The Global South’s assertion in geopolitics  

Indo-Pacific Economic Framework (IPEF)

• It was announced in 2021 to set regional standards for cooperation, and includes the Association of Southeast Asian Nations (ASEAN) member states.
• IPEF is created to encourage regional economies to “decouple” from the Chinese market by leading them to alternative supply chains.
• The IPEF will not include market access commitments such as lowering tariff barriers, as the agreement is “more of an Administrative arrangement”.
• IPEF is viewed as reflecting the US’ ambitions to expand ties with key Indo-Pacific economies by building a supply chain that excludes China.
• It has four “pillars” of work:
  • Fair and resilient trade.
  • Supply chain resilience.
  • Infrastructure, clean energy, and decarbonization.
  • Tax and anti-corruption.
• India agreed to three out of four pillars, which are Supply Chains, Tax & Anti-Corruption and Clean Energy.

What India is missing:

• Linkage: Indian Policymakers do not appear to appreciate the inescapable linkages between geopolitics and
• Multilateral agreements: Unwilling to join two of the region’s key multilateral trading agreements(RCEP and IPEF)
• Trade pillar: India’s refusal to join the trade pillar of the Indo-Pacific Economic Framework (IPEF) while deciding to join the three other pillars of the IPEF.
• Favours bilateral agreements: It is not keen on multilateral, plurilateral and even soft agreements such as the IPEF.

 Recent steps by India:

• Free trade agreements (FTA): with the United Arab Emirates(UAE)
• Early Harvest Agreements: with Australia and the United Kingdom

What is India’s position on the IPEF?

• While some countries had expressed interest in joining negotiations, India did not declare a definitive position for some time because it will be watching what benefits member countries will derive and whether any conditionalities on aspects like environment may discriminate against developing countries.
• Some areas proposed in the IPEF do not appear to serve India’s interests.
  • For example, the IPEF talks about digital governance but the IPEF formulation contains issues that directly conflict with India’s stated position.
• India is in the process of firming up its own digital framework and laws, particularly regarding privacy and data, and it would wait for more information.
• In August 2022, the Indian government withdrew the Personal Data Protection Bill from Parliament, saying it would consider “comprehensive legal framework” to regulate the overall Internet ecosystem, cybersecurity, etc.
• The US has earlier expressed concerns about the possibility of the Indian side demanding data localisation or the storage and processing of Indian users’ data in servers located in India and not the US, even in the case of data of US-based companies.
• A US report expressed that India’s policy will serve as significant barriers to digital trade and act as market access barriers, especially for smaller firms.

 Why it was a regressive step:

• China’s geoeconomic hegemony: Absence of India from various regional trading platforms will invariably boost China’s geo-economic hegemony in Asia.
• Sino-Indian economic partnership: It could be weaponized by Beijing for political purposes.
• Multilateral trading agreements: It would be hard to integrate itself into the regional and global supply chains without being a part of important regional multilateral trading agreements.
• Optionless: We have no option but to address some of the deeper challenges plaguing the investment and business environment in India.
• Look East: without creating economic stakes with the states of the region, India’s ‘Act East’ policy will revert to its earlier avatar — ‘Look East’.
• Sino-Indian rivalry: The less India engages with the region economically, and the more China does so.
• Economically ‘isolated’ in the region: The more China would be able to weaponize trade against India during times of major bilateral standoffs.

What is India's Vision for the Indo-Pacific Region?

• India’s trade in this region is growing rapidly, with overseas investments being directed towards the East, e.g., the Comprehensive Economic Partnership Agreements with Japan, South Korea, and Singapore, and the Free Trade Agreements with ASEAN (Association of Southeast Asian Nations) and Thailand.
• India has been active in championing a Free and Open Indo-Pacific. The US, Australia, and the members of the ASEAN have all expressed a common view that India plays a greater role in the region.
• India, along with its Quad partners, is improving its game in the Indo-Pacific.
• India’s view is to work with other like-minded countries in the Indo-Pacific region to cooperatively manage a rules-based multipolar regional order and prevent any single power from dominating the region or its waterways.

How is IPEF Different from Other Trade Deals?

• The IPEF is not exactly a trade pact and the provision of multiple pillars does entail an option for participants to choose what they want to be a part of.
• It’s not a take-it-or-leave-it arrangement, like most multilateral trade deals are.
• Since the IPEF is not a regular trade pact, the members so far are not obligated by all the four pillars despite being signatories.
• So, while staying off the trade part of the arrangement, India has joined the other three pillars of the multilateral arrangement – supply chains, tax and anti-corruption and clean energy.

 Way Forward

• Trading with China: India must not shy away from trading with China as part of multilateral arrangements while at the same time joining arrangements which have no Chinese presence.
• Decoupling from China: have not turned up at India’s doorstep. Most of them went to countries such as Vietnam thereby highlighting the fact that we need to get our house in order.
• By joining some of these multilateral trading arrangements will force us to do precisely that.
• Trading Agreements: India does have an FTA with the ASEAN, but it is also important for India to become part of trading arrangements which have major non-regional states so as to become a major part of the region’s supply chains.
• Rethink about joining: Given that India has not closed the door on the trade pillar of the IPEF, we have an opportunity to rethink our position.
• In fact, India should also rethink its decision not to join the RECP and seek to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
• Minerals Security partnership: India should also proactively lobby to become a part of the Minerals Security Partnership, theS.-led 11-member grouping to secure supply chains of critical minerals.
• Asian century of economic growth: If indeed, India seeks to be a part of the Asian century and its economic growth story in particular, it must let go of its historical hesitations and phobias regarding multilateral trading arrangements.