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  • GST Compensation dues

    The West Bengal CM has said that slashing State levies on petrol and diesel will be possible only if the Centre clears its outstanding dues of over ₹97,000 crore, which includes compensation for implementing the Goods and Services Tax (GST).

    What is GST?

    • GST launched in India on 1 July 2017 is a comprehensive indirect tax for the entire country.
    • It is charged at the time of supply and depends on the destination of consumption.
    • For instance, if a good is manufactured in state A but consumed in state B, then the revenue generated through GST collection is credited to the state of consumption (state B) and not to the state of production (state A).
    • GST, being a consumption-based tax, resulted in loss of revenue for manufacturing-heavy states.

    Compensation under GST regime

    • Due to the consumption-based nature of GST, manufacturing states like Gujarat, Haryana, Karnataka, Maharashtra and Tamil Nadu feared a revenue loss.
    • Thus, GST Compensation Cess or GST Cess was introduced by the government to compensate for the possible revenue losses suffered by such manufacturing states.
    • However, under existing rules, this compensation cess will be levied only for the first 5 years of the GST regime – from July 1st, 2017 to July 1st, 2022.
    • Compensation cess is levied on five products considered to be ‘sin’ or luxury as mentioned in the GST (Compensation to States) Act, 2017 and includes items such as- Pan Masala, Tobacco, and Automobiles etc.

    Distributing GST compensation

    • The compensation cess payable to states is calculated based on the methodology specified in the GST (Compensation to States) Act, 2017.
    • The compensation fund so collected is released to the states every 2 months.
    • Any unused money from the compensation fund at the end of the transition period shall be distributed between the states and the centre as per any applicable formula.

    Significance of GST compensation

    • States no longer possess taxation rights after most taxes, barring those on petroleum, alcohol, and stamp duty were subsumed under GST.
    • GST accounts for almost 42% of states’ own tax revenues, and tax revenues account for around 60% of states’ total revenues.
    • Finances of over a dozen states are under severe strain, resulting in delays in salary payments and sharp cuts in capital expenditure outlay amid the pandemic-induced lockdowns and the need to spend on healthcare.

    What is the status of the outstanding GST compensation due to the States?

    • The Finance Ministry said that outstanding GST compensation dues to States for 2021-22 stood at ₹78,704 crore.
    • This means that dues have been remitted to States for the eight-month period of April 2021 till November 2021.
    • Normally, compensation for 10 months from April-January of any financial year is released during that year and the compensation for February-March is released only in the next financial year.
    • The pending amount will also be released as and when the amount from cess accrues in the compensation fund.

    Also read:

    [Burning Issue] GST Compensation

     

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  • Civil Registration System Report, 2020

    The Civil Registration System (CRS) report 2020 was released at least a month before its schedule.

    What is Civil Registration System (CRS)?

    • The CRS collates data on all births and deaths registered with local authorities across India.
    • The CRS report is released by the Registrar-General of India.
    • It releases its report around 18 months after a year ends.

    Significance of the 2020 Report

    • The 2020 report was released at least a month before schedule.
    • Such data can be of significance during a pandemic as possible covid-19 deaths may not have been categorized as such in official records.
    • The CRS can help us reach an estimate by using the “excess deaths” approach.
    • It is the difference between the total number of deaths registered in a pandemic year and the number of deaths that normally take place in a year.

    Why was the data released ahead of schedule?

    • India and the WHO are locked in a tussle over the latter’s excess death estimates that would give a sense of pandemic-linked fatalities globally in 2020-21.
    • India has reportedly stalled WHO’s efforts to release the data, claiming flawed methodology.
    • WHO is set to release its estimates today, a possible reason that India released CRS data early.

    Why is India contesting the WHO approach?

    • One key objection by India is that WHO has classified it as a Tier 2 country and hence used a different modelling process to estimate excess deaths from that used for Tier 1 countries.
    • WHO says all countries that made available their full all-cause mortality data for the pandemic period were classified as Tier 1.
    • India is in Tier 2 because it didn’t share official data with WHO.
    • Hence, alternative data and modelling methods had to be adopted, adjusting for factors such as income levels, covid-19 reporting rates, and test positivity rates.

