IPEF supply chain pact could shift production centres to India

The substantial progress made on a supply chain agreement at the recent meeting of trade ministers of the Indo-Pacific Economic Framework for Prosperity (IPEF) could lead to a shift in production centres of key goods and critical sectors to India, a statement by the commerce & industry ministry said on Thursday.

“The agreement will also lead to deeper integration of India in the global supply and value chains, especially Indian MSMEs,” It said.

At the meeting in Detroit, the trade ministers of the 14-member bloc on May 27 had made substantial progress on a supply chain agreement. Other benefits that will accrue to India by being a party to the agreement on supply chains is upward mobility in value chains; mitigation of risks of economic disruptions to India from supply chain shocks and creation of a seamless regional trade ecosystem.

“India and other partner countries will continue to engage to ensure effective implementation of the agreement so as to achieve the overall objectives of the agreement, which is to make IPEF supply chains more resilient, robust and well-integrated, and contribute towards economic development and progress of the region as a whole,” the statement said.

The IPEF was launched in May 2022. Its members include the US, Australia, Brunei Darussalam, Fiji, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam. The grouping is negotiating issues of trade, supply chains, clean energy, decarbonisation, infrastructure, tax and anti-corruption. 

The group gives flexibility to its members to be part of discussions and agreements on any of the issues or opt out of some. India is out of the discussion on trade pillar.