the powerful Indian Americans community to show solidarity with their home country. Prior the visit ‘India Unity Day’ marches will be organised in 20 major cities on June 18 by Indian origin community. White House Press Secretary Karine Jean-Pierre issued a warm statement which mentions that “The visit will strengthen our two countries’ shared commitment to a free, open, prosperous, and secure Indo-Pacific and our shared resolve to elevate our strategic technology partnership, including in defense, clean energy, and space.” India is not only the fifth largest economy, but it is also a fastest growing economy. Same way India is not only the most populous country it has young population while several countries of the world are worried about their aging population. Biden’s invitation to Modi for the state visit to the US and also address a joint session of US Congress second time makes it evidently clear that US attaches great importance to rising India. It is clear that although US is bolstering its ties in the western Pacific and US, UK and Australia are in way to create a new fleet of nuclear-powered submarines all to counter the aggressive and expansionist China, but it does not mitigate the importance of India in US strategy of Indo-Pacific. Now US approach towards India-Russia relations is more logical and realistic as it comprehends that Indo Russian relations are not only old but time tested too. Hence India has not condemned Russia in current Russia-Ukraine war. India also refused to vote against Russia in United Nations and made huge purchases of oil from Russia on discounted price. Now US has adopted a policy where Indian dependence of Russian arms is reducing. According to reports in 2017 Russian share in India’s defence purchases was 62 % however in 2022 the Russian share was reduced to 44%. Partly Russia is not able to supply more arms to India because of Russia Ukraine war and secondly the effectiveness of Russian arms is also tested. Although India’s dependence on Russian armaments is declining partially because India is diversifying arms purchase and also because India is giving much emphasis on ‘Make in India Programme’ especially on defence sector.Indian National Security Advisor Ajit Doval’s meeting with US National Security Advisor Jake Sullivan and then launching of Initiative on Critical and Emerging Technologies (ICET) in Washington DC was important. The latest visit of US Defence Secretary Lloyd Austin in the beginning of this month was also crucial. Both parties discussed the transfer of critical defence technology for joint development of military hardware. A Congressional Committee in the US recommended that India should be included in NATO+(Plus) so that NATO plus becomes more powerful. The Congressional Committee recommended that “Winning the strategic competition with the Chinese Communist Party (CCP) and ensuring the security of Taiwan demands that the US strengthen ties with our allies and security partners including India.” NATO Plus which is a security arrangement has 31 NATO members and five countries namely Australia, Japan, New Zealand, Israel, and South Korea are aligned. The members get incessant opportunity of intelligence sharing and by joining NATO Plus India would get access to advance military technology. Although the proposal came just before the forthcoming visit of Modi, but Delhi made it clear that NATO Plus is not in the interest of India. India’s External Affairs Minister S Jaishankar made it clear on 9 June 2023 that India has no intend to join NATO plus as it is not in the interest of the country. He also made it clear that India is capable of defending itself from any aggression including Chinese hostility. India elucidated that China is passing through an economic crisis and its exports are declining hence it would not be difficult for rising India to counter Chinese offensive. If India joins NATO Plus it would be a big setback to India Russia relations. If India joins NATO Plus the relations between Russia and China would be further strengthened which would be against the interest of India. Not only this if India joins Western block, then Pakistan which is already close to China would also become closer to Russia. Although recently Pakistan has received one oil consignment from Russia on discounted prices, but still India-Russia partnership is much stronger than Russia Pakistan relationship. India has already signed important agreements with United States including LEMOA (Logistics Exchange Memorandum of Agreement), COMCASA (Communications Compatibility and Security Agreement) and BECA (Basic Exchange Agreement). These agreements help India to get access to high technology hence joining NATO Plus may not be much useful. The US proposal is keeping the security of Taiwan in mind and not of India. US is keen to involve India in defence mechanism to counter the expansionist design of China. Although curbing of China is in the interest of India, but Delhi should not come in forefront as both India and China are not only neighbours but nuclear armed countries. India is very keen to develop its defence industry so that its dependence on import can be reduced. India also wants to emerge as major exporter of arms and ammunition. It has fixed target of exporting armaments worth Rs.35000 crore in 2025 hence getting of cutting-edge technology is very important. But joining of NATO Plus may not be in the overall interest of the country. India and US would sign several agreements including important defence deals during the visit. General Electric (GE) and Hindustan Aeronautics Ltd (HAL) would jointly produce F 414 jet engines in India to the finish line. GE has agreed to share technology with HAL, it would be a big boost to Indian defence industry. The technology of producing jet engines is only with four countries i.e., US, Russia, France, and UK, even China buys jet engines from Russia. US, which wants to include India in its defence orbit, agreed to sell 30 drones which would be worth $3 billion. These drones are extremely effective and can be used for surveillance, intelligence gathering as well as for attack. The drones are MQ 1, MQ 9, MQ 9 Reaper and MQ Sea Guardian. India can buy any of these drones as per the requirement. These drones can be used by all the three services. India should not rush to become US partner to confront China as the latter is not threatening India’s security in a big way. Secondly there is no direct commitment from US that it would come directly to confront China in case of war between India and China. Hence Delhi should be careful. India should not entangle if war breaks out between China and US and its allies on Taiwan. Not only this India should be careful that it does not fall in the trap of ‘danger from China’. India should increase its capability and should be prepared to face China in case of eventuality. However, taking the cutting-edge technology from US and other countries is advisable. With all these pros and cons the visit becomes not only important but also cynosure of all eyes. The truth which emerges is India is too important to be ignored. (Jai Kumar Verma is a Delhi-based strategic analyst and member of United Services Institute of India and Institute for Defence Studies and Analyses. The views in the article are solely the author’s. He can be contacted at editor.adu@gmail.com)