    What does the 2020 data show?

    (a) Covid deaths

    • The CRS report for 2020 has recorded deaths of 8.12 million Indians, 6.2% more than 2019.
    • Normally, an unusual increase in deaths would be linked to the pandemic. However, in India, not all deaths are registered.
    • Thus, a rise could simply be because of more families getting deaths registered.
    • The CRS for 2021, which saw more Covid deaths, may not be out until next year.

    (b) Improvements in sex ratio

    • Highest Sex Ratio at Birth (SRB) based on registered events has been reported by Ladakh (1,104) followed by Arunachal Pradesh (1,011), A&N Islands (984), Tripura (974), and Kerala (969).
    • The lowest sex ratio was reported by Manipur (880), followed by Dadra and Nagar Haveli and Daman and Diu (898), Gujarat (909), Haryana (916) and Madhya Pradesh (921).

     

     

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  • India-Germany relations

    Context

    Prime Minister Narendra Modi’s visit to Berlin for the sixth Indo-German Inter-Governmental Consultations (IGC) is significant for its timing and substantial results.

    Strategic and economic importance of India-German ties

    • The timing of the IGC, which Germany chose not to delay, showed outreach to India and the Indo-Pacific.
    • Impact of pandemic on economy: The pandemic hit German economy and sanctions on Russia will further dent its prospects.
    • The country requires new markets for trade and investment.
    • India is an important partner in this regard due to its sustained economic growth and market size.
    • Ukraine crisis: The Ukraine crisis created an urgency to engage with India as part of Germany’s fledgling Indo-Pacific policy.

    Opportunities for India

    • As Germany does the reassessment of China’s role in world affairs it creates an opportunity for India.
    • The Bundestag will discuss the situation of Uyghurs in China’s Xinjiang on May 7.
    • Any departures from China will bring business engagement to India.
    • Germany and India do not have a traditional strategic partnership.
    • It is a green partnership based on trade, investment, technology, functional collaboration, skill development, and sustainability.
    • There are several initiatives like the Indo-German energy forum, environmental forum, partnership on urban mobility, skill development and science and technology.
    • The biggest gain from the IGC has been the Joint Declaration of Intent (JDI) establishing the Green and Sustainable Development Partnership.
    • This will raise the quality and quantum of the existing partnership between the two countries.
    • Germany is reaching out with new and additional financing of €10 billion to fund green projects in India under public, private and PPP models.
    • To support this, a ministerial segment is being introduced under the IGC.
    • The IGC is the only such format that India has with any country.
    • Another significant development is the JDI on Triangular Development Cooperation for projects in third countries.
    • This will provide avenues to work together in the Indo-Pacific, Africa and beyond.
    • The Indo-German Education Partnership, which the German Bundestag passed in 2016 as a New Passage to India, has borne fruit — from about 4,000 students in 2015, there are nearly 29,000 Indian students in Germany.
    • The Indo-German Science and Technology Centre has made valuable contributions.
    • Now, under the energy partnership, the Green Hydrogen Task Force will develop a Green Hydrogen Roadmap.
    • This will attempt to take R&D to the level of commercialisation.
    • The JDI on migration and mobility is an important step taken during this IGC.

    Conclusion

    A new period is reflecting new priorities in view of crises like the pandemic, the economic downturn and now, Ukraine. The German response to India as evidenced through the IGC has been promising. Both sides may justifiably call it a defining moment in the Indo-German partnership.

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  • India slips to 150 in Press Freedom Index

    India has reached 150th position in the World Press Freedom Index, dropping further from its last year’s 142nd rank out of 180 countries.

    What is Press Freedom Index?

    • The PFI is an annual ranking of countries compiled and published by Reporters Without Borders since 2002.
    • It is based upon the organisation’s own assessment of the countries’ press freedom records in the previous year.
    • It intends to reflect the degree of freedom that journalists, news organisations, and netizens have in each country, and the efforts made by authorities to respect this freedom.
    • It does not measure the quality of journalism in the countries it assesses, nor does it look at human rights violations in general.

