Indo-Pacific Economic Framework

The Indo-Pacific Economic Framework is a unique type of trade pact that the United States is pushing among the region’s governments. India and 12 nations led by the United States inaugurated the Indo-Pacific Economic Framework (IPEF) on 23rd May 2022 to provide an economic alternate solution to China’s Geostrategic footprint in the Indo-Pacific area. The IPEF seeks to strengthen economic relationships between all of the participating nations to enhance resilience, sustainable development, inclusiveness, economic expansion, fair treatment, and competitive spirit in the Indo-Pacific region. Biden initiated the IPEF with twelve initial partners who collectively account for 40% of global GDP.

The topic has a very high chance of being asked as a UPSC Prelims International Relations Question or as a Current Affairs Question, as it has been in the news recently.

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Indo-Pacific Economic Framework UPSC Notes PDF –Download PDF Here

About Indo-Pacific Economic Framework

The nations shared a determination to create a free, accessible, transparent, inclusive, interconnected, robust, safe, and affluent Indo-Pacific region with the potential for sustained and inclusive growth in the economy, according to a joint statement. According to the joint statement, they are commencing cooperative discussions in preparation for future deliberations, and the IPEF has four pillars.

IPEF substantially wraps up supply chain deal

Recently negotiations for the supply chain pillar of the Indo-Pacific Economic Framework (IPEF) have been concluded by the 14 members of the Indo-Pacific Economic Framework (IPEF)  including India.

Supply Chain Agreement:

  • The supply chain agreement is to address supply chain disruptions by improving crisis coordination, response and cooperation among the members to support the timely delivery of goods to the affected countries.
  • The final text of the supply chain agreement will be prepared after domestic consultation and legal review by members of Indo Pacific economic framework.
  • Trade Minister Piyush Goyal who participated virtually in the IPEF deliberations said that the agreement will propel deeper integration of economies and supply/value chains within IPEF. 
  • Trade Minister also called for expeditious implementation of measures such as action-oriented collaboration and cooperation that are recognised to address the supply chain disruptions.
  • Under the clean economy pillar, India is focussing on action-oriented elements, such as the mobilisation of low-cost long-tenure climate finance and enhanced access to clean energy technologies.

Four Pillars of IPEF


To create new and innovative strategies in trade and technology policies that promote a broad set of goals that stimulates economic growth and investment, fosters sustainable and equitable economic development, and incentives consumers and workers. Collaboration in the digital economy is one of the initiatives, but it is not the only one.

Supply Chains

To make the supply chains increasingly robust and very well-integrated by increasing openness, diversity, security, and sustainability. To better prepare for and reduce the effects of interruptions in order to assure continuity of business.; to increase logistical efficiency and assistance; and to guarantee access to important raw and processed commodities, semiconductors, key minerals, as well as clean energy technologies.

Clean Energy, Decarbonization, and Infrastructure

In keeping with the objectives and initiatives of the Paris Agreement to enhance people’s and workers’ livelihoods, it plans to speed up the development as well as deployment of clean energy technologies to de-carbonise countries and develop climate resilience. Strengthening collaboration on technologies, mobilising funding, particularly concessional finance, and identifying ways to promote competitiveness and interconnectivity through supporting the development of long-term infrastructure and giving technical assistance are all part of this.
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Tax and Anti-Corruption

To encourage fair competition within the Indo-Pacific region, countries must establish and enforce efficient and robust tax, anti-money laundering, and anti-bribery frameworks in accordance with existing global obligations, principles, and agreements. This entails sharing knowledge and looking for methods to help with the capacity building that is required to promote responsive and accountable mechanisms.


Manufacturing, business activity, global trade, and investment are all centred around the Indo-Pacific area. For millennia, India has been a major hub in the Indo-Pacific region’s commercial operations. As a result, finding shared and innovative answers to the region’s economic difficulties is critical. The Indo-Pacific region is home to half of the world’s population as well as more than 60% of world GDP. This is a significant step toward rebuilding US economic dominance in the area and providing Indo-Pacific countries with a viable alternative to China’s approaches to these key challenges.

Benefits and issues with the IPEF Platform:

  • Non-Tariff Barriers:
    • IPEF can act as a good platform to settle issues related to non-tariff barriers like sanitary and phytosanitary (SPS) measures and Technical Barriers to Trade (TBT).
      • Non-Tariff Barriers: It is a way to restrict trade using trade barriers in a form other than tariffs. Nontariff barriers include quotas, embargoes, certificates, sanctions, levies and other restrictions. 
  • MSMEs in developing countries are not able to tap the opportunities provided by the platforms like IPEF because of the non-tariff barriers. And hence ironing out these differences can give a boost to countries like India.
  • IPEF may consider developing a standardized framework for acceptable quality of goods, which can be gradually enhanced over time. 
    • Rather than enforcing excessively high standards, the focus should be on capacity building, technical assistance, and knowledge-sharing to help developing countries in the south remain competitive.
  • Data shows that in 2021, the total FDI in manufacturing by the US stood at about $2 trillion and just 20% of it went to IPEF countries, which was largely concentrated with Japan at 17%. This implies that from now onwards the US will have to engage more with the IPEF countries.
  • The presence of Public Development Banks (PDBs) within the IPEF member countries could have a catalytic impact, provided that the economic framework of these Indo-Pacific nations is appropriately designed. 
  • By effectively utilizing PDBs with adequate government backing for strategic projects aligned with the objectives of IPEF, the bond between developed and developing countries could be strengthened significantly. The semiconductor initiative should be viewed within this context.

Frequently Asked Questions about the Indo-Pacific Economic Framework:


What is India Indo-Pacific strategy?

The strategy seeks to work with India “through regional groupings to promote stability in South Asia; collaborate in new domains, such as health, space, and cyberspace; deepen our economic and technology cooperation, and contribute to a free and open Indo-Pacific.

What is considered the Indo-Pacific region?

Following is a listing of countries that are defined as the “Indo-Pacific” region: Australia, Bangladesh, Bhutan, Brunei, Cambodia, Fiji, India, Indonesia, Japan, Laos, Malaysia, Maldives, Myanmar, Nepal, New Zealand, Papua New Guinea, Philippines Singapore, Sri Lanka, Taiwan, Thailand, Timor Leste, United States, Vietnam.

What is the importance of the Indo-Pacific region?

Economically, the Indo-Pacific is a centre of global trade and commerce, and therefore a potential area of economic prosperity for the countries in the region. It accounts for 65 percent of the world’s population, 63 percent of the world’s GDP, and 46 percent of the world’s merchandise trade.

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