Global powerhouse: How India can benefit from the IPEF
The Indo-Pacific Economic Framework for Prosperity (IPEF) is structured around the four pillars of Trade (Pillar I), Supply Chains (Pillar II), Clean Economy (Pillar III) and Fair Economy (Pillar IV), with 14 member countries. India holds an observer status on Pillar I given the absence of any market access provision therein and has signed and ratified Pillar II; supply chains are resilient when they can prepare for, respond to, and recover from disturbances. Increased supply chain resilience would mean a reduction of dependency on a single source, diversification of the supplies, and improvement in logistics, and infrastructure. COVID-19 and geopolitical tensions led to an ever-growing need for resilient supply chains globally.
IPEF enables member countries to respond to vulnerabilities in their supply chains collectively. For India, therefore, this will translate into diversified trade linkages and sourcing alternatives, primarily in critical sectors such as pharmaceuticals, electronics, and automotive components.
IPEF Crisis Response Network (CRN) ensures fast communication and response at the time of a crisis in the supply chain between the member countries and it will enable India to gear up quickly to coordinate measures to mitigate the effect of a crisis at the earliest. Membership in IPEF will further help India to enhance the logistics and infrastructure sectors by bringing investment into the country. Quality construction would be required for more effective infrastructure, quality ports, highways, and digital connectivity to enhance efficiency and resilience in supply chains. IPEF suggests embracing advanced technologies for effective supply chain management. India’s tech prowess can make Indian supply chains clearer, traceable and more efficient. IPEF would further strengthen India’s global position and influence in the Indo-Pacific region.
Pillar-III of IPEF is the Clean Economy Agreement, focusing on all matters on sustainable development. It focuses on hastening efforts toward energy security, mitigation of greenhouse gas (GHG) emissions and climate resilience. It emphasises technical cooperation, workforce skill development, building capacities, and conducting research collaborations amongst member countries. India is looking to shift towards sustainable and resilient economies. India will have enhanced access to renewable technologies, reducing reliance on fossil fuels and improving energy security. It will also catalyse investments and projects financing, through concessional finance and otherwise in clean energy projects.
India keenly works to honour global environmental mandates for sustainable development. IPEF sets India to leading the Indo-Pacific region towards a clean energy future. A step toward an economy that’s clean most probably would give rise to new labour-generating industries, besides reducing the economic costs of degradation of the environment. This cooperation can further be extended with respect to knowledge, technologies, and best practices available among the member countries for further driving India’s clean economy goals.
Pillar-IV, the Fair Economy agreement under IPEF provides further on how to prevent corruption and to support tax transparency and predictability in the business environments. This could lead to better economic growth of the partner countries within the Indo-Pacific region. This again motivates the enforcement of transparency and predictability in the business environment of the countries which make the climate more predictable and stable for investors.
This would mean fewer bureaucratic hassles and greater clarity regarding the matter of regulation and greater economic growth will be the only result of successful investment. One of the essential inputs to the Fair Economy Agreement is that India shall have superior standards of anti-corruption regimes for themselves mainly concerning information availability, cross-border investigations, and asset recovery attempts. This would check corruption, money laundering, and terror financing in India, and contribute to better governance as well as citizen trust and will enable India to advocate good tax administration and resource mobilisation back home.
With businesses complying strongly with tax regulations, the revenues of India will rise or revenues that find their way into public services and infrastructure projects. A business environment that is fair and transparent will ensure efficient ways of resource allocation and, consequently, greater economic stability. India can become a champion of good governance and transparency, with an enhanced reputation among international communities and, therefore, more foreign investments.
IPEF is hugely important to India for comprehensive geopolitical positioning and potentially useful in power balancing within the Indo-Pacific region. It further solidifies those relationships for India with economic advantages but also greater diplomatic leverage, presenting India with a truly multidimensional opportunity. Therefore, active engagement by India can ensure collective strength from the countries in the use of those powers to fuel innovation, draw investment, and grow a resilient and sustainable future.