    Highlights of the 2022 report

    (a) Best performing countries

    • Norway– 1st
    • Denmark– 2nd
    • Sweden– 3rd
    • Estonia– 4th
    • Finland– 5th

    (b) Worst performers

    • North Korea remained at the bottom of the list, while Russia was placed at 155th position, slipping from 150th last year.
    • As per the global media watchdog, China climbed up by two positions ranking at 175th position, as compared to 177th position last year.

     (c) Performance in our neighbourhood

    • Besides India, its neighbours except Nepal have also slid down.
    • While Pakistan is at 157th position, Sri Lanka ranks at 146th, Bangladesh at 162nd and Maynmar at 176th position.

    Back2Basics: Freedom of Press and Constitutional Provisions

    • The Supreme Court in Romesh Thappar v. the State of Madras, 1950 observed that freedom of the press lay at the foundation of all democratic organisations.
    • It is guaranteed under the freedom of speech and expression under Article 19, which deals with ‘Protection of certain rights regarding freedom of speech, etc.
    • Freedom of the press is not expressly protected by the Indian legal system but it is impliedly protected under article 19(1) (a) of the constitution.
    • The freedom of the press is also not absolute.

    Reasonable restrictions

    • A law could impose only those restrictions on the exercise of this right, it faces certain restrictions under article 19(2), which is as follows:
    1. Sovereignty and integrity of India
    2. Security of the State,
    3. Friendly relations with foreign States
    4. Public order, decency or morality
    5. Contempt of court
    6. Defamation
    7. Incitement to an offence

     

     

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  • France pulls out of P-75I Project

    Ahead of PM Modi’s scheduled visit, France has denounced its participation in the P-75 India (P-75I) project under which six conventional submarines are to be built in India for the Indian Navy.

    Why did France pull out?

    • The reason was that the Request for Proposal (RFP) requires that the fuel cell AIP be sea proven, which not the case is for us yet since the French Navy does not use such a propulsion system.
    • AIP refers to Air-Independent Propulsion, a technology for conventional — that is, non-nuclear — submarines.

    Backgrounder: Project 75

    • Project 75 India is a part of India’s thirty-year-old submarine building plan by which all the six submarines which are under the project should already be sailing and it should have been followed by the submarines now for which the RFP has been issued.
    • It is a long-awaited and long-overdue project.
    • This should have happened way back but it got delayed because it was difficult to find a strategic partnership model.

    What is P-75I?

    • The Project 75I-class submarine is a follow-on of the Project 75 Kalvari-class submarine for the Indian Navy.
    • In the late 1990s, around the time of Kargil war, a three-decade plan took shape for indigenous construction of submarines.
    • It was known to have two separate series of submarine building lines – codenamed Project 75 and Project 75I — in collaboration with foreign entities.
    • Under this project, the Indian Navy intends to acquire six diesel-electric submarines, which will also feature advanced air-independent propulsion systems.
    • This is for enabling them to stay submerged for longer duration and substantially increase their operational range.

    What is the status of the project?

    • The navy is slightly behind the curve on P-75I.
    • The project faces choppy waters; the Naval Group has already announced it is pulling out, and sources said the Russian and Spanish companies might also not proceed with their bids.
    • Among the concerns, is the requirement to demonstrate a sea-proven fuel cell AIP.
    • While some manufacturers may have the technology, it may not have been proven at sea yet.
    • Another problem for the OEMs is the transfer of technology, which is built into the process.

    Why does the Navy want AIP subs?

    • Simply put, AIP technology allows a conventional submarine to remain submerged for much longer than ordinary diesel-electric submarines.
    • All conventional submarines have to surface to run their generators that recharge the batteries that allow the boat to function under water.
    • However, the more frequently a submarine surfaces, the higher the chances of it being detected.
    • AIP allows a submarine to remain submerged for more than a fortnight, compared to two to three days for diesel-electric boats.
    • IP has a force multiplier effect on lethality of a diesel electric submarine as it enhances the submerged endurance of the boat several folds.

    What submarines does India have now?

