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India's Prime Minister Narendra Modi's recent visit to the United States has seen significant strides in strengthening economic cooperation between India and the Indo-Pacific region. During his visit, India signed three key agreements under the Indo-Pacific Economic Framework (IPEF), demonstrating a commitment to fostering a more robust and integrated economic landscape in the region.
The IPEF, launched in May 2022, is a strategic initiative aimed at deepening economic engagement among its 14 member countries. It is structured around four pillars: Trade, Supply Chain Resilience, Clean Economy, and Fair Economy. India's recent signing signifies a crucial step in its participation in the IPEF, as it now fully engages in the Clean and Fair Economy agreements, having previously ratified the Supply Chain Resilience agreement in February 2024.
The Clean Economy agreement, a significant component of India's IPEF commitments, focuses on accelerating clean energy transitions and mitigating climate change. It outlines a collaborative approach involving technical cooperation, capacity building, workforce development, and research collaborations. This agreement aims to reduce greenhouse gas emissions, enhance climate resilience, and promote sustainable development within the Indo-Pacific region. The agreement also paves the way for investments and project financing, particularly for micro, small, and medium-sized enterprises (MSMEs), further stimulating economic growth and job creation.
The Fair Economy agreement, a complementary aspect of India's IPEF engagement, aims to establish a more transparent and predictable trade and investment environment. It fosters collaboration to combat corruption, enhance tax transparency, and improve tax administration across member states. The agreement underscores the importance of cross-border investigations, asset recovery, and information sharing to counter bribery, money laundering, and terror financing. It also emphasizes the role of technical assistance and capacity building initiatives to bolster anti-corruption measures and improve tax systems, further contributing to good governance and economic stability.
The signing of an overarching IPEF agreement further strengthens the framework's structure by establishing a high-level political oversight mechanism at the ministerial level. This mechanism ensures the effective implementation of various IPEF commitments by providing general guidance and establishing forums for ongoing ministerial discussions on emerging issues. This overarching agreement serves as a key pillar for coordinating and monitoring progress across the IPEF's various pillars, ensuring a collaborative and coordinated approach to regional economic integration.
These agreements align with India's vision of Atmanirbhar Bharat (self-reliant India), aiming to enhance its productive capacity, integrate further into global supply chains, and encourage innovation. The inaugural IPEF Investor Forum, held in Singapore in June 2024, further highlighted the framework's potential, identifying priority infrastructure projects worth USD 23 billion, with India accounting for USD 4 billion of potential investments in renewable energy companies. Additionally, the United States International Development Finance Corporation (DFC) committed USD 1.5 billion to support India's energy transition, climate investments, and digital inclusion efforts, solidifying the framework's commitment to sustainable and inclusive growth.
India's participation in the IPEF signifies its commitment to a more interconnected and prosperous Indo-Pacific region. The agreements highlight the importance of collaboration, transparency, and sustainable development in shaping a future where economic growth is intertwined with environmental protection and good governance. As India continues to engage actively in the IPEF, it is expected to play a pivotal role in realizing the framework's full potential, contributing to a more stable, secure, and prosperous Indo-Pacific region for all.
Source: PM Modi’s US Visit: India Signs Three Key IPEF Agreements Ahead Of Quad Summit