Indian Ocean Power Competition

Indo-Pacific Economic Framework presents opportunities


From UPSC perspective, the following things are important :

Prelims level: IPEF countries

Mains level: Paper 2- IPEF opportunities and challenges


The official launch of the Biden Administration’s Indo-Pacific Economic Framework (IPEF), the US’s de facto foreign economic policy for Asia, has been lauded and welcomed.

About IPEF

  • Seen as a means to counter China in the region, it is a U.S.-led framework for participating countries to solidify their relationships and engage in crucial economic and trade matters in the region.
  • The member nations include Australia, Brunei, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam.
  • It includes seven out of 10 members of the Association of South East Asian Nations (ASEAN), all four Quad countries, and New Zealand.
  • Together, these countries account for 40 per cent of the global GDP. 
  • Not a free trade agreement: The Indo-Pacific Economic Framework is not a free trade agreement.
  • No market access or tariff reductions have been outlined, although experts say it can pave the way for future trade deals.
  • The IPEF is also seen as a means by which the US is trying to regain credibility in the region after former President Donald Trump pulled out of the Trans Pacific Partnership TPP.
  • IPEF countries value its purpose and potential, particularly given some doubts over whether the US administration could sustain its focus in Asia as war broke out in Europe.
  • The IPEF empowers the Biden administration to shape rules across several critical pillars that will condition America’s economic engagement in the Indo-Pacific amid competing economic paradigms, notably the Chinese through the BRI and Europe through digital policies and standards.
  • Countering China: Besides Ukraine, the IPEF’s importance also owes to China’s patent economic footprint across Asia that could be checked by an alternative economic paradigm that emphasises openness, flexibility, and integration.

 Significance of IPEF

  • Boost supply chain resilience: Globally, the IPEF signifies the first multilateral attempt to boost supply chain resilience to ease global inflationary pressures and mitigate effects of future disruptions, particularly key raw materials, critical minerals, and semiconductors.
  • Four key pillars: It’s a framework or a starting point to regulate trade and commerce across four key pillars: Digital economy, supply chains, clean energy, and governance. 
  • Negotiating high standard rules: The IPEF also represents an effort to negotiate “high-standard” rules between like-minded countries to govern the digital economy, particularly data flows, climate mitigation, global tax, anti-money laundering and anti-bribery provisions.


  • Impact on domestic companies: IPEF commitments and standards that other signatories like India have to accede to, will likely facilitate US MNCs’ access to Asian economies at the expense of domestic preferences.
  • Impact on policy preference of countries: The IPEF’s pillars — climate, digital, supply chains, and governance reforms — could clash with and supersede these countries’ policy preferences on such issues.
  • For instance, the US’ preference to allow free and open data flows under the digital economy pillar will constrict India’s ability to regulate data for domestic purposes.

Way forward for India

  • The IPEF remains attractive for India given its flexibility and open nature, allowing Delhi to demonstrate its political commitment to the United States to jointly shape the rules governing the Indo-Pacific’s economic future even as competitors lurk.
  • Tough policy choices, like the one on data and taxation, must be made by Indian officials while negotiating the terms of the IPEF accession.


What’s clear is that the IPEF represents both a mirage and aspiration. Collectively, it represents a leap into an unknown that has to be negotiated amongst partners that share interests and some values.

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