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GS Paper: GS2-18.Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

  • SAARC

    Context

    Despite the framework SAARC provides for cooperation amongst South Asian nations, it has remained sidelined and dormant since its 18th summit of 2014 in Kathmandu. No alternative capable of bringing together South Asian countries for mutually beneficial diplomacy has emerged.

    Common challenges facing South Asia

    • The region is beset with unsettled territorial disputes, as well as trans-border criminal and subversive activities and cross-border terrorism.
    • The region also remains a theatre for ethnic, cultural, and religious tensions and rivalries besides a current rise in ultra-nationalism
    • Nuclear-armed neighbours India and Pakistan are at loggerheads.
    • US military withdrawal from Afghanistan has fuelled fears of intensification of these trends.

    Significance of SAARC

    • As the largest regional cooperation organisation, SAARC’s importance in stabilising and effectively transforming the region is becoming increasingly self-evident.
    • SAARC is needed as institutional scaffolding to allow for the diplomacy and coordination that is needed between member-states in order to adequately address the numerous threats and challenges the region faces.
    • Though SAARC’s charter prohibits bilateral issues at formal forums, SAARC summits provide a unique, informal window — the retreat — for leaders to meet without aides and chart future courses of action.
    • The coming together of leaders, even at the height of tensions, in a region laden with congenital suspicions, misunderstandings, and hostility is a significant strength of SAARC that cannot be overlooked.
    • In March last year, Indian Prime Minister Narendra Modi seized the Covid-19 crisis and utilised SAARC’s seal to convene a video conference of SAARC leaders.
    • Such capacity to bring member-states together shows the potential power of SAARC.

    What role SAARC can play in Afghanistan

    • Commitment to get rid of terrorism: The third SAARC summit in 1987 adopted a Regional Convention on Suppression of Terrorism and updated it in 2004 with the signing of an additional protocol.
    • These instruments demonstrate the collective commitment to rid the region of terror and promote regional peace, stability, and prosperity.
    • Using the network of institutions: In 36 years of existence, SAARC has developed a dense network of institutions, linkages, and mechanisms.
    • SAARC members are among the top troop-contributing countries to UN peacekeeping missions.
    • Joint peacekeeping force: With the US withdrawal from Afghanistan, a joint peacekeeping force from the SAARC region under the UN aegis could be explored to fill the power vacuum that would otherwise be filled by terrorist and extremist forces.

    Consider the question “What role SAARC can play in stabilising the region after the US withdrawal from Afghanistan? Is SAARC still relevant for the region?”

    Conclusion

    Allowing SAARC to become dysfunctional and irrelevant greatly distorts our ability to address the realities and mounting challenges facing SAARC nations.

    Back2Basics: About SAARC

    •  In 1985, at the height of the Cold War, leaders of South Asian nations — namely Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka — created a regional forum.
    • The South Asian Association for Regional Cooperation (SAARC) was established with the goal of contributing “to mutual trust, understanding and appreciation of one another’s problems.”
    • Afghanistan was admitted as a member in 2007.

  • OPEC Reaches Compromise With U.A.E. Over Oil Production

    Context

    The end to the UAE’s weeks-long impasse with Saudi Arabia and Russia, a non-OPEC state, was brought about by Sunday’s deal.

    What was the deal about?

    • United Arab Emirates (UAE), said to hold the world’s largest untapped crude reserves, had demanded an increase in its oil output quotas.
    • The end to the UAE’s weeks-long impasse with Saudi Arabia, one of the world’s biggest crude exporters, and Russia, a non-OPEC state, was brought about by Sunday’s deal.
    • Under its terms, the UAE’s demand for an increase in its oil output quotas, in recognition of its higher production capacity, has been conceded.
    • The baselines have also been raised for Saudi Arabia, Russia, Iraq, and Kuwait.
    • The bloc will now step up crude production by 400,000 barrels a day starting in August.
    • The output boost is in response to rising oil prices in the wake of the rebound in economic activity.
    • The cartel had cut oil production by 9.7 million barrels a day (mbd) as oil demand fell from 100 mbd to 91.1 mbd and prices plummeted from $70 in January 2020 to around $20 in April.

