The other benefits include supply chain diversification, mobilisation of investments, deeper integration of India in global value chains, support to MSMEs and creation of a seamless regional trade ecosystem, which would facilitate the flow of Indian products, the official said.
The agreement would help India to reduce its dependence on China. The pact also assumes significance as the COVID outbreak had severely disrupted the global supply chain as most of the countries were dependent on China for various products, like pharma raw materials.
IPEF was launched jointly by the US and other partner countries of the Indo-Pacific region on May 23 last year in Tokyo.
The framework is structured around four pillars relating to trade, supply chains, clean economy and fair economy (issues like tax and anti-corruption). India has joined all the pillars except the trade one.
Australia, Brunei Darussalam, Fiji, India, Indonesia, Japan, Republic of Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, the US and Vietnam are members of the bloc.As the negotiations for the agreement were concluded, the commerce and industry ministry would now work for its ratification process here. As part of the process, the ministry would approach the Union Cabinet for its approval and inform the IPEF about that.It would come into force after the implementation of the agreement by any of the five member countries.
“These processes are expected to be completed by November when trade ministers from the 14 countries would meet in San Francisco,” the official said.
The ministry would also hold an outreach programme pan India for domestic industry, explaining the benefits of the agreement and how to utilise that.
Under the agreement, IPEF partners seek to provide a framework to build their collective understanding of significant supply chain risks; improve crisis coordination and response to supply chain disruptions; facilitate cooperation, mobilise investments, promote regulatory transparency in sectors and goods critical to the national security and public health and safety.
The official also said that to identify the critical sectors, officials of the member countries will hold discussions.
To implement and monitor the agreement, the bloc would set up The IPEF Supply Chain Council.
The council will meet every year and all the members would have to report on the progress of implementation of the agreement.
Besides the council, the block would set up The IPEF Supply Chain Crisis Response Network and The IPEF Labor Rights Advisory Board.
The network would deal with emergency issues and help partners to seek support during a supply chain disruption and to facilitate information sharing and collaboration among IPEF partners during a crisis, enabling a faster and more effective response that minimises negative effects on their economies.
On the other hand, the advisory board would help members in promoting labour rights in their supply chains.