Indo-Pacific Economic Framework (IPEF) deal is going to sign in shortly

NEW DELHI : With the legal vetting of clean economy (pillar III) and fair economy (pillar IV) pillars of the US-led Indo-Pacific Economic Framework (IPEF) completed, the Union government will shortly announce the timeline for signing the much-awaited deal, two persons aware of the matter said.

Legal scrubbing is a process under which participating countries of the IPEF review proposals through a legal perspective and for language consistency.

A joint ministerial virtual meeting of all the member countries is to be held shortly; wherein the member nations will review progress under Pillar II (supply chain resilience agreement), and the status under Pillars III and IV, the first person said.

Additionally, there will be announcements about hosting investors’ forums under Pillar III in the coming months, the person mentioned above said.

India in November signed a supply chain resilience agreement (Pillar II) with the US and 12 other members of the IPEF for Prosperity to reduce its dependence on China. It has so far stayed away from the trade pillar of the framework.

All participating countries are working on a common work programme, and some, such as Singapore, are interested in working in special areas like the regional hydrogen initiative, carbon markets, and sustainable aviation fuel, the second person said.

Mint on 28 December 2023 reported that legal scrubbing of both the pillars had started and the deal is expected to be signed in 2024.

“Both the pillars are very important for the country. The clean economy (Pillar-III of the IPEF) is aimed at cooperation on research, development and commercialisation of clean energy and climate-friendly technologies,” the second person said.

Under the fair economy deal (Pillar-IV), India will strengthen implementation of effective anti-corruption and tax measures to boost trade and investment among IPEF economies, the first person added.

As things stand, India is yet to sign the trade pillar (Pillar-I) that is aimed at strengthening economic engagement among partner countries, excluding China. New Delhi is seeking more clarity to assess if it will be in the interest of the country.

IPEF was launched in Tokyo by the US and other Indo-Pacific countries on 23 May 2022. The group includes USA, Australia, India, Brunei Darussalam, Fiji, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam.

Queries emailed to the commerce secretary, spokespersons of the ministry of finance and commerce, spokespeople of the US and Singapore were not immediately answered.

“The Indo-Pacific Economic Framework presents a significant opportunity for India to bolster its commitment to renewable energy and sustainable practices. By collaborating with partner nations, we can accelerate the transition towards achieving net zero emission by 2070 and generating about 50% of power from non-fossil fuels by 2030,” said Sanjay Kumar, Partner, Deloitte Touche Tohmatsu India LLP.

“The clean economy pillar will facilitate collaboration on research, development, and commercialization of clean technologies among member nations,” he said. 

Simultaneously, the fair economy pillar will reinforce effective anti-corruption and tax measures, boosting trade and investment within the Indo-Pacific region – a boon for India’s $670 billion export sector, he added.

“By actively participating in IPEF, India can cement its role as a responsible global partner while enhancing economic resilience and promoting an inclusive, competitive, and sustainable growth trajectory,” Kumar said.

Once the deal is legally approved, the commerce ministry will move a Cabinet note in consultation with other ministries involved in the process, such as the ministries of finance and power.

India in November 2023 signed a supply chain resilience agreement (Pillar II) with the US and 12 other members.

The development was seen as a major breakthrough for India and other participating countries. Once the deal is finalized, it will help reduce India’s dependency on China and mitigate risks of economic disruptions from supply chain shocks