    Strain in Saudi Arabia-UAE relations

    • The UAE has played hardball during the bloc’s attempts to deal with the pandemic-induced price volatility.
    • Thus, while the internal rift has been resolved for now, the danger cannot be ruled out of an increasingly economically and politically assertive UAE flexing its muscle.
    • Bilateral relations between the traditional allies, Saudi Arabia and the UAE, have been especially strained since the UAE established diplomatic ties with Israel last year and withdrew troops from the Saudi-spearheaded war in Yemen the year before.
    • A more recent arena of tension is the tariffs Riyadh has imposed on imports from the six-nation Gulf Cooperation Council.
    • Saudi Arabia will now exclude from the GCC tariff agreement goods made by companies with a workforce of less than 25% of locals and industrial products with less than 40% of the added value after their transformation process.
    • Home to a predominantly migrant population, the move could hit the UAE especially hard.

    OPEC’s concerns

    • The OPEC, forecast in 2016 that a strict implementation of the Paris climate accord could see the demand for oil peak by 2030.
    • There is an eagerness to maximise the returns on their substantial hydrocarbon resources, amid growing speculation of a peak in oil demand within sight.
    • The International Energy Agency (IEA), which in 2016 forecast a continued rise in oil consumption until the 2040s, has more recently hinted at about a 5% rise or fall relative to the demand before the pandemic within a decade.
    • OPEC’s other concerns are the stabilization of world oil prices without jeopardizing national expenditure programs, and the diversification of economies in anticipation of the unfolding global energy transition.

    Conclusion

    The latest OPEC compromise echoes growing recognition of the delicate balance between competing domestic and global priorities.

    B2BASICS

    OPEC

    • The Organization of the Petroleum Exporting Countries (OPEC) is a permanent, intergovernmental organization, created at the Baghdad Conference in 1960, by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela.
    • It aims to manage the supply of oil in an effort to set the price of oil in the world market, in order to avoid fluctuations that might affect the economies of both producing and purchasing countries.
    • It is headquartered in Vienna, Austria.
    • OPEC membership is open to any country that is a substantial exporter of oil and which shares the ideals of the organization.
    • Gabon terminated its membership in January 1995. However, it rejoined the Organization in July 2016.
    • As of 2019, OPEC has a total of 14 Member Countries viz. Iran, Iraq, Kuwait, United Arab Emirates(UAE), Saudi Arabia, Algeria, Libya, Nigeria, Gabon, Equatorial Guinea, Republic of Congo, Angola, Ecuador, and Venezuela are members of OPEC.

     

  • Draft Drone Rules, 2021

    The Ministry of Civil Aviation has released Draft Drone Rules, 2021, for public consultation. The rules will replace the Unmanned Aircraft System Rules, 2021.

    Highlights of the Draft Drone Rules 2021

    Number of forms: The rules propose to reduce the number of forms required for manufacturing, importing, testing, certifying and operating drones in India from 25 to six.

    Abolishing authorization number: The draft seeks to abolish the unique authorisation number, unique prototype identification number, and certificate of conformance that were previously required for approval of drone flights.

    Digital Sky Platform: Digital Sky, a platform launched by the government in December 2018, will become a single-window system for all approvals under the newly proposed rules.

    Airspace map: An airspace map segregating the entire landmass of India into Green, Yellow and Red zones will be published on the platform within 30 days of notification of the new rules, the government said. The map will also be machine-readable through an Application Programming Interface (API) for easier plotting of drone flight paths.

    Airport Perimeter: The draft rules reduced the airport perimeter from 45 km to 12 km. The rules state that no flight permissions would be required to fly up to 400 feet in green zones and up to 200 feet in the area between 8 and 12 km from the airport perimeter.

    Drone corridors: The government will also publish a policy framework for Unmanned Aircraft System Traffic Management (UTM) within 60 days of notifying the rules. This will also include frameworks for developing “drone corridors” for the safe transfer of goods by drones.

    Drone Promotion Council: The Rules also propose the setting up of a Drone Promotion Council, with the aim of facilitating a business-friendly regulatory regime for drones in India, the establishment of incubators for developing drone technologies and organizing competitive events to showcase drones and counter-drone solutions.

    Others: To implement safety features such as “no permission, no take-off”, real-time tracking and geofencing, drone manufacturers, importers and operators will get six months’ time to comply from the date of notification of the rules.

  • Regional powers and the Afghanistan question

    Context

    A regional conclave of foreign ministers taking place in Dushanbe this week under the banner of the Shanghai Cooperation Organisation (SCO) should give us a sense of the unfolding regional dynamic on Afghanistan.

