India signs key pacts on clean and fair economies under IPEF, no progress on trade pillar yet
Mint | 22 September 2024
India signs key pacts on clean and fair economies under IPEF, no progress on trade pillar yet
by Dhirendra Kumar
New Delhi: India has signed two more agreements under the Indo-Pacific Economic Framework (IPEF), focusing on clean energy, anti-corruption, and trade transparency, during prime minister Narendra Modi’s three-day US visit for the Quad summit.
These agreements, aimed at creating a “clean” and a “fair economy”, are expected to enhance India’s sustainability efforts and strengthen its collaboration with other IPEF members including the US, Australia, Brunei Darussalam, Fiji, Indonesia, Japan, and Korea, according to a commerce ministry statement on Sunday.
India’s growing role in global partnerships
The pacts, signed on 21 September in Delaware, signify India’s growing role in global partnerships, particularly in the Indo-Pacific, at a time when climate action, transparent governance, and fair-trade practices are becoming central to economic diplomacy. The agreements will increase India’s participation in global value chains and its ambition to transition toward a greener economy.
The Indo-Pacific Economic Framework was launched in Tokyo by the US and other Indo-Pacific countries on 23 May 2022. The group consists of 14 partner countries: Australia, Brunei Darussalam, Fiji, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam. Structured around four pillars—trade, supply-chain resilience, clean economy, and fair economy—the IPEF aims to foster economic growth and stability in the Indo-Pacific region.
India is now signatory to three out of the four pillars under the IPEF. India ratified the agreement on supply chain resilience (pillar II) earlier in February 2024 and maintains observer status for trade (pillar I) as the current terms are seen as less favourable for the country.
The newly signed agreements under the clean (III) and fair economy (IV) pillars, along with an overarching administrative framework, mark a critical step forward in enhancing India’s role within the IPEF partnership, the commerce ministry said.
The clean economy pact (pillar III), seeks to advance cooperation among member countries in clean energy and climate-friendly technologies.
“This agreement will enable technical cooperation, workforce development, and capacity building across sectors. In addition, it promotes the deployment of green technologies and accelerates efforts toward energy transition, climate resilience, and greenhouse gas (GHG) emissions mitigation,” the ministry said.
"The agreement also promises substantial economic benefits for Indian industries, particularly micro, small, and medium enterprises (MSMEs), and aims to facilitate the integration of Indian companies into global value chains. The IPEF Catalytic Capital Fund and IPEF Accelerator will play crucial roles in providing financial support for these initiatives," it added.
The IPEF Catalytic Capital Fund, initially backed by $33 million from Australia, Japan, Korea, and the USA, is designed to attract private investments totalling $3.3 billion, it said.
Additionally, the Partnership for Global Infrastructure (PGI) Investment Accelerator has secured $300 million from the Development Finance Corporation (DFC), further supporting energy transition and climate investment.
India aims to gain significantly from these efforts, particularly in sectors such as renewable energy and green technologies. During the first Investor Forum held in Singapore earlier in June 2024, IPEF partners identified priority infrastructure projects worth $23 billion, of which $4 billion were offered for Indian renewable energy companies.
The United States International Development Finance Corporation (DFC) has committed $1.5 billion to support India’s transition toward clean energy.
One major outcome of this collaboration is the memorandum of understanding signed between companies from India, Singapore, and Japan for a state-of-the-art green ammonia plant in Thoothukudi, Tamil Nadu. Singapore-based Sembcorp will be investing ₹36,238 crore in the project, marking a key milestone in India’s green energy ambitions.
