India signed and exchanged the first-of-its-kind agreements focused on Clean Economy, Fair Economy, and the IPEF Overarching arrangement under Indo -Pacific Economic Framework (IPEF) for prosperity, on 21st September, 2024 at Delaware USA, in the presence of Prime Minister Shri Narendra Modi who is on 3-day visit to the US for the Quad Summit.

IPEF Clean Economy Agreement (Pillar-III)

The Agreement on Clean Economy intends to 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 with the aim to collectively accelerate efforts of IPEF partners towards energy security and transition, climate resilience and adaptation and GHG emissions mitigation.

This Agreement will facilitate investments, project financing including concessional financing, joint collaborative projects, workforce development and Technical Assistance and Capacity Building for industries, in particular for the MSMEs, and facilitate further integration of Indian companies in the global value chains, particularly in the Indo-Pacific region. These activities will be undertaken through joint collaborative actions such as Cooperative Work Programmes, the IPEF Catalytic Capital Fund, the IPEF Accelerator etc.

IPEF Fair Economy Agreement (Pillar-IV)

The Agreement aims to create a more transparent and predictable trade and investment environment across the Indo-Pacific. To achieve these goals, the IPEF partners will collaborate to enhance their efforts in preventing and combating corruption, including bribery, and supporting initiatives to improve tax transparency, the exchange of information, domestic resource mobilization, and tax administration.

It focuses on enhancing information sharing among partners, facilitating asset recovery, and strengthening cross-border investigations and prosecutions. This will also support India's efforts in fighting corruption, money laundering, and terror financing.

Recognizing the critical role of technical assistance and capacity building (TACB) in achieving the commitments outlined in the proposed agreement and ensuring effective implementation and enforcement of anti-corruption measures, the partners are committed to identifying and implementing TACB initiatives. These initiatives will strengthen anti-corruption efforts and improve the efficiency of tax administration.

Overarching IPEF Agreement

The Overarching Agreement is an administrative agreement establishing an oversight Ministerial-level mechanism. This Agreement seeks to establish a high-level political oversight framework at the Ministerial level over the various individual IPEF agreements while setting general guidance and goals, and guiding Leaders' vision and mandate for IPEF. This Agreement primarily includes administrative and institutional provisions.

This agreement would provide identity to the group and longevity to the IPEF partnership, by creating a formal mechanism and establishing a forum for Ministerial discussions on emerging issues, etc. This agreement is expected to facilitate the effective implementation of subject agreements (Pillars II-IV), that have the potential to enhance India's productive capacity, and integration into supply chains, and promote innovation, in line with the concept of Atmanirbhar Bharat.

The Union Cabinet, chaired by Prime Minister Shri Narendra Modi, had accorded the approval earlier this month for signing and ratification of these three agreements focused on the Clean Economy, Fair Economy, and the overarching IPEF Agreement which were signed by other IPEF members on June 6, 2024 in IPEF Ministerial meeting in Singapore, however India did not formally sign the same then as the domestic approval process was still underway.

IPEF to boost investment

Investor Forum: Under Clear Economy (Pillar-III) Agreement, IPEF partners aim to catalyze investment in green technology and reduce GHG emissions through various means including annual business matching events under the Investor Forum.  The First Investor Forum was held in Singapore on 5-6 June, 2024.  One of such efforts was accelerated in the form of a MoU among companies from India, Singapore and Japan following which, Singapore-based Sembcorp will be investing ₹36,238 crore for state-of-the-art green ammonia plant in Thoothukudi.

At the Inaugural Forum, IPEF partners identified USD 23 Billion (₹1.91 lakh crore) of priority infrastructure projects  ~USD 4 Billion (₹ 33,200 crore) from India which offered potential opportunities for investment in some Indian renewable energy companies. The United States International Development Finance Corporation (DFC) committed a total of USD 1.5 Billion (₹12,450 crore) to support energy transition, climate investment, and digital inclusion.

Funds under IPEF: IPEF also provides platforms for technical assistance, concessional funding, and viability gap funding. The IPEF Catalytic Capital Fund, with an initial grant of USD 33 million (₹273.9 crore) from Australia, Japan, Korea, and the United States, aims to catalyze private investments totaling USD 3.3 billion (₹27,390 crore). Additionally, the PGI Investment Accelerator under IPEF has received initial funding of USD 300 million (₹2,490 crore) from the United States International Development Finance Corporation (DFC).

Initiatives under IPEF

IPEF Upskilling Initiative: IPEF Upskilling Initiative was launched in September 2022 to support sustainable and inclusive economic growth and development by providing primarily for women and girls in IPEF emerging and middle-income partner countries with access to digital skills training. Under the initiative, as communicated by the US, 14 participating US companies and the Asia Foundation provided 10.9 million upskilling opportunities in IPEF partners, primarily for women and girls, in the last 2 years, of which India availed 4 million of these opportunities.

Critical Mineral Dialogue: This ongoing dialogue focuses on several key areas, including the comprehensive mapping of mineral resources across IPEF partners to develop an extensive database, promoting trade by mapping trade flows within the IPEF region and enhancing business engagements, and fostering technical collaboration for mineral recovery and recycling in the region. These initiatives are aimed at strengthening the critical mineral supply chain and ensuring sustainable mining practices in the region.

Tech Council: The main objectives of this initiative are coordination and cooperation on key technologies by bringing together IPEF partners to share best practices and standards, enhance the resilience of digital infrastructure, promote investment, and foster innovation through workforce development. The key areas on which IPEF partners are currently collaborating include Cyber Security, Undersea Cables and Artificial Intelligence.

Cooperative Work Program (CWP): Aim of CWP is to facilitate collaborative and cooperative efforts among the interested participating IPEF countries to advance the objectives of the Clean Economy Agreement. Till date, 8 CWP proposals, circulated by several IPEF countries, have been announced in the IPEF Ministerial meetings. These are related to hydrogen supply chains, carbon markets, clean electricity, sustainable aviation fuel, just transition, emissions intensity accounting, small modular reactors, and including India’s proposal on e-waste urban mining.

About IPEF

IPEF was launched on 23 May 2022 at Tokyo, Japan, comprising 14 countries – Australia, Brunei, Fiji, India, Indonesia, Japan, Republic of Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, Vietnam and USA. The IPEF seeks to strengthen economic engagement and cooperation among partner countries with the goal of advancing growth, economic stability and prosperity in the region.

The framework is structured around four pillars relating to Trade (Pillar I); Supply Chain Resilience (Pillar II); Clean Economy (Pillar III); and Fair Economy (Pillar IV). India has ratified Agreement on Supply Chain Resilience (Pillar II) in February 2024 and has maintained an observer status in Pillar-I.

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