    SCO addressing challenges in Afghanistan

    • Geography, membership and capabilities make the SCO an important forum to address the post-American challenges in Afghanistan.
    • The SCO was launched 20 years ago by China and Russia to promote inner Asia stability. 
    • The current members of the SCO are China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Pakistan, and India.
    • The SCO has four observer states — Iran, Afghanistan, Mongolia and Belarus.
    • The idea of a regional solution to Afghanistan has always had much political appeal.
    • But divergent regional strategic perspectives limit the prospects for a sustainable consensus on Afghanistan.

    Implications of the US exit for the region

    • The quiet satisfaction in Moscow, Beijing, Tehran and Rawalpindi at the US’s exit from Afghanistan, however, is tinged by worries about the long-term implications of Washington’s retreat
    • Regional players have to cope with the consequences of the US withdrawal and the resurgence of the Taliban.
    • Neither Moscow nor Beijing would want to see Afghanistan becoming the hub of international terror again under the Taliban.
    • For China, potential Taliban support to the Xinjiang separatist groups is a major concern.
    • Iran can’t ignore the Sunni extremism of the Taliban and its oppressive record in dealing with the Shia, and Persian-speaking minorities.
    • Pakistan worries about the danger of the conflict spilling over to the east of the Durand Line, and hostile groups gaining sanctuaries in Afghanistan.

    Three factors that drive India’s Afghan policy

    • The US exit means a new constraint on Delhi’s ability to operate inside Afghanistan.
    • There is also the danger that Afghanistan under the Taliban could also begin to nurture anti-India terror groups.
    • If India remains active but patient, many opportunities could open up in the new Afghan phase.
    • Three structural conditions will continue to shape India’s Afghan policy.
    • One is India’s lack of direct physical access to Afghanistan.
    • This underlines the importance of India having effective regional partners.
    • Second, it remains to be seen if Pakistan’s partnership with China and the extension of the China Pakistan Economic Corridor into Afghanistan can address Pakistan’s inability to construct a stable and legitimate order in Afghanistan.
    • Third, the contradiction between the interests of Afghanistan and Pakistan is an enduring one.
    • While many in Pakistan would like to turn Afghanistan into a protectorate, Afghans deeply value their independence.
    • All Afghan sovereigns, including the Taliban, will inevitably look for partners to balance Pakistan.

    Way forward for India

    • India must actively contribute to the SCO deliberations on Afghanistan, but must temper its hopes for a collective regional solution.
    • At the same time, Delhi should focus on intensifying its engagement with various Afghan groups, including the Taliban, and finding effective regional partners to secure its interests in a changing Afghanistan.

    Conclusion

    India should pursue the regional solution to Afghanistan challenge after the US exit while increasing the engagement with the various players in Afghanistan including the Taliban.

  • Strategic cooperation between India, Italy and Japan can ensure a free Indo-Pacific

    Context

    Recently, Mr. Draghi, Italy’s Prime Minister described Chinese competitive practices as “unfair” and invited the EU to be franker and more courageous in confronting Beijing on various issues. Against this backdrop, a trilateral partnership between India-Japan-Italy could play important role in the Indo-Pacific region.

    India’s growing centrality in Indo-Pacific strategic architecture

    • Countries that share similar values and face similar challenges are coming together to create purpose-oriented partnerships.
    • In the context of the Indo-Pacific, the challenges posed by China’s assertive initiatives clash with a region lacking multilateral organisations capable of solving problems effectively.
    • But as a new pushback against China takes shape and as Indian foreign policy becomes strategically clearer, there is new momentum to initiatives such as the Quad.

    India-Italy-Japan trilateral partnership

    • Recently, Italy has also begun to signal its intention to enter the Indo-Pacific geography.
    • It has done so by seeking to join India and Japan in a trilateral partnership.
    • Italy has become more vocal on the risks emanating from China’s strategic competitive initiatives.
    • On the Indian side, there is great interest in forging new partnerships with like-minded countries interested in preserving peace and stability in the Indo-Pacific.
    • The responsibility of keeping the Indo-Pacific free and open, and working for the welfare of its inhabitants falls on like-minded countries within and beyond the region.

    Potential of trilateral partnership

    • Their compatible economic systems can contribute to the reorganisation of the global supply chains that is now being reviewed by many players as a natural result of the Chinese mismanagement of the COVID-19 pandemic.
    •  At the security level, the well-defined India-Japan Indo-Pacific partnership can easily be complemented by Italy.
    • At the multilateral level, the three countries share the same values and the same rules-based world view.

