India and the Indo-Pacific Economic Framework (IPEF) Explained

The Indo-Pacific Economic Framework (IPEF) is a United States-led economic cooperation initiative, launched in May 2022, that brings 14 Indo-Pacific economies together around four pillars: trade, supply chain resilience, clean economy, and fair economy. Unlike a traditional free trade agreement, the Indo-Pacific Economic Framework does not cut tariffs or grant market access, and instead sets out commitments and cooperative arrangements on supply chains, clean energy and anti-corruption.

India joined the Indo-Pacific Economic Framework at its launch but chose to participate in only three of its four pillars, staying out of the trade pillar over concerns about labour, environment, digital trade and public procurement commitments. This explainer describes how IPEF works, why India made this selective choice, what the agreements on supply chains, clean economy and fair economy contain, and why the framework matters for India and the region.

Key Takeaways

• The Indo-Pacific Economic Framework was launched by the United States in Tokyo on 23 May 2022 with 13 initial partners, and Fiji joined shortly afterwards to make 14.
• IPEF is organised around four pillars: Pillar I on trade, Pillar II on supply chains, Pillar III on clean economy and Pillar IV on fair economy.
• India joined the supply chain, clean economy and fair economy pillars but opted out of the trade pillar, which it has observed without joining.
• The IPEF Supply Chain Agreement created three bodies, a Supply Chain Council, a Crisis Response Network and a Labor Rights Advisory Board, to improve supply chain resilience.
• IPEF does not offer tariff cuts or preferential market access, so it is a cooperation framework and not a free trade agreement.
• For India, IPEF offers a way to participate in supply chain diversification and clean-energy cooperation while avoiding binding trade commitments that it considers premature.

What is the Indo-Pacific Economic Framework?

The Indo-Pacific Economic Framework is an economic initiative led by the United States that aims to deepen cooperation among Indo-Pacific economies on trade rules, supply chain resilience, decarbonisation and good governance. It was launched on 23 May 2022 in Tokyo and covers a group of economies that together account for a very large share of global output and population.

The framework was created after the United States withdrew from the Trans-Pacific Partnership in 2017 and did not rejoin its successor. Washington wanted an economic presence in the Indo-Pacific that did not require approval of a traditional trade treaty by the legislature. IPEF is therefore designed as a set of executive agreements, with each pillar negotiated separately so that countries can choose where to take part.

This “modular” design is the key feature. A partner can sign on to some pillars and not to others, which is the structure that made it possible for India to participate selectively.

Who are the partners in IPEF?

The 14 partners in IPEF are the United States, Australia, Brunei, Fiji, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam. They include members of ASEAN, members of the Quad and several Pacific island and Southeast Asian economies.

China is not a partner, and neither are Taiwan, Hong Kong or some other large Indo-Pacific economies. Chinese officials have criticised the framework as an attempt to build exclusive economic blocs, while the participating governments say that IPEF is open and focused on shared challenges.

What are the four pillars of IPEF?

The four pillars of IPEF are Pillar I on trade, Pillar II on supply chains, Pillar III on clean economy and Pillar IV on fair economy. Each pillar has its own negotiating track and produces a separate agreement.

Why did India stay out of the IPEF trade pillar?

India stayed out of the IPEF trade pillar because the pillar’s proposed commitments on labour standards, environmental rules, digital trade, and public procurement could limit India’s policy flexibility, and because the pillar offered no tariff reductions or market access in return. India announced this decision at the IPEF ministerial meeting in Los Angeles in September 2022, while joining the other three pillars.

Indian officials explained that several issues in the trade pillar were still unsettled and that India needed to protect its domestic policy space. They said that the trade pillar’s discussions on environment and labour could become non-tariff barriers, and that commitments on cross-border data flows could affect India’s regulation of digital data. The absence of any market access benefit also meant that India would take on obligations without a clear economic return.

India has continued to follow the trade pillar as an observer. This allows it to monitor the negotiations and to join later if it chooses. The decision also fits India’s broader trade approach, which prefers bilateral and carefully negotiated trade agreements to open-ended multilateral commitments.

What does the IPEF Supply Chain Agreement do?

The IPEF Supply Chain Agreement establishes a framework for partners to improve the resilience, competitiveness and transparency of supply chains through three new bodies and a set of cooperative commitments. It was signed in November 2023 and entered into force in February 2024 after enough partners completed their domestic procedures.

