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  • E-commerce rules 2020

    The article analyses the various restrictions under The Consumer Protection (E-Commerce) Rules, 2020 to regulate all commercial transactions and issues with such restrictions.

    Context

    • The recent rules relating to e-commerce, issued by the ministry of consumer affairs, food and public distribution, under the Consumer Protection Act, 2019 needs some changes.

    What the recent rules specify

    • The Consumer Protection (E-Commerce) Rules, 2020, notified on July 23, regulate all commercial transactions sold over a digital or electronic network.
    • The e-com rules currently recognise two e-commerce business models, namely, marketplace model and inventory-based model.
    • The rules have separate specified provisions for marketplace- and inventory-based entities.
    • The e-com rules require that all information on the return, refund, exchange, warranty and guarantee, delivery and shipment of the goods or services being sold, including their country of origin, be provided on the platform.
    • Such details enable consumers to make an informed decision.

    What the new rules seek to achieve

    • The country of origin requirement is significant as India and several other countries are currently re-negotiating their free trade agreements.
    • E-com rules prohibit unfair trade practices by entities and sellers on marketplaces and manipulation of price.
    • The entities are prohibited from manipulating the price of the goods or services to gain unreasonable profit by imposing unjustified price or charges on consumers.

    Issues with the rules

    • It remains unclear as to what would constitute price manipulation.
    • It also remain unclear how the e-commerce entities and sellers are expected to navigate these roadblocks without falling foul of such provisions.
    • Both the marketplace entity and sellers are now required to set up a grievance redressal mechanism, small businesses may not be in a position to comply.
    • The rules also prohibit an e-commerce entity from levying a charge for cancellation post confirmation.
    • While the provisions may be intended as safeguards that ensure a level-playing field, some of these conditions are impractical.
    • Applying identical rules does not convey a business-friendly approach.

    Investment restrictions

    • The Foreign Exchange Management (Non-debt Instruments) Rules, 2019 currently recognise the marketplace and inventory model.
    • It permit 100% FDI under the automatic route to marketplace entities as also to those engaged in single-brand retail.
    • Foreign investments, up to 51%, are permitted in multi-brand retail with prior government approval.
    • As per the non-debt rules, entities engaged in single-brand retail are permitted to undertake retail trading through e-commerce.
    • However, single-brand retail trading through e-commerce has to open a brick-and-mortar store within two years from the date it commences online retail.
    • Retail trading, in any form, by means of e-commerce, is not permissible for entities engaged in inventory-based multi-brand retail trading and having foreign investment.

    Consider the question “What are the objectives sought to be achieved through The Consumer Protection (E-Commerce) Rules, 2020 to regulate commercial transactions? What are the issues with the rules?”

    Conclusion

    The commercial sector is anxious for India to consider relaxing some of these requirements, or extending the time period for compliance, given that brick-and-mortar operations may not be possible in the foreseeable future.

    Source-

    https://www.financialexpress.com/opinion/e-commerce-rules-a-one-size-fits-all-approach-some-need-to-be-relaxed/2071953/

    Back2Basics: Invenetory model and marketplace model

    • Marketplace model of e-commerce means providing of an information technology platform by an e-commerce entity on a digital and electronic network to act as a facilitator between buyer and seller.
    • The main feature of the market place model is that the e-commerce firm like flipkart, snapdeal, amazon etc. will be providing a platform for customers to interact with a selected number of sellers.
    • Inventory model of ecommerce means an ecommerce activity where inventory of goods and services is owned by e-commerce entity and is sold to the consumers directly.
    • The main feature of inventory model is that the customer buys the product from the ecommerce firm.

  • Aiming for wider consumer base and directing public spending accordingly

    The article suggests the widening of consumer base rather than increasing consumption. To augment that, the government should also direct the spending towards such sectors which would help in broadening of the base.