    The way forward for trilateral cooperation

    • The Italian government must formulate a clear Indo-Pacific strategy that must indicate its objectives.
    • But Rome must go beyond that in defining and implementing, at the margins of the EU’s common initiatives, its own policy with respect to the Indo-Pacific.
    • The India, Italy and Japan trilateral initiative can be a forum to foster and consolidate a strategic relationship between these three countries, and specifically expand India-Italy bilateral relations.
    • A trilateral cooperation can be the right forum for India and Italy to learn more from each other’s practices and interests and consolidate a strategic dialogue that should include the economic, the security and the political dimensions.
    •  To consolidate the trilateral cooperation in this field, the three countries need to define a common economic and strategic agenda.

    Conclusion

    A clear political will is needed from all sides, and Italy, in particular, should recognise its interests in playing a larger role towards the maintenance of a free and open Indo-Pacific. Robust India-Italy strategic ties can be the first step towards the realisation of this goal.

  • EAM hands over relics of 17th century Georgian Queen St. Ketevan to Georgia

    After a long-standing request of Georgia, External Affairs Minister handed over the holy relics of 17th century Georgian Queen St. Ketevan nearly 16 years after they were found in Goa.

    Who was St. Ketevan?

    • Queen Ketevan was a 17th century Georgian Queen.
    • From Kakheti, a kingdom in eastern Georgia, she was tortured and killed in 1624 in Shiraz during the rule of the Safavid dynasty.
    • Portuguese missionaries were said to have carried the relics to Goa in 1627.
    • In 2005, after years of research and study of medieval Portuguese records, the relics were found at the St. Augustine Church in Old Goa.

    Importance of Georgia for India

    • Georgia a strategically important country situated at the intersection of Eastern Europe and Western Asia.
    • Relations between Georgia and India date back to ancient times.
    • The Panchatantra influenced Georgian folk legends. During the medieval period, Georgian missionaries, travelers, and traders visited India.
    • Some Georgians served in the courts of Mughal emperors, and a few rose to the rank of governor.
    • India was among the first countries to officially recognize Georgia, doing so on 26 December 1991.
    • India is a net exporter to Georgia.
    • The main commodities exported by India to Georgia are cereals, nuclear reactors, boilers, machinery and mechanical appliances, pharmaceuticals, electrical machinery and equipment, aluminium and aluminium articles.

    Answer this PYQ in the comment box:

    Q.Consider the following pairs:

    Sea Bordering Country
    1. Adriatic Sea Albania
    2. Black Sea Croatia
    3. Caspian Sea Kazakhstan
    4. Mediterranean Sea Morocco
    5. Red Sea Syria

    Which of the pairs given above are correctly matched? (CSP 2019)

    (a) 1, 2 and 4 only

    (b) 1, 3 and 4 only

    (c) 2 and 5 only

    (d) 1, 2, 3, 4 and 5

  • Crafting a unique partnership with Africa

    This op-ed analyses the future of India-Africa cooperation in agriculture amid the looming Chinese involvement in African countries.

    Agricultural significance of Africa

    • With 65% of the world’s uncultivated arable land, employing over 60% of the workforce, and accounting for almost 20% of Sub-Saharan Africa’s GDP, agriculture is critical to Africa’s economy.

    China factor behind

    • As this relationship enters the post-pandemic world, it is vital to prioritize and channel resources into augmenting partnerships in agriculture.
    • This is crucial given its unexplored potential, centrality to global food security, business prospects and to provide credible alternatives to the increasing involvement of Chinese stakeholders in the sector.

    Analyzing Chinese engagement

    Chinese corporations, small and medium-sized enterprises and entrepreneurs adopt has provided a layered perspective of the sociopolitical, economic and environmental impact of Chinese engagement.

    • Trade: China is among Africa’s largest trading partners.
    • Credit facility: It is also Africa’s single biggest creditor.
    • Infrastructure: Its corporations dominate the region’s infrastructure market and are now entering the agri-infra sector.
    • Strategic support: While access to Africa’s natural resources, its untapped markets and support for ‘One China Policy’ are primary drivers of Chinese engagement with the region, there are other factors at play.

    China is going strategic in the guise of agriculture

    • Increasingly critical to China’s global aspirations, its engagement in African agriculture is taking on a strategic quality.
    • Chinese-built industrial parks and economic zones in Africa are attracting low-cost, labour-intensive manufacturing units that are relocating from China.
    • Chinese engineers interviewed spoke of how their operations in Africa are important to accumulate global experience in management, risk and capital investments.
    • Not only are they willing to overlook short-term profits in order to build a ‘brand China’, but they want to dominate the market in the long term, which includes pushing Chinese standards in host countries.
    • Chinese tech companies are laying critical telecommunications infrastructure, venture capital funds are investing in African fintech firms, while other smaller enterprises are expanding across the region.

