The Indo-Pacific Economic Framework (IPEF) is an economic partnership launched on May 23, 2022, in Tokyo. It aims to enhance economic engagement and cooperation among its 14 member countries, including India, the United States, Japan, Australia, and other Indo-Pacific nations. The framework is designed to address economic challenges and promote prosperity in the region.
IPEF is structured around four main pillars:
India did not sign the Trade (Pillar I) agreement of IPEF. This decision was driven by concerns over the potential impact on India’s domestic market and the lack of clarity regarding the benefits and commitments required under this pillar. India has expressed reservations about binding trade commitments that could affect its economic sovereignty, especially those related to labor, environmental standards, and digital trade regulations, which may conflict with India’s existing policies and economic interests.
India has signed three key agreements under IPEF:
The Clean Economy Agreement focuses on promoting technical cooperation, workforce development, and research collaborations among IPEF members. It supports investments in green technologies, sustainable energy projects, and joint collaborative initiatives, aligning with India’s goals of reducing greenhouse gas emissions and building a sustainable economy.
The Clean Economy Agreement will facilitate investments and capacity building, particularly in green technologies and MSMEs. It will help Indian companies integrate into global value chains, attract concessional financing for clean energy projects, and support India’s transition to a low-carbon economy.
The Fair Economy Agreement aims to enhance governance and foster a fair economic environment by addressing corruption, improving tax transparency, and strengthening financial crime controls. It focuses on creating a level playing field for businesses across the Indo-Pacific region, supporting economic stability and sustainable growth.
The Fair Economy Agreement will help India improve its trade and investment environment by implementing measures to combat corruption, promote asset recovery, and strengthen financial oversight. This will attract more foreign investment, support economic reforms, and enhance India’s competitiveness in the global market.
The overarching agreement provides a political oversight framework to ensure the effective governance of IPEF’s pillars. It facilitates ministerial dialogue, enhances cooperation among member countries, and ensures that the economic initiatives under IPEF align with the broader strategic interests of the Indo-Pacific region.
IPEF supports various initiatives, including upskilling programs, research on critical minerals, and cooperative projects on digital connectivity, green technologies, and e-waste management. These initiatives aim to promote sustainable development, enhance workforce capabilities, and address common economic challenges faced by the member nations.
India’s participation in IPEF represents a strategic effort to deepen economic ties with Indo-Pacific nations and influence regional economic policies. By engaging in this partnership, India aims to enhance its economic resilience, diversify supply chains, and promote sustainable growth aligned with its national interests. “Strategic alliances in a dynamic world economy are the keystones of shared prosperity and resilient development.”
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