    • India has 16 conventional diesel-electric submarines, which are classified as SSKs.
    • After the last two Kalvari Class subs are commissioned under P-75, this number will go up to 18.
    • India also has two nuclear ballistic submarines, classified SSBN.

    Strategic importance of submarines development

    • Ageing arsenal: Currently, India has less number of submarines than what is required with some more of those from both types being at various stages of construction.
    • Combat roles in near future: The nuclear powered and diesel-electric submarines have their designated roles in the Carrier Battle Groups, which are formations of ships and submarines with Aircraft Carriers at the lead role.
    • Strategic deterrence: As per the basic principles of submarine deployment and the minimum requirement for India to create a strategic deterrence, there is a specific number of submarines of both types that India needs to have in active service.

    Significance of P-75 I

    • ‘Make in India’ Projects: It will serve to facilitate faster and more significant absorption of technology and create a tiered industrial ecosystem for submarine construction in India.
    • Self-Reliance: From a strategic perspective, this will help reduce current dependence on imports and gradually ensure greater self-reliance and dependability of supplies from indigenous sources.
    • Securing Indo-Pacific: China is increasing its presence in the Indian Ocean Region (IOR) and this is creating pressure on the Indian Navy in sprucing up the submarine arm.

     

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  • Advanced Towed Artillery Gun System (ATAGS) passes validation trials

    The indigenous Advanced Towed Artillery Gun System (ATAGS) developed by the Defence Research and Development Organisation (DRDO) successfully completed the validation trials.

    Why in news?

    • The ATAGS has demonstrated a range of over 45 km, making it the “most consistent and accurate gun in the world”.

    ATAG System

    • The ATAGS is a 155-mm, 52-calibre artillery gun jointly developed by the DRDO in partnership with Bharat Forge of the Kalyani Group and the Tata Power SED.
    • ATAGS has greater than 95% of indigenous content. It set a world record for the longest unassisted projectile range of 48 kilometres.

    Its features

    • The gun consists of a barrel, breech mechanism, muzzle brake and recoil mechanism to fire 155 mm calibre ammunition with a firing range of 48 km.
    • It has an all-electric drive to ensure reliability and minimum maintenance over a long period of time.
    • It has advanced features like high mobility, quick deployability, auxiliary power mode, advanced communication system, automatic command and control system with night capability in direct fire mode.

     

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  • [Yojana Archive] Fintech Beyond Boundaries

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    April 2022

    Context

    FinTech is rapidly changing the face of the banking industry, as several banks are now switching to digitization as well as paperless and cashless processes.

    Fintech in India: A backgrounder

    • With the establishment of two institutions in 2009, India’s fintech journey began.
    • The National Payments Corporation of India was the first to take over ATM networks in India in order to modernize retail payments and settlements.
    • The second step was the establishment of India’s Unique Identification Authority.

    What are fintechs?

    • Fintech, the word, is a combination of “financial technology”. 
    • Financial technology (Fintech) is used to describe new tech that seeks to improve and automate the delivery and use of financial services. ​​​
    • At its core, fintech is utilized to help companies, business owners and consumers better manage their financial operations, processes, and lives by utilizing specialized software and algorithms.

    Key fintech products

    • Digital Public Infrastructure (DPI): DPI refers to digital solutions that enable basic functions such as collaboration, commerce, and governance, which are critical for public and private service delivery.
    • Digital Public Goods (DPGs): DPGs refer to open source software, open data, open AI models, open standards, and open content that adhere to privacy and other applicable best practices.  They’re an important tool for constructing infrastructure in ways that avoid some of the drawbacks of proprietary software-based solutions.

    Why in news?

    • India is one of the largest and fastest-growing markets in the world with more than 2100 fintechs.
    • It has the third largest fintech ecosystem in line after the US and China.
    • As of December 2021, India has over 17 fintech companies which have gained Unicorn status with a valuation of over USD 1 billion.

