In a significant move aimed at reducing reliance on China and fortifying global supply chains, India, along with the United States and 12 other members of the Indo-Pacific Economic Framework (IPEF), have inked a supply chain resilience agreement. The agreement, signed in San Francisco during the IPEF ministerial meeting, intends to shift critical sector production and key goods among member nations.
The IPEF comprises 14 members, including India, Australia, the US, Japan, Fiji, South Korea, New Zealand, Singapore, and Thailand, collectively representing a substantial 40% of the global gross domestic product (GDP) and 28% of global trade in goods and services.
Commerce and Industry Minister Piyush Goyal expressed India’s participation in this pioneering agreement as a crucial step towards bolstering global supply chains. He highlighted its potential to foster adaptability, stability, and sustainability across these chains. The agreement is positioned as a first-of-its-kind international pact within the IPEF and serves as a cornerstone of the framework’s objective to fortify supply chains.
The accord, regarded as one of the core pillars of the IPEF, was finalized on May 27 and is anticipated to render the region’s supply chains more resilient, robust, and seamlessly integrated. This initiative is expected to significantly contribute to the economic progress and development of the entire region.
Key benefits of the agreement include supply chain diversification, increased investment mobilization, deeper integration of India into global value chains, support for micro, small, and medium enterprises (MSMEs), and the facilitation of a smooth regional trade ecosystem conducive to the flow of Indian products.
The pact’s implementation will be triggered upon ratification by at least five member countries, a move anticipated to pave the way for enhanced cooperation among nations within the IPEF.
Additionally, the agreement outlines the establishment of three new bodies within the IPEF supply chain framework: the supply chain council, the supply chain crisis response network, and the IPEF labor rights advisory board. These bodies are intended to facilitate cooperative measures among member nations, including crisis response mechanisms and addressing labor-related issues through collaborative approaches.
While the trade pillar of the IPEF remains under negotiation, advancements in the fair economy and clean economy pillars are anticipated to be announced shortly, reinforcing the multi-dimensional efforts of the IPEF nations towards fostering sustainable economic growth and cooperation.
This agreement marks a crucial stride in reshaping global supply chain dynamics, amplifying regional economic resilience, and fostering collaborative frameworks among member nations within the Indo-Pacific region.
