Negotiations for the Supply Chains (Pillar-II) Agreement Substantially Concluded during 2nd IPEF Ministerial Meeting

· Agreement expected to bring benefits to India like shift of production centres in key goods/critical sectors to India, giving a boost to Aatmanirbhar Bharat and PLI schemes, mobilization of investments

· Agreement to also lead to deeper integration of India in the Global Supply and Value Chains especially Indian MSMEs

Negotiations for the Supply Chains (Pillar-II) Agreement were substantially concluded during the second in-person Indo-Pacific Economic Framework (IPEF) Ministerial Meeting held in Detroit on 27 May 2023, hosted by the US.

Once implemented, the Supply Chain Agreement is expected to bring in a number of benefits to India and the other IPEF partner countries. Some of the key benefits expected are: potential shift of production centres in key goods/critical sectors to India; bolstering of domestic manufacturing capacities; giving a boost to Aatmanirbhar Bharat and Production Linked Initiatives schemes; mobilization of investments especially in production of key goods, logistics services and infrastructure; deeper integration of India in the Global Supply and Value Chains particularly of Indian MSMEs; enhanced exports from India; upward mobility in the value chains; mitigation of risks of economic disruptions to India from supply chain shocks/adverse events; creation of a seamless regional trade ecosystem facilitating flow of Indian products; enhanced trade facilitation including through digital exchange of trade documentation, quicker port clearances; joint Research and Development; and workforce development.

India and other partner countries will continue to engage to ensure effective implementation of the Agreement so as to achieve the overall objectives of the Agreement which is to make IPEF supply chains more resilient, robust, and well-integrated, and contribute towards economic development and progress of the region as a whole.

The IPEF Supply Chains (Pillar-II) Agreement is one of the fastest ever concluded plurilateral economic cooperation Agreements. Under this Agreement, IPEF partner countries are seeking to: make supply chains more resilient, robust, and well-integrated through crisis response measures; cooperation for mitigation of the effect of disruptions to better ensure business continuity, and improve logistics and connectivity; promoting investments particularly in critical sectors and production of key goods; and worker role enhancement through requisite upskilling and reskilling, and increasing comparability of skills credentials frameworks across IPEF. It entails cooperative and collaborative efforts among the IPEF partners.