New Delhi - The proposed supply chain agreement among the 14-member IPEF grouping would provide various benefits to India, including a potential shift of production centres in critical sectors and mitigating risks of economic disruptions from supply chain shocks, an official said on Wednesday. Members of the bloc concluded the negotiations on the proposed agreement, one of the four pillars of the Indo-Pacific Economic Framework for Prosperity (IPEF), on May 27 in Detroit.
The other benefits include supply chain diversification, mobilisation of investments, deeper integration of India in global value chains, support to MSMEs and creation of a seamless regional trade ecosystem, which would facilitate the flow of Indian products, the official said.

The agreement would help India to reduce its dependence on China. The pact also assumes significance as the COVID outbreak had severely disrupted the global supply chain as most of the countries were dependent on China for various products, like pharma raw materials.
IPEF was launched jointly by the US and other partner countries of the Indo-Pacific region on May 23 last year in Tokyo.

The framework is structured around four pillars relating to trade, supply chains, clean economy and fair economy (issues like tax and anti-corruption). India has joined all the pillars except the trade one.
Australia, Brunei Darussalam, Fiji, India, Indonesia, Japan, Republic of Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, the US and Vietnam are members of the bloc.

As the negotiations for the agreement were concluded, the commerce and industry ministry would now work for its ratification process here. As part of the process, the ministry would approach the Union Cabinet for its approval and inform the IPEF about that.

It would come into force after the implementation of the agreement by any of the five member countries.

"These processes are expected to be completed by November when trade ministers from the 14 countries would meet in San Francisco," the official said.