 

https://www.aviation-defence-universe.com/washington-helped-islamabad-come-out-of-grey-list/

Washington helped Islamabad  come out of ‘Grey list’

               The Author

·        Trying to retune its ties with Pakistan

By Jai Kumar Verma

New Delhi. 03 November 2022. On 21 October the Financial Action Task Force (FATF) has taken out Pakistan from its ‘Grey List”. FATF issued a statement that “Pakistan is no longer subject to FATF’s increased monitoring process; to continue to work with APG (Asia/Pacific Group on Money Laundering) to further improve its AML/CFT (anti-money laundering & counter-terrorist financing) system”. Pakistan was put in grey list of FATF in 2018 as it failed to check the financial assistance to terrorist outfits. As the country was in FATF’s grey list Islamabad was not getting financial assistance from International Monetary Fund (IMF), Asian Development bank (ADB), World Bank, European Union, and other financial institutions. At present Pakistan’s economy is passing from a critical phase and it needed urgent financial assistance.

Pakistan’s track record is so dismal that in past meetings of FATF it was saved by China, Turkey, and Malaysia from downgrading to ‘Black List’. But in the current meeting United States, United Kingdom and other western countries supported Islamabad hence it instead of slipping to black list it came out from grey list. India sharply reacted to the exit of Pakistan from grey list. The Ministry of External Affairs (MEA) Spokesperson Arindam Bagchi stated, “We understand that Pakistan will continue to work with the Asia Pacific Group on Money Laundering (APG) to further improve its Anti Money Laundering (AML) /Counter Terror Financing (CFT) system.” He also reiterated that “As a result of FATF scrutiny, Pakistan has been forced to take some action against well-known terrorists, including those involved in attacks against the entire international community in Mumbai on 26/11”.

Pakistan lobbied hard to come out from the grey list.  In the latest meeting of FATF, China, US and other western countries supported Pakistan. China blocked the blacklisting of Hafiz Talah Saeed leader of Lashkar-e-Tayyeba (L-e-T) and son of L-e-T Chief Hafiz Saeed. China rescued Pakistan five times in four months in United Nations.

Both China and US have declared each other as their main adversaries but they supported Pakistan albeit with different motives. China considers India as its prospective challenger hence it wants to weaken India. China’s long-term policy is the containment of India and China is using Pakistan to achieve this. All Chinese weapons, missiles and platforms are against India. China is Pakistan’s biggest bilateral creditor and invested huge sum in China Pakistan Economic Corridor (CPEC). Pakistan claims that it has all weather strategic partnership with China.

Besides helping Pakistan in FATF, US also helped Islamabad in getting IMF loan. Pakistani Finance Minister Miftah Ismail claimed that IMF sanctioned $1.7 billion loan and also extended the programme for a year more. US ambassador in Pakistan visited Pak Occupied Kashmir and called it as Azad Kashmir.