    FinTech industry in India: A closer look

    • Banks have conventionally served as the gateway to payment services in India.
    • However, with the rapid advancement of technology, this no longer appears to be the case, as the monopoly of banks in this area is gradually weakening.
    • In recent years, India’s payments infrastructure has seen substantial improvements, particularly with the introduction of new payment mechanisms and interfaces such as Immediate Payments Service (IMPS), Unified Payments Interface (UPI), Bharat Interface for Money (BHIM), and others.
    • The government’s “Make in India” and “Digital India” projects also played a significant role in accelerating the adoption of Fintech.
    • It is commendable that the Reserve Bank of India (RBI) has also pushed the growing use of electronic payments to establish a truly cashless society in recent years.

    Key initiatives: India Stack

    • The India Stack is a set of APIs that allow the government and private sector to deploy cashless and paperless technology.
    • Although the owners of these APIs are responsible for their upkeep, the India Stack encourages developers to use them by hosting events.

    Components of the India Stack

    • Unique Identification Number: The UIDAI makes up the India Stack, also known as the Aadhaar Stack. This is the individual’s unique identification number, which is linked to their biometric readings.
    • E-KYC: The e-KYC project allows businesses to obtain instant customer verification.
    • AEPS: AEPS expands financial inclusion by allowing government entitlements and bank-to-bank transfers to be disbursed at retail outlets that can go cashless.
    • UPI: A payment request and a customer can use the Unified Payment Interface to send funds to a beneficiary and collect payment requests from customers.
    • E-Sign: eSign is enabled through an API that facilitates an Aadhaar cardholder to electronically sign documents. This is authenticated through biometric readings and through an OTP.
    • DigiLocker: DigiLocker is used as a Government of India repository for documents.
    • Digital Signature: Digital Signature provides the capability that allows individuals to electronically sign contracts with any entity without a pen or paper.

    FSCA – The Governing Body

    • The IFSCA was established under the International Financial Services Centres Authority Act of 2019.
    • In India, the IFSCA is the single body in charge of the creation and regulation of financial goods, financial services, and financial institutions.
    • India’s first international financial services centre is the GIFT IFSC.
    • IFSC serves as a unified authority for the development and regulation of financial products, financial services, and financial institutions.

    Data and standards

    • People and small businesses can now retrieve and use their data thanks to digitised infrastructure.
    • To make this open-banking system work, a standard language will be needed, similar to how UPI created a payment protocol.
    • The National Payments Corporation of India (NPCI) is launching an Open Credit Enablement Network (OCEN) to connect lenders and marketplaces.

    Challenges to FinTech in India

    • Despite being a vastly diversified and populated country, a huge portion of India remains underbanked, underserved and subject to a constantly changing regulatory environment.
    • And for these very reasons, the nation’s financial landscape and unsolved challenges are no easy hurdles to overcome.
    • This is where Fintech enters the equation, with its ability and power to fundamentally alter and transform India’s financial and banking services sector.

    Conclusion

    • FinTech companies’ growing partnerships with traditional banking, insurance, and retail sectors, where they are actively catering to evolving customer needs, will further accelerate FinTech’s expansion in India.
    • All these factors indicate a positive shift towards FinTech and present a huge growth potential for the industry, with the country gearing towards massive adoption.

  • [pib] National Open Access Registry (NOAR)

    National Open Access Registry (NOAR) has successfully gone live from 1st May 2022.

    What is NOAR?

    • NOAR is a centralized online platform through which the short-term open access to the inter-state transmission system is being managed in India.
    • It is an integrated platform accessible to all stakeholders in the power sector, including open access customers (both sellers and buyers), power traders, power exchanges, National/Regional/State LDCs and others.
    • The platform provides automation in the workflow to achieve shorter turnaround time for the transactions.
    • NOAR platform also has a payment gateway integrated for making payments related to interstate short-term open access transactions.
    • NOAR platform provides transparency and seamless flow of information among stakeholders of open access.