    Agricultural landscape

    • While many Chinese entities have been active in Africa’s agriculture for decades now, the nature, form and actors involved have undergone substantial change.
    • In Zambia, Chinese firms are introducing agri-tech to combat traditional challenges, such as using drone technology to control the fall armyworm infestation.
    • They have set up over Agricultural Technology Demonstration Centers (ATDCS) in the continent where Chinese agronomists work on developing new crop varieties and increasing crop yields.
    • This ATDCs partner with local universities, conduct workshops and classes for officials and provide training and lease equipment to small holder farmers.
    • Chinese companies with no prior experience in agriculture are setting out to build futuristic ecological parks while others are purchasing large-scale commercial farms.

    Inducing their soft power

    • The exponential growth in the China-Africa economic ties and the emergence of Beijing as an alternative to traditional western powers have motivated change in perceptions across groups.
    • Governments and heads of state are recalibrating approaches, media houses are investing more resources for on-the-ground reporting.

    Dark Side of the Sino-Africa ties

    • Simultaneously, Africa-China relations are becoming complex with a growing, insular diaspora, lopsided trade, looming debt, competition with local businesses and a negative perception accompanied by greater political and socioeconomic interlinkages.
    • On occasion, there seems to be a gap between skills transferred in China and the ground realities in Africa.
    • In some cases, the technology taught in China is not available locally and in others, there is inability to implement lessons learnt due to the absence of supporting resources.
    • Larger commercial farms run by Mandarin-speaking managers and the presence of small-scale Chinese farmers in local markets aggravates socio-cultural stresses.

    India’s agricultural engagement

    • Diverse portfolios: India-Africa agricultural cooperation currently includes institutional and individual capacity-building initiatives, an extension of soft loans, supply of machinery, acquisition of farmlands and the presence of Indian entrepreneurs in the African agricultural ecosystem.
    • Land acquisition: Indian farmers have purchased over 6,00,000 hectares of land for commercial farming in Africa.
    • States cooperation: Sub-national actors are providing another model of cooperation in agriculture. Consider the case of the Kerala government trying to meet its requirement for cashew nuts with imports from countries in Africa.
    • Civil society: Similar ideas could encourage State governments and civil society organizations to identify opportunities and invest directly.
    • Agri-business: There is also promise in incentivizing Indian industries to tap into African agri-business value chains and connecting Indian technology firms and startups with partners in Africa.
    • Investment: In the past year, despite the pandemic, the sector witnessed a record increase in investments.

    Way forward

    • A thorough impact assessment needs to be conducted of the existing capacity-building initiatives in agriculture for India to stand in good stead.
    • This could include detailed surveys of participants who have returned to their home countries.
    • Country-specific and localized curriculum can be drawn up, making skill development demand-led.
    • In all senses, India has consistently chosen well to underline the development partnership to be in line with African priorities.
    • It is pertinent, therefore, that we collectively craft a unique modern partnership with Africa.

    Conclusion

    • While India’s Africa strategy exists independently, it is important to be cognizant of China’s increasing footprint in the region.
    • Beijing’s model, if successful here, could be heralded as a replica for the larger global south.
    • It is important to note, however, that prominent African voices have emphasized that their own agency is often overlooked in the global discourse on the subject.

  • US puts Pakistan, Turkey on Child Soldier Recruiter List

    The US has added Pakistan and 14 other countries to a Child Soldier Recruiter List that identifies foreign governments having government-supported armed groups that recruit or use child soldiers.

    Who is a child soldier?

    • The recruitment or use of children below the age of 15 as soldiers is prohibited by the UN Convention on the Rights of the Child (CRC).
    • Currently, 193 countries have ratified the CRC.
    • The CRC requires state parties to “take all feasible measures” to ensure that children under 18 are not engaged in direct hostilities.
    • It further prohibits the state parties from recruiting children under 15 into the armed forces.
    • It is considered a war crime under the Rome Statute of the International Criminal Court.
    • In addition, the Optional Protocol to the CRC further prohibits kids under the age 18 from being compulsorily recruited into state or non-state armed forces or directly engaging in hostilities.
    • The United States is a party to the Optional Protocol.

    What is US law?

    • The US adopted the Child Soldiers Prevention Act (CSPA) in 2008.
    • The CSPA prohibits the US government from providing military assistance, including money, military education and training, or direct sales of military equipment, to alleged countries.

