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India targets key sectors to reduce import dependence under IPEF
Industry News- Aug 12,24
The sectors under scrutiny include chemicals, automobiles, pharmaceuticals, advanced technology, electronics, and critical minerals, all deemed vital for national security and economic resilience.
India is actively identifying critical sectors where heavy reliance on imports poses risks to supply chain stability, as part of the Indo-Pacific Economic Framework (IPEF) agreement. The sectors under scrutiny include chemicals, automobiles, pharmaceuticals, advanced technology, electronics, and critical minerals, all deemed vital for national security and economic resilience.
This initiative aligns with the IPEF Supply Chain Resilience Agreement, which came into effect in February 2024. The agreement aims to reduce reliance on China and promote the shift of critical production to member countries. The IPEF, comprising India, Australia, the US, Japan, Fiji, South Korea, New Zealand, Singapore, and Thailand, represents 40% of global GDP and 28% of international trade in goods and services.
Industry consultations are underway to finalize additional sectors. The government is gathering data on critical imports, domestic production capacities, and supply chain issues, seeking industry input on diversification and investment strategies.
The IPEF framework is structured around four pillars: trade, supply chain resilience, clean economy, and fair economy. India participates in all except the trade pillar. The focus on critical sectors aims to address vulnerabilities arising from single-source dependencies and limited alternative suppliers.
"Enhancing the auto supply chain through the IPEF agreement will benefit India’s auto and auto-component sectors. The industry must leverage IPEF to integrate into the global production network," said Deep Kapuria, Chairman, Hi-Tech Gears Ltd.
Challenges include significant imports to meet domestic demand, inadequate domestic production capacity, and transport constraints. The supply chain council, established under the agreement, has set initial priorities, which will be further explored at its first in-person meeting in Washington in September, coinciding with the Supply Chain Summit.
(ET)
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