IPEF Supply Chains Agreement Set to Transform India’s Manufacturing Sector

New Delhi, India – Supply Chains (Pillar-II) Agreement negotiations were substantially concluded during the second in-person Indo-Pacific Economic Framework (IPEF) Ministerial Meeting, which was hosted by the United States on May 27, 2023. Once implemented, this Agreement is anticipated to provide India and the other 14 IPEF partner nations, including Australia, Brunei, Fiji, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and the United States, with a number of benefits.

Some of the key projected benefits include: a potential shift of production centers in key goods/critical sectors to India; bolstering of domestic manufacturing capacities; giving a boost to Aatmanirbhar Bharat and Production Linked Initiatives schemes; mobilization of investments, particularly in the production of key goods, logistics services, and infrastructure; deeper integration of India in the Global Supply and Value Chains, especially of Indian MSMEs; and increased exports from India. It is also expected to promote upward mobility in value chains; mitigate risks of economic disruptions to India from supply chain shocks/adverse events; create a regional trade ecosystem that facilitates the flow of Indian products; enhance trade facilitation through digital exchange of trade documentation and faster port clearances; promote joint research and development; and promote workforce development.

India and other partner countries will continue to ensure effective implementation of the Agreement in order to achieve its overall objectives, which are to make IPEF supply chains more resilient, robust, and well-integrated, and to contribute to the economic development and progress of the entire region.

The IPEF Supply Chains (Pillar-II) Agreement is one of the quickest plurilateral economic cooperation agreements ever to be concluded. Under this Agreement, IPEF partner countries seek to: make supply chains more resilient, robust, and well-integrated through crisis response measures; cooperate in mitigating the impact of disruptions to better ensure business continuity; improve logistics and connectivity; promote investments in particular in critical sectors and the production of key goods; and enhance worker roles through upskilling, reskilling, and greater comparability. It involves the cooperation and collaboration of IPEF partners.

Image Source: Magic Wand Media

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