Supply chain pact
THE signing of the Supply Chain Resilience Agreement by India and 13 other member countries of the Indo-Pacific Economic Framework (IPEF) underlines the importance of multilateral cooperation amid geopolitical rivalries and tensions. The pact is expected to make IPEF supply chains more resilient, robust and well-integrated, and contribute towards economic development and progress of the region. The IPEF includes India’s Quad partners (the US, Australia and Japan), South Korea, New Zealand, Fiji and ASEAN members Brunei, Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam. Together, these countries account for around 40 per cent of the world’s GDP, making IPEF a formidable economic bloc. Notably, some of these nations are also part of the Regional Comprehensive Economic Partnership (RCEP), the China-spearheaded trade initiative that India had opted out of four years ago. Launched in May 2022, the IPEF is widely seen as a US-led counter to the RCEP, which is touted as the world’s biggest trade agreement.
Supply chains suffered worldwide disruptions during the Covid-19 pandemic, laying bare the vulnerabilities of the global economy. The Russia-Ukraine war and the Israel-Hamas conflict have made things worse. Moreover, manufacturers and suppliers find themselves constantly exposed to financial risks due to climate change-induced natural disasters. The IPEF needs to ensure uninterrupted trade engagement among its members.
New Delhi’s interests are best served if the IPEF helps it emerge as an attractive investment destination and a bigger player on the export front. The major challenges for India are to improve ease of doing business, make the regulatory system transparent and spur sustainable growth. The onus is on the IPEF, which is built on four pillars — trade, supply chains, clean economy and fair economy — to bring about seamless integration of economies and guard against becoming a US-centric initiative.
