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India recently signed agreements with the US-led Indo-Pacific Economic Framework for Prosperity (IPEF) to focus on a clean and fair economy.
India's signed agreements with the US-led Indo-Pacific Economic Framework for Prosperity (IPEF) highlight its commitment to greener technologies, energy security, better business environments, and maintaining national flexibility.
It is an initiative announced by US President Joe Biden in May 2022 to promote economic links between countries in the Indo-Pacific region and address modern economic challenges.
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India has joined Supply Chain Resilience, Clean Economy, and Fair Economy and has observer status in Trade. |
The framework was launched in Tokyo, Japan, with fourteen founding member nations: Australia, Brunei, Fiji, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, Vietnam, and the United States. Together, these countries account for 40% of world GDP and 28% of global trade in goods and services.
India signed the Clean Economy Agreement under the IPEF to combat climate change and preserve energy security. The agreement's objectives include developing alternative energy sources, reducing dependency on fossil fuels, and accelerating investments in green technologies.
Cooperative technological advancements under the agreement will help India achieve a clean energy transition. For example, India has committed to increasing its solar capacity to 100 GW by 2025 under initiatives like the National Solar Mission and the International Solar Alliance. By attracting additional investment in these sectors, the IPEF deal could strengthen India's leadership in renewable energy.
The Fair Economy Agreement aims to set a transparent and predictable business environment. Its objective is to create trust among IPEF countries by supporting tax transparency and anti-corruption measures, making cross-border commercial operations more manageable.
In 2018, India passed the Fugitive Economic Offenders Act to target financial offenders like Vijay Mallya and Nirav Modi. This domestic regulation defines India's strong viewpoint against economic crimes. The Fair Economy Agreement will strengthen India’s efforts by granting access to international cooperation and resources for prosecuting financial criminals worldwide.
The IPEF has established financial mechanisms to aid member countries, like India, in meeting their clean and fair economic goals. The IPEF Catalytic Capital Fund received an initial grant of $33 million from Australia, Japan, Korea, and the United States, and it expects to attract $3.3 billion in private investments in green technologies.
The financial mechanisms under the IPEF will help India to reduce its budgetary burden and achieve ambitious environmental goals. For example, India's Green Hydrogen Mission aims to produce 5 million tons of green hydrogen annually by 2030; this mission could benefit from IPEF’s concessional funding.
While the agreement provides significant opportunities to India, some experts have expressed concern that multiple IPEF talks took place secretly, with little public participation. One major problem is whether India has agreed to a non-derogation clause restricting the government's ability to change domestic legislation for critical infrastructure projects.
India's internal policies must remain flexible to meet critical infrastructure demands. For example, while IPEF's environmental criteria may be high, India should guarantee that its national interests, such as the Pradhan Mantri Awas Yojana (Urban) for affordable housing, are not hampered by excessive international obligations.
India's membership in the IPEF is about retaining its strategic position in the Indo-Pacific region. The agreements establish India as a responsible global player in addressing climate change while promoting fair economic policies. However, India must ensure that international norms do not determine its internal standards and guidelines.
India's experience with the Paris Agreement highlights that the country accepts international commitments and develops policies such as the National Action Plan on Climate Change (NAPCC) to address local issues. India should maintain this approach with the IPEF, ensuring that global and domestic interests are balanced.
By joining the US-led IPEF Clean and Fair Economy agreements, India has committed to addressing global issues such as economic corruption and climate change. However, it must protect its regulatory autonomy and guarantee that international standards do not hurt national interests.
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PRACTICE QUESTION Q.Critically analyze the significance of India's involvement in the Indo-Pacific Economic Framework for Prosperity (IPEF). How do clean and fair economic agreements support India's national interests? (250 Words) |
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