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Tactical Infrastructure: Securing the future through trade

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SINGAPORE-GDP-GROWTH by .
Containers get transported at the Pasir Panjang Terminal in Singapore

Investments by countries to secure strategic financial and regional advantages have been strategies for a long time. In the face of rapidly changing geopolitical dynamics, a renewed push by India to secure crucial consumption supplies through partnering with trading nations is an area that requires attention…writes Taponeel Mukherjee

SINGAPORE-GDP-GROWTH by .
Containers get transported at the Pasir Panjang Terminal in Singapore

India’s role will be both as a trading partner as well as a partner in infrastructure creation with the partnering nation. One needs to look across commodities and products that India is a big importer of to identify areas where it can add value through supply chain infrastructure creation. The infrastructure can span the spectrum from farmlands to ports. Identifying and removing bottlenecks in the supply chains of partner nations can help create stronger trade relations and more stable value of imports.

The first step in strategic infrastructure creation is identifying the most critical sectors and industries. This identification must be made based on two fundamental factors.

Firstly, one must determine the consumption sectors that will see increased demand given the rapid pace of urbanisation and rising incomes in India. Principally, this focuses on current imports. Identifying the most crucial import commodities, especially those that face significant price volatility, to create infrastructure in the relevant trading nations is a path that needs focus.

Secondly, policymakers need to watch for future sectors that will require imports for commodities that are not available in India. For example, for the renewable energy revolution to get further impetus and for electric vehicles to be deployed on a large scale, energy storage through batteries is crucial.

An article, “India’s Storage Opportunity”, by Manish Pant in “Power Today” magazine, highlights an interesting point: “India’s production of rare earth minerals like lithium and cobalt, which are essential components in storage batteries, is negligible.”

Securing lithium and cobalt supplies through trade partnerships that go beyond merely importing the commodity will be vital as the energy ecosystem transforms. While making the energy ecosystem completely free from imports may not be possible, a better-planned approach that sees the Indian government working with the private sector to create the infrastructure for securing strategic advantages is essential.

Primarily, India must ensure greater energy independence, and not a shift away from oil dependence to dependence on other commodities. While natural resource allocation in a country is beyond one’s control, strategic trade partnerships and infrastructure creation are not.

After the identification of the most critical industries is made, the second step is identifying nations that are growing the fastest in the sector. These are trade partners where India can add value through financing and partnering in infrastructure creation. The fastest-growing producers need not be the largest. The vital step is creating symbiotic relationships with long-term trading partners who benefit from Indian financial and technical expertise, and India generates value by securing supplies of essential commodities.

It is imperative to bear in mind that these strategic investments need not only be big-ticket. Whether for products that are increasingly being consumed or energy independence, it is vital to chip away to reduce the volatility around the commodity gradually. While better trade partnerships with the top five producers of any commodity is a step in the right direction, so is a renewed push to partner with smaller nations.

Investing in supply chain infrastructure in crucial products is a structural shift that will add value over decades. Gradual partnerships and tactical infrastructure creation by India that allows it to create and improve symbiotic relationships with trading partners is the need of the hour.

In the infrastructure space, it is crucial for each commodity with each trading partner to identify as to where in the commodity supply chain India can add value. As commodities transform throug” “space, time and fo”m” before reaching Indian markets, it will be vital to make the best use of Indian capital and expertise.

In summary, an agile approach to trade and infrastructure creation can aid India in creating a secure and stable source for essential commodities.