In a significant development for economic cooperation in the Indo-Pacific region, India has signed crucial agreements focused on establishing a clean and fair economy.
These pacts were finalized during Prime Minister Narendra Modi’s recent three-day visit to the United States for the Quad Summit. As part of the US-initiated Indo-Pacific Economic Framework (IPEF), these agreements aim to enhance India’s productive capacity and foster integration into global supply chains. Here’s a closer look at the agreements and their implications.
Overarching Agreement: A New Governance Structure
The centerpiece of the agreements signed is an overarching administrative agreement designed to create a ministerial-level oversight mechanism. This framework aims to facilitate the effective implementation of IPEF’s pillars II, III, and IV, which focus on supply chain resilience, clean economy, and fair economy, respectively.
According to a statement from the Department of Commerce, this agreement seeks to provide a formal identity to the IPEF partnership while ensuring its longevity. It establishes a platform for ministerial discussions on emerging issues and sets general guidance for the leaders’ vision and mandate within the framework.
Notably, while other IPEF members signed this agreement during a ministerial meeting in June, India had to wait until its domestic approval process was complete. The Union Cabinet finally greenlit the signing of these agreements earlier this month, paving the way for India’s formal commitment.
Pillar III and IV: Focus on Clean and Fair Economy
Clean Economy Pact
The clean economy agreement aims to facilitate investment in sustainable projects and promote workforce development and capacity building, particularly for small businesses. By fostering collaboration on clean energy and climate-friendly technologies, the pact seeks to accelerate efforts towards energy security, climate resilience, and greenhouse gas emissions mitigation among IPEF partners.
The Indian government has emphasized that this agreement will enhance technical cooperation and joint research initiatives.
Fair Economy Pact
The fair economy agreement is designed to create a more transparent and predictable trade and investment environment across the Indo-Pacific.
This pact focuses on combating corruption and improving tax transparency among member countries. Collaborative efforts will be directed towards enhancing information sharing, asset recovery, and strengthening cross-border investigations.
This framework not only supports India’s initiatives against corruption and money laundering but also aims to create a stable environment for businesses operating within the region.
Industry Implications and Challenges Ahead
While these agreements mark a significant step for India within the IPEF, experts have raised important considerations regarding their implementation.
The Delhi-based think tank GTRI has highlighted the necessity for the government to provide detailed briefings to industry stakeholders about the signed agreements. Merely sharing the legal texts will not suffice; businesses require clear insights into how these commitments will impact their sectors, compliance needs, and long-term policy goals.
Concerns have also emerged regarding potential commitments to minimum standards for clean energy technologies in the domestic market.
Such standards could force India to rely on imports, negatively impacting local producers during the clean energy transition. GTRI emphasized the need for India to ensure that it can support its own industries while making this transition.
India’s recent signing of key agreements under the IPEF marks a critical advancement in its economic strategy, particularly in the context of a clean and fair economy.
As the country navigates this new landscape, it will be essential for the government to communicate effectively with industry stakeholders and ensure that domestic producers are supported throughout this transition.
With a collaborative framework in place, the future of India’s integration into global supply chains and its commitment to sustainable economic practices looks promising, but careful implementation will be vital to avoid pitfalls along the way.
