India signs US-led IPEF bloc’s clean, fair economy agreements
India on Sunday signed the US-led 14-member Indo-Pacific Economic Framework for Prosperity (IPEF) bloc’s agreements on a clean and fair economy. The agreements signed during Prime Minister Narendra Modi’s visit to the US are aimed at facilitating development, access, and deployment of clean energy and climate-friendly technologies. They also aim to strengthen anti-corruption measures and promote tax transparency within member countries.
The Commerce and Industry Ministry said that the agreement on clean economy intends to accelerate efforts of IPEF partners towards energy security, GHG (greenhouse gas) emissions mitigation, developing innovative ways of reducing dependence on fossil fuel energy and promoting technical cooperation.
“India signed and exchanged the first-of-its-kind agreements focused on Clean Economy, Fair Economy, and the IPEF overarching arrangement under Indo -Pacific Economic Framework (IPEF) for prosperity, on September 21, 2024 at Delaware USA, in the presence of Prime Minister Narendra Modi who is on 3-day visit to the US for the Quad Summit,” the ministry said.
The agreement on a fair economy intends to create a more transparent and predictable business environment, which can spur greater trade and investment in the markets of member countries, the ministry said, adding that the agreements focus on enhancing information sharing among partners, facilitating asset recovery, and strengthening cross-border investigations and prosecutions.
“IPEF also provides platforms for technical assistance, concessional funding, and viability gap funding. The IPEF Catalytic Capital Fund, with an initial grant of $33 million from Australia, Japan, Korea, and the United States, aims to catalyse private investments totaling $3.3 billion. Additionally, the PGI Investment Accelerator under IPEF has received initial funding of $300 million from the United States International Development Finance Corporation,” the ministry said.
Ajay Srivastava, former Indian Trade Service officer and head of economic think tank Global Trade Research Initiative (GTRI), however, expressed concern over the deal as IPEF negotiations have mostly been conducted in secrecy with limited public input.
“In the Clean Economy Pillar, the hope is that India has not agreed to a non-derogation clause, which would prevent the government from easing domestic regulations for projects of national importance. Such flexibility is essential for India to pursue key infrastructure projects without being hindered by rigid international commitments,” Srivastava said.
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He added that most standards and regulations being discussed in IPEF are already in place in the US and Organisation for Economic Co-operation and Development (OECD) countries.
“If India adopts these standards without adequate preparation, it risks being pushed into compliance not only in IPEF but also in future trade deals with the EU, UK, and others. India must ensure that it can develop domestic standards quickly to avoid being at a disadvantage in international negotiations,” he added
The IPEF, a strategic partnership involving 14 member countries, focuses on building economic cooperation through its four key pillars — trade, supply chain resilience, clean economy, and fair economy (focusing on tax and anti-corruption).
India’s engagement in IPEF, alongside the US, Japan, Australia, and other Indo-Pacific nations, highlights its commitment to a regional partnership that represents 40 per cent of the global economy and 28 per cent of world trade.