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M Modi with other Quad Leaders in Tokyo (Photo Credit: Twitter/Amit Malviya)
M Modi with other Quad Leaders in Tokyo (Photo Credit: Twitter/Amit Malviya)

US-backed Indo-Pacific Economic Framework must help India reduce economic dependence on China

ANI | Updated: May 29, 2022 13:31 IST

Beijing [China], May 29 (ANI): Though India has joined the Indo-Pacific Economic Framework (IPEF) alongside 11 Asian nations and the US to counter China's economic dominance in the region, this new framework needs to create the confidence that this multilateral economic cooperation could also benefit India by helping the country reduce its economic dependence on China.
This framework must set in motion supply chain diversification at the earliest. Right now, as it stands, the initiative is thin on details. The IPEF, a US-initiated framework, needs more clarity and a concrete plan for economic engagement among its members, reported a US-based media outlet, The Diplomat.
One of the multilateral partnership that did not work for India is Regional Comprehensive Economic Partnership (RCEP), touted as the world's largest trading bloc. India joined the RCEP negotiations in 2012. In 2019, 15 nations, including China, Japan, South Korea, Australia, and New Zealand among others, signed the free trade agreement.
However, India walked out of the negotiations, citing national interests. The shadow of this walkout is still hanging over this new IPEF framework. Therefore, IPEF would need to address India's seamless accommodation in this grouping. This is especially crucial as except for India and the United States, all the other members of IPEF are a part of RCEP as well.
IPEF, a group of 13 countries, is a multilateral economic framework. In recent times, India is seen as focusing on bilateral free trade agreements instead of multilateral ones.
This becomes highly visible from New Delhi's recent agreements with the UAE and Australia. Apart from these two countries, similar agreements are also in the works with the UK and the EU as India gives a push to Prime Minister Narendra Modi's "Make in India for the World" initiative.
India's trade relations with China are another key factor. India's bilateral trade with China has increased by 15.3 per cent in the first quarter of this year alone, reaching USD 31 billion, according to the Chinese customs.
Similarly, Chinese investments in Indian start-ups also soared in 2021 as compared to 2020. Investment inflow from Chinese venture capital, private equity, accelerators, and incubators amounted to USD 14.13 billion in 2021. In 2020, the amount of investment was just USD 3.95 billion.

And hence, it is important that this framework needs to create the confidence that multilateral economic cooperation could also benefit India by helping the country reduce its economic dependence on China.
US State Secretary Antony Blinken said, "IPEF as we call it, renews American economic leadership but adapts it to the 21st century by addressing cutting edge issues like the digital economy, supply chains, clean energy, infrastructure, and curb corruption. A dozen countries including India, have already joined together, IPEF members make up more than a third of the global economy."
"The actions we take at home and with countries worldwide will determine whether our shared vision of the future will be realised," he added.
Biden unveiled the discussion on IPEF on May 23 with a dozen initial partners, including India, which represent 40 per cent of the world GDP.
"We'll do that by taking out some of the most acute challenges that drag down growth and by maximising the potential of our strongest growth engines," said Biden at the Indo-Pacific Economic Framework event in Japan.
This Biden-led initiative saw the participation of Prime Minister of Japan Kishida Fumio, as well as the virtual presence of leaders of other partner countries viz. Australia, Brunei, Indonesia, Republic of Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, and Vietnam.
The Biden administration has yet to provide many details on the criteria for the new economic framework.
Quad Summit held in Tokyo has provided an opportunity for the Leaders to exchange views about developments in the Indo-Pacific region and contemporary global issues of mutual interest.
Prime Minister Anthony Albanese of Australia, Prime Minister Narendra Modi of India, Prime Minister Fumio Kishida of Japan, and President Joe Biden of the United States discussed the issues related to the Indo-pacific region besides other global and regional issues. (ANI)