    Key features

    • Centralized System: Single point electronic platform for all the stakeholders
    • Automated Process: Automated administration process of the short-term open access
    • Common Interface: Interface with the RLDCs scheduling applications and Power Exchanges (s)
    • Payment Gateway: Make payments related to STOA transactions

     

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  • [Burning Issue] India-EU Relations

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    Context

    • President of the European Commission Ursula Von Der Leyen was on two–day official visit to India.
    • She has heaped all praises for the robustness of Indian democracy. She went on to say that ‘World Watches When Indians Cast Their Vote’.
    • Both sides are expected to review the progress on various aspects of the relationship and further intensify the multifaceted partnership with EU.

    About European Union (EU)

    • The EU is a political and economic union of 27 member states that are located primarily in Europe.
    • The union and EU citizenship were established when the Maastricht Treaty came into force in 1993.
    • The EU grew out of a desire to strengthen international economic and political co-operation on the European continent in the wake of World War II.
    • It has often been described as a sui generis political entity (without precedent or comparison) with the characteristics of either a federation or confederation.
    • The eurozone consists of all countries that use the euro as official currency. All EU members pledge to convert to the euro, but only 19 have done so as of 2022.

    Members of the EU

    • Through successive enlargements, the European Union has grown from the six founding states (Belgium, France, West Germany, Italy, Luxembourg, and the Netherlands) to 27 members.
    • This entails a partial delegation of sovereignty to the institutions in return for representation within those institutions, a practice often referred to as “pooling of sovereignty“.
    • In the 2016 ‘Brexit’ referendum, the UK voted to leave the EU. The UK officially left the EU in 2020

    India-EU Relations: A Backgrounder

    • It’s been 60 years since India accredited its first ambassador to the European Economic Community (EEC), the organisation that served as embryo for the European Union.
    • Back then, India was a protectionist economy trying to move away from the British colonial era while the EEC consisted of just six European countries.
    • Today, the relations between the EU and India are defined by the 1994 EU–India Cooperation Agreement.
    • India and the EU became “Strategic Partners” in 2004.

    [A] Political Partnership

    • The Joint Political Statement signed in 1993, opened the way for annual ministerial meetings and a broad political dialogue.
    • The Cooperation Agreement signed in 1994 took the bilateral relationship beyond trade and economic cooperation.
    • A multi-tiered institutional architecture of cooperation has since been created, presided over by the India-EU Summit since 2000.
    • Today EU stands as a major reference for India’s legislative process in the field of Data security and privacy.

    [B] Economic Ties

    • Bilateral trade: The EU is India’s largest trading partner, while India is the EU’s 9th largest trading partner. It is the second-largest destination for Indian exports after the United States.
    • Investment: The EU’s share in foreign investment inflows to India has more than doubled from 8% to 18% in the last decade. This makes the EU an important foreign investor in India.
    • Preferential treatment: India is the benefactor of the unilateral preferential tariffs under the EU Generalised Scheme of Preferences (GSP).
    • Energy: Both sides have finalised civil nuclear cooperation agreement after 13 years of negotiations called as the European Atomic Energy Community (EURATOM). It involves collaboration in the civil nuclear energy sector.
    • Development cooperation: Over €150 million worth of projects by EU are currently ongoing in India. European Investment Bank (EIB) is providing loans for Lucknow, Bangalore, and Pune Metro Projects.

    [C] Defence & Security

    • EU and India have instituted several mechanisms for greater cooperation on pressing security challenges like counterterrorism, maritime security, and nuclear non-proliferation.
    • Information Fusion Centre – Indian Ocean Region in New Delhi (IFC-IOR) has recently been linked-up with the Maritime Security Centre – Horn of Africa (MSC-HOA) established by the EU Naval Force (NAVFOR).

     [D] Climate Change

    • EU and India also underline their highest political commitment to the effective implementation of the Paris Agreement and the UNFCCC despite US withdrawing from the same.
    • India-EU Clean Energy and Climate Partnership was agreed at the 2016 Summit – to promote access to and disseminate clean energy and climate friendly technologies and encourage R&D.
    • Energy cooperation is now ongoing on a broad range of energy issues, like smart grids, energy efficiency, offshore wind and solar infrastructure, and research and innovation.
    • EU and India also cooperate closely on the Clean Ganga initiative and deal with other water-related challenges in coordinated manner.

