Context:
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US Federal Reserve chair announced that Americans should be prepared for the global supply chain to remain in crisis through 2022.
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Covid-induced supply chain disruption highlighted the loopholes of total dependence on one country for vital products, and diversification will take a few years to implement.
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Lean manufacturing processes and just-in-time delivery mean a factory closure in one Asian country can unleash a global crisis.
Example of dependence on China:
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According to the United Nations, China accounts for 28.7% of global manufacturing output.
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China is India’s largest trading partner; bilateral trade was at $92.68 billion in 2019.
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A major chunk of electronic components, auto parts, consumer durables, active pharmaceutical ingredients (APIs), and key starting materials (KSM) required to manufacture lifesaving drugs are imported from China.
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80% of heparin(used to prevent blood clotting) comes from China. Without heparin, critical care will suffer, virtually paralyzing the entire global healthcare delivery system.
What needs to be done by India?
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It is important for every Indian industrial body to create a checklist of vulnerable items and secure supply till the end of 2022.
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Most countries cannot be self-reliant due to small aging populations, which means a small consumer base or a lack of a talented workforce.
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It is time for India to enhance its status by becoming a global manufacturing hub.