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India key partner in US' friend-shoring agenda, says Treasury Secy Janet Yellen

Yellen takes a dig at China and Russia, saying the world had been for too long overly reliant on "risky countries" that "wield trade as a geopolitical weapon"

November 11, 2022 / 11:18 AM IST

US treasury secretary Janet Yellen has said India is an ally in her country's pursuit of strengthening supply chains during an uncertain time for the global economy.

Speaking at the Microsoft India Development Center in Noida on November 11, Yellen, on her first visit to the country as the treasury secretary, said the world had been overly dependent for too long on "risky countries" for critical inputs.

"Take Russian energy exports. Russia has long presented itself as a reliable energy partner. But for the better part of this year, (Vladimir) Putin has weaponised Russia's natural gas supply against the people of Europe. It's an example of how malicious actors can use their market positions to try to gain geopolitical leverage which disrupt trade for their own gains," Yellen said.

In recent months, India's purchase of Russian oil has faced scrutiny in the West, with New Delhi remaining firm that the move is in the national interest and the government has a responsibility towards consumers as inflation soars.

"United States is pursuing an approach called 'friend-shoring' to diversify away from countries that present geopolitical and security risks to our supply chains. To do so, we are proactively deepening economic integration with trusted trading partners like India," she added.

Yellen is in New Delhi to participate in the US-India Economic and Financial Partnership. Later in the day, she will hold a bilateral meeting with Finance Minister Nirmala Sitharaman and also interact with executives from major Indian and American companies operating in the country.

Sitharaman and Yellen are expected to issue a joint statement on the Economic and Financial Partnership dialogue.

Also read: India's trade deficit with Russia rises a whopping 674% in H1 on discounted oil buys

The visit comes at a time when India's trade with Russia has grown, especially oil imports. The Russian invasion of Ukraine in late February led to a surge in global commodity and energy prices as the West punished Moscow with a string of sanctions.

India, which meets more than 80 percent of its energy needs through imports, has taken advantage of Russian oil, available at a discount, and become its second largest buyer after China.

While the increased purchases of Russian oil by India has reportedly left US President Joe Biden's administration disappointed, India has defended its actions saying it has to do right by its citizens and provide cheap fuel.

Plans are also afoot to enforce a "price cap" on Russian oil, with Yellen saying earlier this week that India would benefit from the proposed cap.

Speaking on the US' friend-shoring agenda at the Microsoft research facility, Yellen also took a dig at China, saying the world's largest economy was also taking steps to reduce its reliance on manufacturers "whose approaches clash with our human rights values".

"We are also seeing signs that Western firms are diversifying their supply chains beyond China. Technology companies like Amazon and Google are investing in India and Vietnam. Apple recently announced that it will be shifting some iPhone manufacturing from China to India. The United States will continue to deepen our business and commercial ties with India as we pursue our friend-shoring agenda," she said.

Commenting on India's upcoming G-20 presidency, the former US central banker said India would have full support of her country.

"A successful Indian presidency is indispensable to our global economic recovery and sustained progress on our deepest problems," she added.

Siddharth Upasani is a Special Correspondent at Moneycontrol. He has been covering the Indian economy, economic data, and monetary and fiscal policies for nine years. He tweets at @SiddharthUbiWan. Contact:
first published: Nov 11, 2022 10:50 am