    [E] Research and Development

    • India-EU Science & Technology Steering Committee meets annually to review scientific cooperation.
    • Both have official mechanisms in fields such as Digital Communications, 5G technology, Biotechnology, artificial intelligence etc.
    • ISRO has a long-standing cooperation with the European Union, since 1970s. It has contributed towards the EU’s satellite navigation system Galileo.

    Major limitations to the ties

    • Deadlock over BTIA: The negotiations for a Broad-based Bilateral Trade and Investment Agreement (BTIA) were held between 2007 to 2013 but have remained dormant/suspended since then.
    • Export hurdles: Indian demands for ‘Data secure’ status (important for India’s IT sector) to ease norms on temporary movement of skilled workers, relaxation of Sanitary and Phytosanitary (SPS), etc. stands largely ignored.
    • Trade imbalance: This heavily leans towards China. India accounts for only 1.9% of EU total trade in goods in 2019, well behind China (13.8%).
    • Brexit altercations: In the longer term of balancing of global powers, a smaller Europe without the key military and economic force UK, is much weaker in the wake of an ambitious China and an increasingly protectionist US.
    • EU primarily remains a trade bloc: This has resulted in a lack of substantive agreements on matters such as regional security and connectivity.
    • Undue references to sovereign concerns: The European Parliament was critical of both the Indian government’s decision to scrap Jammu and Kashmir’s special status in 2019 and the Citizenship (Amendment) Act.
    • China’s influence: EU’s affinity lies with China. This is because of its high dependence on the Chinese market. It is a major partner in China’s Belt and Road Initiative (BRI).
    • Ukrainian war: EAM S. Jaishankar’s witty reply about EU’s oil import from Russia has not been welcomed across the EU. It still expects India to criticize Russia.

    EU’s interests in India

    • Reducing dependence on China: It is necessary for both sides as it is making them highly vulnerable to Chinese aggression.
    • Western lobby: EU acknowledges its supply chain’s vulnerability, the risk posed by overdependence on China, and the need to strengthen the global community of democracies.
    • Healthcare: The on-going pandemic has shown the need for cooperation in global health. India and the EU have called for a reform of the World Health Organisation (WHO).
    • Perception of India as a huge market: EU still largely perceives India as huge market rather than a partner.
    • Promotion of multilateralism: Both sides are facing issues related to US-China trade war and uncertainty of the US’ policies. They have common interest in avoiding a bipolarised world and developing a rules-based order.

    India’s stakes in EU

    • Global leadership vacuum: Retreat of the U.S. from global leadership has provided opportunities for EU- India cooperation and trilateral dialogues with countries in the Middle Fast, Central Asia, and Africa.
    • Chinese Aggression: China’s increasing presence in Eurasia and South Asia is creating similar security, political and economic concerns for Europe and India.
    • Fall of the conventional global order: Trade war, crumbling WTO and break down of TPP etc. has made EU understand the economic importance of India.
    • BREXIT: Brexit is pushing India to look for new ‘gateways’ to Europe, as its traditional partner leaves the union. A renewed trade and political cooperation are the need of the hour.
    • Conformity over Indo-Pacific: The Indo-Pacific is the main conduit for global trade and energy flows. Rule-based Indo-pacific is of everyone’s interest with EU no exception.

    Way forward

    • A close bilateral relation between India and the EU has far-reaching economic, political and strategic implications on the crisis-driven international order.
    • Both sides should realise this potential and must further the growth of the bilateral ties with a strong political will.
    • As highlighted by EU strategy on India 2018, India-EU should take their relations beyond “trade lens”, recognizing their important geopolitical, strategic convergences.
    • India can pursue EU countries to engage in Indo-pacific narrative, geo-economically if not from security prism.

  • Recent woes of the jute industry in West Bengal

    Member of Parliament (MP) from Barrackpore constituency in West Bengal met the Union Textile about issues concerning jute farmers, workers and the overall jute industry.

    What is the news?

