The Indo-Pacific Economic Framework (IPEF) is a US-led initiative aimed at strengthening economic partnerships among participating countries to enhance resilience, sustainability, inclusiveness, economic growth, fairness, and competitiveness in the Indo-Pacific region. Launched in 2021, the IPEF brings together a dozen initial partners who collectively represent 40% of the world’s GDP. Unlike traditional Free Trade Agreements (FTAs), the IPEF allows members to negotiate specific components of interest within four main pillars:
- Supply-chain resilience
- Clean energy, decarbonization, and infrastructure
- Taxation and anti-corruption
- Fair and resilient trade
India’s Participation in IPEF
Recently, the Indian Minister of Commerce & Industry addressed the IPEF Ministerial meeting in the United States, where India decided to participate in three out of the four pillars of the framework, opting out of the Fair & Resilient Trade pillar. India agreed to engage in the Supply Chains, Tax & Anti-Corruption, and Clean Energy pillars.
India’s Position on the Trade Pillar
India’s decision to stay away from the Fair & Resilient Trade pillar stems from several concerns:
- Digital Governance: The IPEF’s formulation on digital governance conflicts with India’s stated position. India is in the process of developing its own digital framework and laws, particularly regarding privacy and data protection. In August 2022, India withdrew the Personal Data Protection Bill from Parliament to consider a comprehensive legal framework regulating the overall Internet ecosystem and cybersecurity.
- Data Localisation: The US has expressed concerns about India’s potential demand for data localization, which would require storing and processing Indian users’ data on servers located within India. This policy could pose significant barriers to digital trade and market access, particularly for smaller firms.
- Environmental Conditionalities: India is cautious about environmental conditions that may discriminate against developing countries, a critical factor as it observes the benefits derived by member countries.
India’s Vision for the Indo-Pacific Region
India envisions a Free and Open Indo-Pacific, collaborating with like-minded countries to manage a rules-based, multipolar regional order. Key elements of India’s vision include:
- Growing Trade and Investments: India’s trade in the Indo-Pacific region is rapidly increasing, with significant investments directed eastward. This includes Comprehensive Economic Partnership Agreements with Japan, South Korea, and Singapore, as well as Free Trade Agreements with ASEAN and Thailand.
- Active Regional Role: India has been a vocal advocate for a Free and Open Indo-Pacific. The US, Australia, and ASEAN members have all recognized India’s crucial role in the region.
- Quad Collaboration: India, along with its Quad partners (the US, Japan, and Australia), aims to enhance regional security and stability, preventing any single power from dominating the region or its crucial waterways.
India’s Strategic Approach
India’s engagement with the IPEF reflects a strategic approach to regional cooperation. By participating in the pillars of supply chains, tax & anti-corruption, and clean energy, India aims to bolster economic resilience and sustainability without compromising its national interests in digital governance and data protection. This selective participation underscores India’s commitment to fostering a balanced and inclusive economic environment in the Indo-Pacific region.
In conclusion, India’s nuanced stance at the IPEF Ministerial meeting demonstrates its strategic priorities and vision for the Indo-Pacific. By aligning with three of the four pillars, India continues to play a significant role in shaping a resilient, sustainable, and inclusive economic landscape in the region.