Recently US approved $450 million to service Pakistan’s F-16 fighter jets although India objected for the same. US wants to keep Pakistan army happy as several times civil administration speaks against US but Pakistan army always maintained cordial relations with US.

Both US and Pakistan share intelligence on Afghanistan. This time US left Afghanistan but its intelligence organisations are monitoring the developments in Afghanistan as US administration does not trust the present Taliban regime. US intelligence agencies are keeping eye on Afghanistan through Pakistan and extermination of al Qaeda Chief Zawahiri is proof of it. Afghan government has US designated terrorists but US is not taking any action against them because of Inter Services Intelligence (ISI) of Pakistan.

On the other hand, Islamabad also getting US assistance in curbing the rising terrorist activities of Tehreek-e-Taliban Pakistan (TTP) as the outfit made hundreds of lethal attacks on Pakistani security forces. TTP fighters are residing in border areas of Pakistan and Afghanistan. TTP which is known as Pakistani Taliban are getting support from Afghan Taliban.

President Biden has fascination for Pakistan and its army. In 2008 Pakistan awarded US Vice Presidential candidate Joe Biden and Republican Senator Richard Lugar ‘Hilal-i-Pakistan’ which is the second highest award in Pakistan. In 2011 Biden as Vice President went to meet Pakistan army Chief General Ashfaq Parvez Kyani to Rawalpindi, which is unprecedented. In November 2015 Biden as Vice President invited Pakistan army chief Raheel Sharif in White House.

Pakistan supplied ammunition to Ukraine through C-17 Globemaster of Royal Air Force of United Kingdom. Pakistan took the risk of anger of Russia to please US.

In October 2022, General Qamar Javed Bajwa Chief of Army Staff of Pakistan made a five-day visit to US. The visit was few weeks before his scheduled retirement. Although few analysts claimed that Bajwa visited US as he wanted to ascertain US reaction before getting one more extension. Strong critics of Bajwa claimed that as he had close relations with US since he became Army Chief in November 2016 and he wanted the blessings of US before overthrowing the present civilian government.

Nonetheless the visit of General Bajwa was to reset the ties between both the countries which were damaged badly by former Prime Minister Imran Khan as he continuously blamed US for ousting him from prime ministership. Bajwa also visited Saudi Arabia after removal of Imran Khan as the ties between both the countries were damaged during his prime ministership.

In the current visit Bajwa reassured US that relations between both the countries would remain cordial even after he relinquishes the post of Chief of Army Staff. He also took Chief of General Staff Lt. General Azhar Abbas who is among the six important frontrunners for the coveted post of Chief of army staff. General Bajwa also introduced Lt. General Abbas to important dignitaries in Washington DC. Bajwa met US Secretary of Defence Lloyd Austin and National Security Advisor Jake Sullivan and discussed important issues pertaining to defence. Bajwa emphasised that Pakistan is a trusted and tested friend of US and cordial relations would benefit both the countries.

Bilawal Bhutto foreign minister of Pakistan also met US Secretary of State Antony Blinken on the sidelines of United Nations General Assembly session in September this year. In the meeting he reaffirmed about the assistance of $56.5 million for flood relief as well as the additional $ 10 million of food security.

Although now Washington is also interested in repairing ties with Islamabad but there is a trust deficit as US felt cheated in Afghanistan when overtly Pakistan was helping US but covertly assisting various terrorist groups in Afghanistan especially Haqqani network. These terrorist outfits were attacking US led NATO troops.

Even when the relations between US and Pakistan deteriorated the cooperation between defence forces of both the countries continued as most of arms, ammunition and platforms in Pakistan defence forces are of US origin. Large number of senior officers of Pakistan defence forces have personal interests in US.

The national security strategy of US released in October 2022 classified China as the main threat to the country. Hence US is trying to undermine China and for that it considers India as an important partner but as India follows an independent foreign policy hence Washington is also trying to retune its ties from Islamabad and wants to dilute China Pakistan relations. The annual bilateral trade between US and Pakistan is around $6 billion and US is Islamabad’s biggest trade partner while China is the largest state investor in Pakistan. Hence US wants to have cordial relations with Pakistan but it does not want to replace China as in that case US has to put very large amount in Pakistan.