The three institutions

• IPEF Supply Chain Council: a body that identifies critical sectors and key goods and develops sector-specific action plans.
• IPEF Supply Chain Crisis Response Network: an emergency communication channel that lets partners coordinate quickly during supply disruptions.
• IPEF Labor Rights Advisory Board: a tripartite body that brings together governments, workers and employers to promote labour rights in supply chains.

The agreement is cooperative rather than punitive. It does not create tariff preferences or legally enforceable trade remedies. It focuses on information sharing, mapping of critical supply chains, logistics and workforce development. For India, which wants to be a trusted manufacturing and sourcing hub, the agreement supports its goal of attracting supply chains that are diversifying away from over-reliance on a single country.

What does the IPEF Clean Economy Agreement cover?

The IPEF Clean Economy Agreement covers cooperation on clean energy, decarbonisation, carbon markets, sustainable land and water use, and the development of clean technologies. It was signed in September 2024 after being substantially concluded in late 2023.

The agreement sets up cooperative work programmes in areas such as hydrogen, renewable energy, energy efficiency and carbon capture. It also plans a Catalytic Capital Fund to attract public and private investment into clean energy projects in partner economies, and a network for technical assistance. These measures are mostly voluntary and cooperative.

India has a strong interest in this pillar because it has large renewable energy targets, an expanding green hydrogen programme and a need for climate-related finance and technology. The pillar gives India a platform to seek investment and know-how while keeping its own climate policies.

What does the IPEF Fair Economy Agreement cover?

The IPEF Fair Economy Agreement covers anti-corruption and tax-related cooperation, requiring partners to adopt measures that prevent bribery, improve transparency and strengthen the enforcement of tax laws. It was signed in September 2024 alongside the Clean Economy Agreement.

Its commitments include criminalising bribery and related offences, protecting whistleblowers, promoting asset recovery and improving the exchange of information between tax authorities. It also seeks to make beneficial ownership information more accessible to reduce illicit financial flows.

These provisions largely align with existing international frameworks, such as the United Nations Convention against Corruption. For India, which has its own anti-corruption laws and has joined international tax transparency initiatives, the commitments are generally compatible with domestic policy.

Why does IPEF matter for India?

IPEF matters for India because it connects India to a US-led supply chain and clean-energy network without requiring binding trade concessions, and it fits India’s ambition to become a major manufacturing and green-energy hub. It also strengthens India’s economic ties with Indo-Pacific partners at a time when global supply chains are being reorganised.

• Supply chain diversification: companies looking for alternatives to concentrated production sites may consider India, and IPEF coordination can help.
• Technology and finance for clean energy: the Clean Economy pillar supports investment in renewable energy and green hydrogen.
• Strategic alignment: IPEF links India with the United States, Japan, Australia and Southeast Asian partners in an economic setting that complements the Quad.
• Policy autonomy: participation in only three pillars lets India engage while avoiding commitments on contentious trade issues.

What are the criticisms and limitations of IPEF?

The main criticisms of IPEF are that it offers no market access, that it lacks binding enforcement, and that its future depends on the policy priorities of the United States. Without tariff reductions, some partners see little incentive to make costly domestic reforms.

Analysts also point out that the framework has been shaped by changing US trade policy. Political shifts in Washington since 2025 have raised questions about how actively the United States will pursue the initiative, although the signed agreements remain in place among the partners. Another challenge is that the pillars cover a diverse group of economies with different levels of development, which makes it difficult to set common standards.

Supporters respond that IPEF’s flexibility is a strength. It allows quick agreement on practical issues such as crisis response and information sharing, and it can evolve over time.

How does IPEF compare with other Indo-Pacific frameworks?

IPEF differs from agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP) because it does not provide tariff concessions and is built around cooperation on non-tariff themes. India is not a member of CPTPP or RCEP, having decided in 2019 not to join RCEP.

How has IPEF progressed since its launch?

IPEF has progressed from a political announcement in 2022 to three signed agreements by 2024, with the trade pillar remaining the slowest to conclude. The negotiations were conducted through a series of ministerial meetings, each of which narrowed differences among the partners.