    Prescription for long term growth: Broadening the consumer base

    • India entered the pandemic with declining growth and limited scope for a conventional and large fiscal stimulus.
    • The NSS 68th round consumption survey indicates that in urban India, the top 20 per cent of the population accounted for nearly 55 per cent of discretionary consumption and 45 per cent of all consumption.
    •  The narrow consumption base coupled with uncertainty over the demographic dividend could belie India’s long-term investment attractiveness.
    • With or without the pandemic, the prescriptions for long-term growth remain the same — broaden the consumer base.
    • This broadening of the consumer base should happen through empowering the low and middle-income consumers.

    Why can’t the government just spend to revive growth

    • 1) Temporary incomes coupled with job/income uncertainty will induce precautionary savings without any impact on growth.
    • 2) With revenues declined, funding of additional expenditure is through higher borrowings.
    • Any incremental debt should be seen in the context of future investments being hampered due to current consumption.
    • India’s public debt/GDP will likely reach around 85 per cent and the consolidated gross fiscal deficit to GDP ratio could be around 12.5 per cent this year. 

    Way forward

    • India needs to broaden its consumer base beyond the top 10-20 per cent of the population to improve long-term growth prospects.
    • To achieve this we will need well-paid employment for the bottom and middle segments.
    • The “safe” group of India’s workforce is extremely small.
    • The PLFS 2018-19 report places around 24 per cent of the workforce in the regular wage/salary category.
    • Within this segment, around 40 per cent do not have a written contract, paid leaves, or security while 70 per cent do not have any written contract.
    • These sharp skews in consumption and labour become a substantial risk for a consumption-led growth in the aftermath of a crisis.
    • The PLFS 2018-19 report indicates that around 50 per cent of the rural non-agriculture workforce.
    • 35 per cent of the urban workforce is engaged in the construction and manufacturing sectors.
    • The rebuild and recover phase should aim for a wider consumer base with infrastructure and manufacturing as the two pillars.
    • To make manufacturing easier, the focus should be on labour reforms, fewer/quicker approvals, reducing the compliance burden, and promoting export-oriented sectors.
    • Policies should not become too inward-looking such that export promotion becomes difficult.

    Directing public spending and policies appropriately

    • Most public spending should be directed towards roads, railways, infrastructure, healthcare and educational facilities.
    • To promote infrastructure creation along with private sector participation, the government needs to charge an economic price for goods and services such as power, irrigation, and public utilities.
    • Establish the rule of law with minimal interference in pricing, streamline processes for quick approvals and ensure timely payments to private operators.
    • The government should also signal its vision along with a financing strategy through sharper expenditure management, enhanced market borrowings, setting up of a Development Financing Institution, and an asset monetisation programme.

    Conclusion

    To achieve economic growth of 7-8 per cent the government needs to start addressing large infrastructure deficit, the weak financial sector, archaic land and labour laws, and the administrative and judicial hurdles.

  • AGR dues issue in Telecom Sector

    The Supreme Court has held that telecom firms will get 10 years to clear their adjusted gross revenue or AGR dues and that the National Company Law Tribunal (NCLT) should decide whether or not spectrum can be sold under the Insolvency and Bankruptcy Code.

    Try this PYQ:

    Q. In India, which of the following review the independent regulators in sectors like telecommunications, insurance, electricity, etc.?

    1. Ad Hoc Committees set up by the Parliament
    2. Parliamentary Department Related Standing Committees
    3. Finance Commission
    4. Financial Sector Legislative Reforms Commission
    5. NITI Aayog

    Select the correct answer using the code given below:

    (a) 1 and 2

    (b) 1, 3 and 4

    (c) 3, 4 and 5

    (d) 2 and 5

    Supreme Court rule on AGR dues

    • In its judgment, the SC gave all telcos a 10-year timeline to complete the payments of AGR dues, instead of the old 20-year schedule suggested by the DoT.
    • It also directed telcos to pay 10 per cent of the total AGR dues by March 31, 2020, following which they can make payments in annual instalments between 2021 and 2031.
    • The non-payment of dues in any year would lead to the accrual of interest and invite contempt of court proceedings against such companies.
    • A crucial issue of whether the spectrum could be sold under IBC will now be decided by the National Company Law Tribunal.