    • The Barrackpore MP had earlier written to West Bengal CM, seeking her intervention into the “arbitrary decision” of capping the price for procuring raw jute from the mills.
    • He was referring to the Office of the Jute Commissioner (JCO)’s September 30 notification mandating that no entity would be allowed to purchase or sell raw jute at a price exceeding ₹6,500 per quintal.

    What is Jute?

    • Jute is the only crop where earnings begin to trickle in way before the final harvest.
    • The seeds are planted between April and May and harvested between July and August.
    • The leaves can be sold in vegetable markets for nearly two months of the four-month jute crop cycle.
    • The tall, hardy grass shoots up to 2.5 metres and each part of it has several uses.
    • The outer layer of the stem produces the fibre that goes into making jute products.
    • But the leaves can be cooked, the inner woody stems can be used to manufacture paper and the roots, which are left in the ground after harvest, improve the yield of subsequent crops.
    • A ‘Golden Fibre Revolution’ has long been called for by various committees, but the jute industry is in dire need of basic reforms.

    Jute production in India

    • India is the world’s biggest producer of jute , followed by Bangladesh.
    • Jute is primarily grown in West Bengal, Odisha, Assam, Meghalaya, Tripura and Andhra Pradesh.
    • The jute industry in India is 150 years old.
    • There are about 70 jute mills in the country, of which about 60 are in West Bengal along both the banks of river Hooghly.
    • Jute production is a labour-intensive industry. It employs about two lakh workers in the West Bengal alone and 4 lakh workers across the country.

    Significance of Jute

    • Compared to rice, jute requires very little water and fertiliser.
    • It is largely pest-resistant, and its rapid growth spurt ensures that weeds don’t stand a chance.
    • Jute is the second most abundant natural fibre in the world.
    • It has high tensile strength, acoustic and thermal insulation, breathability, low extensibility, ease of blending with both synthetic and natural fibres, and antistatic properties.
    • Jute can be used: for insulation (replacing glass wool), geotextiles, activated carbon powder, wall coverings, flooring, garments, rugs, ropes, gunny bags, handicrafts, curtains, carpet backings, paper, sandals, carry bags, and furniture.

    Why in news now?

    • Mills are now procuring raw jute at prices higher than what they are selling them at after processing.
    • The government has a fixed Minimum Support Price (MSP) for raw jute procurement from farmers, which is ₹4,750 per quintal for the 2022-23 season.
    • However, as the executive stated, this reached his mill at ₹7,200 per quintal, that is, ₹700 more than the ₹6,500 per quintal cap for the final product.
    • Though the Union government has come up with several schemes to prevent de-hoarding, the executive believes the mechanism requires a certain “systematic regulation”.

    What happened to supply?

    • What made the situation particularly worrisome recently was the occurrence of Cyclone Amphan in May 2020 and the subsequent rains in major jute producing States.
    • These events led to lower acreage, which in turn led to lower production and yield compared to previous years.
    • Additionally, as the Commission for Agricultural Costs and Prices (CACP) stated in its report, this led to production of a lower quality of jute fibre in 2020-21 as water-logging in large fields resulted in farmers harvesting the crop prematurely.
    • Acreage issues were accompanied by hoarding at all levels – right from the farmers to the traders.

    Where does India stand in comparison to Bangladesh?

    • As per the Food and Agriculture Organisation (FAO), India is the largest producer of jute followed by Bangladesh and China.
    • However, in terms of acreage and trade, Bangladesh takes the lead accounting for three-fourth of the global jute exports in comparison to India’s 7%.
    • This can be attributed to the fact that India lags behind Bangladesh in producing superior quality jute fibre due to infrastructural constraints and varieties suitable for the country’s agro-climate.
    • Further, as the CACP report stated, Bangladesh provides cash subsidies for varied semi-finished and finished jute products.
    • Hence, the competitiveness emerges as a challenge for India to explore export options in order to compensate for the domestic scenario.

    What is at stake?

    • The jute sector provides direct employment to 3.70 lakh workers in the country.
    • It supports the livelihood of around 40 lakh farm families, closure of the mills is a direct blow to workers and indirectly, to the farmers whose production is used in the mills.
    • West Bengal, Bihar and Assam account for almost 99% of India’s total production.

     

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