After signing, each agreement must be ratified or approved under the domestic procedures of the partners. The Supply Chain Agreement came into force first, and the institutions under it began their work. Implementation of the Clean Economy and Fair Economy Agreements depends on similar domestic steps and on the development of the work programmes that give them practical content.

The trade pillar has moved more slowly because it deals with sensitive subjects such as digital trade, labour and environmental standards. Several partners have been unable to agree on common language, and the pillar has not produced a final text comparable to the other three. India’s observer role means it can join the pillar later if the final text addresses its concerns.

Bottom Line

The Indo-Pacific Economic Framework gives India a way to take part in Indo-Pacific supply chain and clean-energy cooperation on its own terms. By joining three pillars and staying out of the trade pillar, India shows a preference for selective, interest-based engagement. IPEF’s real impact will depend on how effectively the partners implement their commitments and on the continued political support of the United States.

Frequently Asked Questions

What is the Indo-Pacific Economic Framework?

The Indo-Pacific Economic Framework is a US-led economic initiative launched in May 2022 that includes 14 Indo-Pacific economies. It covers trade, supply chains, clean economy and fair economy. It is a cooperation framework and does not provide tariff cuts or market access.

Which countries are in IPEF?

The 14 IPEF partners are the United States, Australia, Brunei, Fiji, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam. China is not a partner. Fiji joined shortly after the initial 13 partners announced the launch.

Why did India not join the IPEF trade pillar?

India did not join the trade pillar because it had concerns about commitments on labour, environment, digital trade and public procurement. It also noted that the pillar provided no market access or tariff benefits. India joined the other three pillars and continues to observe the trade negotiations.

Which IPEF pillars has India joined?

India has joined Pillar II on supply chains, Pillar III on clean economy and Pillar IV on fair economy. It has not joined Pillar I on trade. This selective participation is possible because IPEF is designed as a modular framework.

Is IPEF a free trade agreement?

No, IPEF is not a free trade agreement. It does not reduce tariffs or give preferential market access. Instead, it sets out cooperative commitments and institutions on supply chain resilience, clean energy and anti-corruption.

What did the IPEF Supply Chain Agreement establish?

The IPEF Supply Chain Agreement established the Supply Chain Council, the Crisis Response Network and the Labor Rights Advisory Board. These bodies help partners map critical sectors, respond quickly to disruptions and promote labour rights. The agreement was signed in November 2023 and entered into force in February 2024.

{“@context”:”https://schema.org”,”@graph”:[{“@type”:”FAQPage”,”mainEntity”:[{“@type”:”Question”,”name”:”What is the Indo-Pacific Economic Framework?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:”The Indo-Pacific Economic Framework is a US-led economic initiative launched in May 2022 that includes 14 Indo-Pacific economies. It covers trade, supply chains, clean economy and fair economy. It is a cooperation framework and does not provide tariff cuts or market access.”}},{“@type”:”Question”,”name”:”Which countries are in IPEF?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:”The 14 IPEF partners are the United States, Australia, Brunei, Fiji, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam. China is not a partner. Fiji joined shortly after the initial 13 partners announced the launch.”}},{“@type”:”Question”,”name”:”Why did India not join the IPEF trade pillar?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:”India did not join the trade pillar because it had concerns about commitments on labour, environment, digital trade and public procurement. It also noted that the pillar provided no market access or tariff benefits. India joined the other three pillars and continues to observe the trade negotiations.”}},{“@type”:”Question”,”name”:”Which IPEF pillars has India joined?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:”India has joined Pillar II on supply chains, Pillar III on clean economy and Pillar IV on fair economy. It has not joined Pillar I on trade. This selective participation is possible because IPEF is designed as a modular framework.”}},{“@type”:”Question”,”name”:”Is IPEF a free trade agreement?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:”No, IPEF is not a free trade agreement. It does not reduce tariffs or give preferential market access. Instead, it sets out cooperative commitments and institutions on supply chain resilience, clean energy and anti-corruption.”}},{“@type”:”Question”,”name”:”What did the IPEF Supply Chain Agreement establish?”,”acceptedAnswer”:{“@type”:”Answer”,”text”:”The IPEF Supply Chain Agreement established the Supply Chain Council, the Crisis Response Network and the Labor Rights Advisory Board. These bodies help partners map critical sectors, respond quickly to disruptions and promote labour rights. The agreement was signed in November 2023 and entered into force in February 2024.”}}]}]}