    What is AGR?

    • Adjusted Gross Revenue (AGR) is the usage and licensing fee that telecom operators are charged by the Department of Telecommunications (DoT).
    • It is divided into spectrum usage charges and licensing fees, pegged between 3-5 per cent and 8 per cent respectively.

    What is the issue about?

    • All the telecom companies that operate in India pay a part of their revenues as licence fee and spectrum charges to the Department of Telecommunications (DoT) for using the spectrum owned by the government.
    • In its definition of AGR, the DoT had said that telcos must cover all the revenue earned by them, including from non-telecom sources such as deposit interests and sale of assets.
    • The telecom companies were opposed to this and had challenged this definition of AGR in several forums, including the Supreme Court.
    • On October 24, 2019, the SC had upheld the DoT’s definition of AGR.
    • Though the telcos sought a review of the judgment, it was dismissed by the top court which had then insisted that telcos clear all the dues by January 23, 2020.

  • Special Frontier Force: The Vikas Battalion

    There have been reports that a Special Frontier Force (SFF) unit, referred to as Vikas Battalion, has been instrumental in occupying some key heights on the LAC.

    Try this question for mains:

    Q.“It cannot be business as usual with China after the border clash.” Critically comment.

    What is the Special Frontier Force (SFF)?

    • SFF was raised in the immediate aftermath of the 1962 Sino-India war.
    • It was a covert outfit which recruited Tibetans (now it has a mixture of Tibetans and Gorkhas) and initially went by the name of Establishment 22.
    • It was named so because it was raised by Major General Sujan Singh Uban, an Artillery officer who had commanded 22 Mountain Regiment.
    • He, therefore, named the new covert group after his regiment. Subsequently, the group was renamed as Special Frontier Force.
    • SFF now falls under the purview of the Cabinet Secretariat where it is headed by an Inspector General who is an Army officer of the rank of Major General.

    Is SFF a part of the Army?

    • Strictly speaking, the SFF units are not part of the Army but they function under the operational control of the Army.
    • The units have their own rank structures which have equivalent status with Army ranks.
    • However, they are highly trained Special Forces personnel who can undertake a variety of tasks which would normally be performed by any Special Forces unit.
    • The SFF units, therefore, function virtually as any other Army unit in operational areas despite having a separate charter and history.

    Major operations conducted

    • There are several overt and covert operations in which SFF units have taken part over the years.
    • They took part in operations in the 1971 war, Operation Blue Star in Golden Temple Amritsar, Kargil conflict and in counter-insurgency operations in the country.
    • There are several other operations too in which the SFF has participated but the details are classified.

  • Pinaka Missile System

    The Ministry of Defence (MoD) has signed contracts with three Indian companies for supply of six regiments of the Pinaka Rocket System to be deployed along borders with Pakistan and China.

    Following things are crucial to know about the Pinaka Missile System:

    1) It’s development and manufacture

    2) Fire Range and other capabilities

    3) Latest technology enhancement

    Pinaka Missile System

    • Pinaka is an indigenously developed rocket system named after Lord Shiva’s mythological bow.
    • It is used for attacking the adversary targets prior to the close-quarter battles which involve smaller range artillery, armoured elements and the infantry.
    • The development of the Pinaka was started by the DRDO in the late 1980s, as an alternative to the multi-barrel rocket launching systems of Russian make, called like the ‘Grad’, which are still in use.
    • After successful tests of Pinaka Mark-1 in late 1990, it was first used in the battlefield during the Kargil War of 1999, quite successfully.
    • Subsequently, multiple regiments of the system came up over the 2000s.

