Recently, on Wednesday, in San Francisco, India, the US, and 12 other members of the Indo-Pacific Economic Framework (IPEF) initiated a supply chain resilience pact that aims to cut dependence on China and help shift manufacturing of crucial goods to IPEF member nations.
IPEF is a strategic and economic base that emphasizes the interconnectedness of the Indian and Pacific Oceans regions. It involves cooperation and economic integration among countries in these regions.
The 14 countries that are part of IPEF make up 40% of the global gross domestic product and about a third of global goods and services trade.
IPEF works on four pillars: trade, supply chains, clean economy, and fair economy. India has joined all pillars except the trade pillar.
This IPEF Supply Chain Resilience Agreement is a first-of-its-kind international agreement that will fortify and strengthen global supply chains, and foster adaptability, stability, and sustainability.
This pact will come into force after the implementation of the agreement by any five member countries.
India’s Commerce and Industry Minister Piyush Goyal suggests that this pact emphasizes enhanced collaboration to realize the collective aims of IPEF, particularly, for affordable financing for clean economy transition and enhancing technology cooperation.
The other benefits of this pact include supply chain diversification, mobilization of investments, deeper integration of India in global value chains, support to MSMEs, and creation of a seamless regional trade ecosystem.
The supply chain agreement is working towards the establishment of three new IPEF supply chain bodies to facilitate cooperation among the partners. These are the Supply Chain Council, the Supply Chain Crisis Response Network, and the IPEF Labor Rights Advisory Board.
India is likely to benefit from these ongoing IPEF negotiations. Launched in May 2022, IPEF currently has 14 member nations: Australia, Brunei, Fiji, India, Indonesia, Japan, Malaysia, New Zealand, Philippines, Singapore, South Korea, Thailand, US, and Vietnam.
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