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Source: The post is based on an article “On India opting out of IPEF: India must actively pursue trade agreements, not only bilateral ones but also plurilateral pacts” published in The Indian Express on 14th September 2022.
Syllabus: GS 2 – Bilateral, regional and global groupings and agreements involving India
News: India has recently decided to stay away from the trade pillar of Indo-Pacific Economic Framework (IPEF).
India also decided to opt out of the Regional Comprehensive Economic Partnership (RCEP) in 2019.
The decision of India from staying away from such multi-trade agreements may be a concern to its trade development.
What is Indo-Pacific Economic Framework (IPEF)
Read More about IPEF
IPEF offers member countries the option to not participate in all of the given pillars.
Therefore, India has joined the other three pillars (supply chains, tax and anti-corruption and clean energy) and stayed away from the trade pillar.
Why has India decided to stay away from the trade pillar of IPEF?
The government has said that there are several areas of concern such as labor to environmental standards, digital trade, and public procurement.
Further, the terms of the agreements and the benefits that the member countries will get, are also not clear.
These are important concerns however these important concerns should not prevent India to stay away from the trade pillar of the IPEF.
These term and can also be sought in other bilateral agreements.
What are the challenges involved with India staying away from trade component?
This decision of India to opt out of the trade pillar has come at a time when the global economic environment is uncertain and challenging.
The International Monetary Fund has lowered its forecast for global growth and world trade in goods and services this year. The issue is low demand and tightening policy of central banks to tackle increasing inflation. This slowdown in trade has already become visible in India’s trade statistics.
The export growth of India slowed down after the country witnessed unexpected exports growth in the first quarter of 2021-22.
What can be the course of action?
India must take part in the trade agreement of both bilateral and multilateral. It will help in improving trade and exports of the nation.
