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Visiting US Treasury Secretary Janet Yellen on Friday said her country is using a tactic called "friendshoring" to minimise supply chain vulnerabilities, in an era where certain countries are using trade as a geopolitical weapon.

Yellen explained this approach in her address at the Microsoft's office in Noida, where she met several tech leaders.

"Let me explain an approach that the United States is taking to minimise supply chainvulnerabilities. It's called friendshoring," she said.

"We must vigorously promote our global economic integration and continue to reap its benefits. As we do so, I believe that we must also account for the probability of disruptions to trade. Recent disruptions have contributed to higher prices in both of our countries and sapped economic output," the Treasury Secretary explained.

Giving the example of disruptions caused due to Russia's invasion of Ukraine, Yellen said: "For too long, countries around the world have been overly dependent on risky countries or a single source 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, (Russian President 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 or disrupt trade for their own gain."

In this context, she said that the US is pursuing an approach called "friendshoring" to diversify away from countries that present geopolitical and security risks to its supply chain.

"To do so, we are proactively deepening economic integration with trusted trading partners like India. Our strategy will also create redundancies in our supply chain to mitigate over-concentration risks. And we are also addressing our reliance on manufacturers whose approaches clash with our human rights," she explained.

To be very clear, friendshoring is not limited to an exclusive club of countries, Yellen stressed.

"We seek integration with the large group of countries that we can count on developing countries and advanced economies alike. In fact, part of our 'friendshoring' approach involves partnering with developing countries to grow local industries and connect them to the global supply chain.

"For example, our development finance institution is providing America's largest solar manufacturer with up to $500 million in debt financing to build a facility in Tamil Nadu in India. This facility will boost India's solar manufacturing capacity. At the same time, it will help diversify supply chains away from China, which currently dominates over 80 per cent of global solar panel production.

"Our investments are also consistent with our values like certain solar panel materials produced in China, like those from the Xinjiang region, are known to be produced with forced labour," she informed.

The Treasury Secretary further said that new supply chains are developing across regions from Asia to the European Union.

"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 was shifting some iPhone manufacturing from China to India. The US will continue to deepen our business and commercial ties with India as we pursue our friendshoring agenda," she added.