Washington has appointed Donald Armin Blome as US ambassador in Pakistan in April 2022. The post was vacant since 2018. Not only this members of Congress and several high-ranking US officials also visited Islamabad. In April General Bajwa stated that Islamabad has “excellent” relations with US and Pakistan receives best military equipment from US. Pakistan from several years was getting financial assistance, supply of defence equipment, training from US and now when it is passing from grave financial crisis Islamabad wants all types of help from US.

Biden’s recent statement that Pakistan “may be one of the most dangerous nations in the world” should not please much to Indian analysts. India should inculcate self-reliance as both China and US is assisting Pakistan which is India’s sworn enemy and has waged a low-intensity war against India. Delhi should not look for short-term solutions but should plan long-term strategy. At present world is passing from a turmoil. Russian Ukraine war is continuing, Taiwan is in danger, animosity between US and China is increasing, Prime Minister of UK had to resign within 45 days. World suffered economic disaster because of Corona virus and several countries are facing economic disaster. Hence India should emphasise on ‘Make in India’ programme and should make sincere efforts to produce more and more weapons, arms, and ammunition so that it can lessen its import of defence items. India should also enhance its defence export so that it can achieve its target of export of defence items worth $4.87 billion by 2025.

(Jai Kumar Verma is a Delhi-based strategic analyst and Life member of United Services Institute of India and member of Manohar Parrikar Institute for Defence Studies and Analyses. The views in the article are solely the author’s. He can be contacted at editor.adu@gmail.com)

 

 

 

https://www.aviation-defence-universe.com/friend-shoring-a-boon-or-a-bane/

 

Friend-shoring: A boon or a bane?

Friendshoring with smiles

·        An asset for democratic world

·        A China containment trump card

By Jai Kumar Verma

New Delhi. 21 September 2022. Just before the world was hit by Corona virus and Covid -19 became the greatest global fear, a Morgan Stanley Research outlined how secular trends and trade tensions were, together, slowing globalization and potentially reversing it, in a concept that’s been referred to “slowbalization.”

It was 2019 and since then the humanity first suffered the onslaught of the pandemic and now it is in great trouble because of Russia Ukraine war. Not only this, the danger of Chinese attack on Taiwan is also looming large on the horizon.

                The Author

Russia Ukraine war created wheat shortage and energy crisis in the world. These threats have not only disturbed the supply chain, even the production of several essential items was jeopardised. The supply of food grain, petroleum products including gas and other important items was disrupted. These catastrophes forced the western world to plan about rejuvenating the world economic order, so that the supply chain as well as production of essential items remain uninterrupted.

And then came the most famous speech given by US Secretary of the Treasury Janet Yellen at South Korean multinational LG’s Science Park of Seoul in July this year. She put forth the concept of ‘friend-shoring’ which means that trade should be restricted only to the dependable allies so that the threats to supply chains is minimised. The phrase ‘friend-shoring’ is akin to the concept of ‘onshoring’ and ‘nearshoring’ which means that production and supply chain should be either within the country or near the country. As the world has become a global village hence it is not feasible to produce everything within the country or very near to the country hence the idea is changed to ‘friend-shoring’ which would restrict the supply chain networks with like-minded and friendly countries. She appealed to the countries friendly to US that all should work together so that more robust supply chains between trusted and likeminded countries can be devised. Although Yellen made it clear that US is not deserting from world trade.

                             Friends in need

 

Yellen also mentioned that “Supply chain resilience is a key focus of the Biden-Harris Administration.  The necessity of this work has been illustrated clearly by the events of the past two years – first by COVID-19 and our efforts to fight the pandemic, and now by Russia’s brutal war of aggression in Ukraine.  Together, they have redrawn the contours of global supply chains and trade.” She further mentioned that “‘Friend-shoring’ is about deepening relationships and diversifying our supply chains with a greater number of trusted trading partners to lower risks for our economy and theirs.”

President Joe Biden also issued an order in 2021 to review American supply chains. The appraisal would suggest how to secure and strengthen the supply chains and in what manner US dependence on foreign supplies can be reduced.

