India and IPEF: Its Time for India to Take Responsibility

A proposal made by the U.S. President during the East Asia Summit in October 2021 has fructified recently during the second in-person Quadrilateral alliance (Quad) summit in Tokyo amidst the European war.

The U.S. and ‘Oceans 12’ – a baker’s dozen of 13 nations have launched the Indo-Pacific Economic Framework (IPEF) for Prosperity on 24th May 2022 which now has plus one – Fiji as the latest nation from the south Pacific to join the framework to make it ‘Oceans 14’. More sovereign, democratic and emerging economies would follow to achieve sustainable and inclusive economic growth promised by the new framework and India is rightfully placed to become a container vessel for the framework.

India’s long coastline with deep-water ports, ancient trading experience by the Cholas and Pandya dynasties possessing the oldest dockyard at Lohtal; Gujarat and having strategically located natural Islands make the nation-state a unique position in the Indian Ocean Region (IOR) which accounts for one-third of bulk cargo and half of container traffic pass through it.

The Modi government has been giving priority to ocean diplomacy, the Look west – Act East policy and importance to IOR and the Indo-Pacific vision. The current government has also rolled out various measures to

make the ease of doing business much simpler and quicker, schemes such as SagarMala, the O-SMART scheme to unlock the potential of waterways and coastline for better connectivity, infrastructure, logistics and to encourage research in deep ocean study has been advanced.

India as a bridge between the developing nations and the developed nations provides an opportunity for countries which are looking at taking advantage of this arrangement while balancing the economic security risks posed by China’s rise.

As the fastest growing economy, India provides an alternative manufacturing destination for multi-national companies looking for a way out of China. With over 2.37 million sq. km. of Exclusive Economic Zone (EEZ), a successful democratic model, liberalized administrative policies, rapid economic growth and experience in leading a regional forum: The Bay of Bengal Initiative for Multi-Sectoral Technical and economic cooperation (BIMSTEC) – India has the capacity and the potential to drive the region towards prosperity and to bridge the gaps between public-private investments and supply chains.

The IPEF is not a free trade agreement (FTA) but it is a 21st-century economic arrangement that will seek to tackle the 21st-century economic challenges shared by like-minded nations remarked by Jake Sullivan, U.S. National Security Adviser. This is the first plurilateral framework that India has agreed to join after exiting the Regional Comprehensive Economic Partnership (RCEP) in 2019.

India has concerns about some of the pillars, particularly trade, and digital governance which includes cross-border data flows and data localization and labour standards. There is also a small apprehension about the simultaneous existence of IPEF and RCEP which would draw a raised eyebrow by the Communist Party of China. Another challenge for India is in the area of green and clean energy. As India currently relies heavily on coal-based power plants for electricity generation, the transition from traditional to eco-friendly energy use and its adaptability would continue to pose challenges.

India and the U.S. having several contentions and diverging views on various pillars covered under this framework have both joined this comprehensive plurilateral framework and this has not only reinvigorated multilateralism but has provided a much-required boost to polylaterals. As this framework focuses more on facilitation than liberalisation, Polylaterals tend to play an important part in reviving multilateralism and sustainable economic democracy.

IPEF IS AN OFFER WHICH INDIA SHOULDN’T REFUSE

IPEF is a large canvas and India along with other Asia-Pacific countries should look towards taking advantage of this framework which focuses on supply chain resilience, sustainability, inclusiveness, shared economic growth and competitiveness.

The twelve members apart from the US in the framework account for almost 33.3% of India’s export which could further go up and mutually benefit with the help of IPEF. India’s mission of becoming a global manufacturing hub may also actualize sooner.

Peace in Indian Ocean region key to global prosperity, rules-based, open Indo-pacific essential for global prosperity – Rajnath Singh (Defence Minister of India) As India recently hosted the Association of South East Asian Nations (ASEAN) Foreign Ministers’ meet in mid-June where seven out of ten members are members of the IPEF, the focus on the side-line meetings was to build an “inclusive and flexible” IPEF as emphasised by PM Narendra Modi at the launch event to collectively make the Indo-Pacific region an engine of global economic growth and prosperity.

The ASEAN-India Foreign Ministers’ Meeting in June 2022 also proposed an ASEAN-India Maritime Exercise and informal meeting between India and ASEAN Defence Ministers in November 2022. Both sides are also looking at collaboration around the seven pillars of the Indo-Pacific Oceans Initiative (IPOI).

The article first appeared on IADN Strategic Focus magazine, August-September 2022 Issue.

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