India is likely to soon be able to sign the clean economy and fair economy agreements under the US-led Indo Pacific Economic Framework for Prosperity (IPEF) as the Cabinet notes on the pacts are in an advanced stage of finalisation, official sources have said.
The country, however, is not yet ready to join the trade pillar of IPEF as it continues to be uncomfortable with some of its components, such as framing of high-standard rules on digital economy, including cross-border data flows and data localisation, and labour and environment issues, the source added.
“The Cabinet notes on clean economy and fair economy pacts have almost been readied by the Commerce Department as other Ministries and Departments are largely on board on its contents. Since India is not set to take on heavy additional obligations by signing the two pacts, the domestic discussions are not complicated,” an official tracking the matter told businessline.
India was the only country in the 14-member IPEF bloc that had not endorsed the clean economy and fair economy pacts at the Ministerial level meeting in Singapore in June this year because of its general elections. It had assured other members that it would get domestic clearances after a new government was in place.
In a move seen by many as an attempt to counter China’s growing influence in the Indo-Pacific region, US President Joe Biden launched the IPEF in Tokyo on May 23, 2022. The 14 members include the US, India, Australia, Brunei, Fiji, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam.
Four pillars
The IPEF framework is structured around the four pillars of trade, supply chains, clean energy and tax & anti-corruption, but there are no provisions on tariff cuts on goods.
All 14 IPEF members, including India, have signed the supply chains resilience agreement which entered into force on February 24, 2024.
The clean economy pact focusses on energy security and transition, climate resilience and adaptation; GHG (greenhouse gas) emissions mitigation; find/develop innovative ways of reducing dependence on fossil fuel energy; promote technical cooperation, workforce development, capacity building, and research collaborations; and collaborate to facilitate development, access, and deployment of clean energy and climate-friendly technologies.
“India hopes to attract investments and concessional financing for its clean energy projects,” the official said.
More transparent
The agreement on fair economy intends to create a more transparent and predictable business environment that can spur greater trade and investment in the markets of member countries; enhance efforts to prevent and combat corruption by strengthening anti-corruption frameworks, support efforts to improve tax transparency and exchange of information for tax purposes between competent authorities.
The pillar 1 of IPEF which deals with trade is nowhere near finalisation as the US does not seem to be interested any more in the chapter on digital trade. India had opted out of the negotiations on trade pillar right at the beginning.