 

                             Friendship indeed

 

The notion of ‘friend-shoring’ would also reduce the overdependence on China. Beijing has emerged as the ‘world’s factory’. According to United Nations Statics Division statics, China’s global manufacturing output was about 30 percent in 2018. China is world’s foremost producer of chemical fertilisers, cement, steel, machinery parts, clothing, textiles, and footwear. China’s economy is now the world’s second largest economy and claims that it would take over US in few years. China is also threatening US’s lone super power status.

The analysts claim that strategy planners in US wants to curb the growth of China. According to recent study by an important think tank several companies would shift a quarter of their global product sourcing from China to other countries. The process of shifting from China to other countries was expedited because of pandemic, climate change and aggressive behaviour of China. Not only this countries like Vietnam, South Korea and India are providing several facilities so that these companies shift their factories from China to their countries.

US and other democratic countries are planning to shift production of critical items in friendly countries and extend trade with each other as they want to reduce dependence on China and Russia which have different values and systems. Although it is best if all things are produced and sold in the homeland but it is not feasible now, hence friendly countries and allies are included in production and in supply chains.

                          New Found Friends?

At present efforts are made to diversify the production units as pulling all manufacturing units from China is not feasible hence efforts are to reduce the dependence on China. Chinese exports increased after 2001 when Beijing joined World Trade Organisation (WTO) and started taking the benefits of it.

Under ‘friend-shoring’ if US supplies gas and rare earths to Europe and Europe sells semiconductor chips to Australia and Canada, the supply chain would certainly be stronger then purchasing these items from China and Russia. US and South Korea are old business partners and Biden administration wants to preclude China from controlling the technological industries.  Hence it is promoting South Korea to produce semiconductors, batteries for electric vehicles etc. In his recent visit President Biden had visited a South Korean chip factory and would like to establish similar factory in Texas (USA). Proponents of ‘friend-shoring’ mention that the buyers should not only emphasise on price. They should view other considerations also.

The economists claim that ‘friend-shoring’ or ‘ally-shoring’ would damage the world economy as the global supply chains have reduced the tariffs, transportation, and communication costs. The production cost is lessened because the firms are allowed to purchase goods where it is more cost-effective. Manufacturing units are located in developing countries because of low-cost labour. The under-developed countries get the employment while the final products are less expensive hence even the poor persons in the developed world can purchase the product. The labour in the developing countries gain skill and after some time they manufacture more sophisticated items.

Friends forever:  friend-shoring permanent

 

‘Friend-shoring’ may start the process of ‘deglobalisation’ which means higher prices in short run while lesser growth in long-term.

The friends do not remain friends all the time as Britain left European Union. Severe difference cropped up between US and Canada during the time of President Trump.

China would think many times before invading Taiwan because of its close trade relations with US and Europe but in case of ‘friend-shoring’ there would be a clear division between friends and foes. The economic dependence on countries of different ideologies may avert the battles.

Friend-shoring would be disastrous for poor countries as their economy would never rise. There would be mass exodus from the poor countries to wealthy countries which would create problems in developed countries too. The poor countries would become failed countries and extremism and radicalisation would grow there and they would export terrorism.

If ‘friend-shoring’ is essential then it should be limited to essential and strategic items of national security only.

Way Ahead  

The advocates of ‘friend-shoring’ claim that in pursuit of reducing the cost, the companies have ignored resilience which included climate disasters including floods, famines, earthquakes etc. Companies also discounted chokepoints. Hence companies should diversify their production plants in different countries.

                  Friendshoring between China-Pak

 

 

The diversification is also essential because of change in policies of the country. The relations between US and China became tense when US under presidency of the then President Trump adopted tit-for-tat policy and imposed tariffs on Chinese goods. China also retaliated not only with US but imposed restrictions on Australian imports. Russia-Ukraine war has also disturbed the supply chain. It clearly indicates that in view of national security it is essential that strategic items should be produced either within the country, by friendly neighbours or countries with similar values and institutions. China, which has emerged as a big economic power and now threatening several countries would suffer a setback. Several poor countries suffering because of China’s debt trap, may take a sigh of relief and if China’s economic strength reduces it would not lay debt trap to other countries. India may also be benefitted if more industries shift from China as few would certainly come to India.

(Jai Kumar Verma is a Delhi-based strategic analyst and Life Member of United Services Institute of India and member of Manohar Parrikar Institute for Defence Studies and Analyses. The views in the article are solely the author’s. He can be contacted at editor.adu@gmail.com)