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India on Sunday signed key agreements focused on clean and fair economy, as well as an overarching arrangement under the US-initiated Indo-Pacific Economic Framework (IPEF) for prosperity.
The pacts were signed during Prime Minister Narendra Modi’s three-day visit to the US for the Quad Summit.
IPEF is a 14-member group launched by US President Joe Biden over two years ago with an aim to enhance the economic competitiveness and prosperity among the member countries. The framework is structured around four pillars – trade (pillar I), supply chain resilience (pillar II), clean economy (pillar III), and fair economy (pillar IV).
India ratified the supply chain resilience agreement earlier this year in February and has maintained an observer status in the case of trade pillar.
Apart from India, the 13 other members of the IPEF are Australia, Brunei, Fiji, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, US and Vietnam.
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The overarching agreement is an administrative agreement towards establishing an oversight ministerial-level mechanism. It aims to facilitate the “effective implementation” of pillars II, III and IV. The three pillars have the potential to enhance India's productive capacity, integration into supply chains, and promote innovation, in line with its focus on being self-reliant.
“This Agreement seeks to establish a high-level political oversight framework at the ministerial level over the various individual IPEF agreements, while setting general guidance and goals, and guiding leaders' vision and mandate for IPEF. This agreement primarily includes administrative and institutional provisions,” the department of commerce said in a statement on Sunday.
“This agreement would provide identity to the group and longevity to the IPEF partnership, by creating a formal mechanism and establishing a forum for ministerial discussions on emerging issues, etc,” the statement said.
While the rest of the IPEF members had signed the overarching agreement during the grouping’s ministerial meeting in June, India could not formally sign the pact since the domestic approval process was still underway.
The Union Cabinet gave approval for signing and ratification of the agreements–clean economy, fair economy, and the overarching IPEF agreement– earlier this month.
PILLAR III and IV
The clean economy pact aims to facilitate investments, project financing, including concessional financing, joint collaborative projects, workforce development and capacity building for industries, in particular for the small business, and facilitate further integration of Indian companies in the global value chains, particularly in the Indo-Pacific region.
“The agreement on clean economy aims to promote technical cooperation, workforce development, capacity building, and research collaborations; and collaborate to facilitate development, access, and deployment of clean energy and climate-friendly technologies with the aim to collectively accelerate efforts of IPEF partners towards energy security and transition, climate resilience and adaptation and GHG emissions mitigation,” the statement said.
The pact on fair economy aims to create a ‘more transparent and predictable trade and investment environment’ across the Indo-Pacific regions.
To achieve these goals, the IPEF partners will collaborate to enhance their efforts in preventing and combating corruption, including bribery, and supporting initiatives to improve tax transparency, the exchange of information, domestic resource mobilisation, and tax administration.
“It focuses on enhancing information sharing among partners, facilitating asset recovery, and strengthening cross-border investigations and prosecutions. This will also support India's efforts in fighting corruption, money laundering, and terror financing,” the statement said.
Delhi-based think tank GTRI said now that India has formalised its commitments, it is crucial that the government provides detailed briefings to industry stakeholders about the agreements signed.
“Sharing the legal text alone will not be enough, as businesses require clear insights into how these commitments will impact sectors, compliance needs, and long-term policy goals,” GTRI said in a report.
Additionally, there is concern that India might have committed to minimum standards for clean energy technologies in the domestic market, which could force reliance on imports and negatively impact local producers. “India needs to ensure it can support its own industries during the clean energy transition,” the report said.
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