    What is prohibited for countries on the list?

    The following types of security assistance are prohibited for countries that are on the list:

    • Licenses for direct commercial sales of military equipment
    • Foreign military financing for the purchase of defence articles and services, as well as design and construction services
    • International military education and training
    • Excess defence articles
    • Peacekeeping operations

    Criticism of the treaty

    • International treaties like CRS are valuable and necessary tools to establish international norms as they raise awareness regarding human rights abuses.
    • However, these treaties are limited in scope and nature, and they tend to be idealistic rather than practicable.
    • The UN’s mechanisms only bind state parties that ratify the treaties.
    • It, therefore, has no authority over countries that are not parties to the convention or are non-state entities, such as rebel militias recruiting child soldiers.
    • While the UN views its treaties and conventions as binding on state parties, it has no police power mechanism to enforce its decisions.
    • Therefore, the CRC and its Optional Protocol are limited by the signatories’ willingness to comply. Somalia, for example, is a signatory but it hasn’t ratified the convention.

  • OPEC+ seeks consensus on oil output

    OPEC+ has failed to reach a deal on oil output policy because the United Arab Emirates blocked some aspects of the pact.

    About OPEC

    • OPEC is a permanent, intergovernmental organization, created at the Baghdad Conference in 1960, by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela.
    • It aims to manage the supply of oil in an effort to set the price of oil in the world market, in order to avoid fluctuations that might affect the economies of both producing and purchasing countries.
    • It is headquartered in Vienna, Austria.
    • OPEC membership is open to any country that is a substantial exporter of oil and which shares the ideals of the organization.
    • Today OPEC is a cartel that includes 14 nations, predominantly from the middle east whose sole responsibility is to control prices and moderate supply.

    What is OPEC+?

    • The non-OPEC countries which export crude oil along with the 14 OPECs are termed as OPEC plus countries.
    • OPEC plus countries include Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan, and Sudan.
    • Saudi and Russia, both have been at the heart of a three-year alliance of oil producers known as OPEC Plus — which now includes 11 OPEC members and 10 non-OPEC nations — that aims to shore up oil prices with production cuts.

    Must read:

    [Burning Issue] Oil Prices and OPEC+

    Concerns for India

    • Rising oil prices are posing fiscal challenges for India, where heavily-taxed retail fuel prices have touched record highs, threatening the demand-driven recovery.
    • India imports about 84% of its oil and relies on West Asian supplies to meet over three-fifths of its demand.
    • As one of the largest crude-consuming countries, India is concerned that such actions by producing countries have the potential to undermine consumption-led recovery.
    • This would hurt consumers, especially in our price-sensitive market.

    Answer this PYQ in the comment box:

    Q.The term ‘West Texas Intermediate’, sometimes found in news, refers to a grade of (CSP 2020):

    (a) Crude oil

    (b) Bullion

    (c) Rare earth elements

    (d) Uranium

  • OECD-G20 Inclusive Framework Tax Deal

    India has joining the OECD-G20 framework for a global minimum tax.

    Must read

    What is Global Minimum Corporate Tax?

    What is this tax deal?

    • The proposed solution consists of two components:
    1. Pillar One is about the reallocation of an additional share of profit to the market jurisdictions and
    2. Pillar Two consists of minimum tax and subject to tax rules
    • Some significant issues including share of profit allocation and scope of subject to tax rules, remain open and need to be addressed.
    • Further, the technical details of the proposal will be worked out in the coming months and a consensus agreement is expected by October.

    Why did India join?

    • The principles underlying the solution vindicates India’s stand for a greater share of profits for the markets, consideration of demand-side factors in profit allocation.
    • There is a need to seriously address the issue of cross border profit shifting and need for the subject to tax rules to stop treaty shopping.
    • India is in favour of a consensus solution that is simple to implement and simple to comply with.
    • At the same time, the solution should result in the allocation of meaningful and sustainable revenue to market jurisdictions, particularly for developing and emerging economies.

    What is Base Erosion and Profit Shifting (BEPS)?

    • BEPS refers to corporate tax planning strategies used by multinationals to “shift” profits from higher-tax jurisdictions to lower-tax jurisdictions.
    • It thus “erodes” the “tax base” of the higher-tax jurisdictions.
    • Corporate tax havens offer BEPS tools to “shift” profits to the haven, and additional BEPS tools to avoid paying taxes within the haven.
    • It is alleged that BEPS is associated mostly with American technology and life science multinationals.