    Its versions and capabilities

    • The Pinaka, which is primarily a multi-barrel rocket system (MBRL) system, can fire a salvo of 12 rockets over a period of 44 seconds.
    • One battery of the Pinaka system consists of six launch vehicles, accompanied by the loader systems, radar and links with network-based systems and a command post.
    • It can neutralize an area one kilometre by one kilometre.
    • The Mark-I version of Pinaka has a range of around 40 kilometres and the Mark-II version can fire up to 75 kilometres.
    • The Mark-II version of the rocket has been modified as a guided missile system by integrating it with the navigation, control and guidance system to improve the end accuracy and increase the range.
    • The navigation system of the missile is linked with the Indian Regional Navigation Satellite System.

  • Exercise Indra 2020

    Amid high operational alert by the Indian Navy in the Indian Ocean Region (IOR) India and Russia are scheduled to hold the bilateral naval exercise, Indra 2020, in the Andaman Sea, close to the strategic Strait of Malacca.

    [Prelims Spotlight]: Various Defence Exercises in News

    https://www.civilsdaily.com/prelims-spotlight-various-defence-exercises-in-news/

    Exercise Indra

    • It is a joint, tri-services exercise between India and Russia
    • This series of exercise began in 2003 and the First joint Tri-Services Exercise was conducted in 2017.
    • Company sized mechanized contingents, fighter and transport aircraft, as well as ships of respective Army, Air Force and Navy, participate in this exercise of ten days duration.

  • Thinking of new recovery path

    Growth and environmental protection are not the polar opposites of each other. The article analyses the issue of balancing the two and using pandemic as an opportunity to evolve novel recovery path.

    Pandemic: opportunity to new recovery path

    • The pandemic presents an opportunity for us to think of a new recovery path, one that can decouple economic growth and environmental degradation.
    • It becomes more important as India sees opportunities on the global call to diversify the supply chain and its internal call for Atmanirbhar Bharat.
    • For that, we need to strengthen our production and manufacturing capabilities.

    Issue of regulatory infrastructure

    • Monitoring and implementing environmental regulations is the biggest challenge we face.
    • Take the municipal solid waste rules.
    • Two decades after the regulations came into effect, their status not in good shape.
    • A comparatively recent regulation, centred around Extended Producer Responsibility, has also posed challenges in monitoring and implementation.
    • In a recent ruling, the judiciary not only ruled against the industry but also blamed officials responsible for implementing the regulations.

    Focus on implementation and monitoring

    •  In the long run, diluting regulatory norms will create more adverse impacts resulting in greater community upsurge.
    • The focus has to be to improve the system’s capabilities to monitor and implement regulatory requirements.
    • There needs to be greater transparency and accountability; there is no dearth of technology to facilitate this.
    • The intention and capacity to take action, rectify and diffuse is critical.
    • The right ecosystem between the industry, community and regulator is crucial.
    • If the three stakeholders remain isolated and get activated only in a crisis, we will not make any progress towards solving the issue.

    Way forward

    • We need to couple growth and environmental protection.
    • Environmental health will be the key enabler of socio-economic growth in the future.
    • Industry needs to realise that it is a part of an ecosystem and not at the centre of it.
    • Communities get impacted, either positively or negatively,  they need to empower themselves through education, so that they are not driven by the agenda of individuals with vested interests.
    • We have a challenge in implementing environmental regulations.
    • The community does not trust that the industry is meeting its compliance requirements, so, the regulatory system’s role is to improve this trust quotient.

    Conclusion

    As we plan our recovery past the pandemic, we have a good chance to create a new normal. We need to align towards a common cause and goals. We should not miss this chance.

  • GST reforms and compensation issue

    The GST compensation issue raises the need for reform in the system. The article discusses this issue and suggests reform.

    Background

    • Three years ago, the Centre and the States of the Union of India struck a grand bargain resulting in GST.
    • The States gave up their right to collect sales tax and sundry taxes, and the Centre gave up excise and services tax. 

    Issue of compensation

    • Consent of the states was secured by a promise of reimbursing any shortfall in tax revenues for a period of five years.
    • This reimbursement was to be funded by a special cess called the GST compensation cess. 
    • The promised reimbursement was to fill the gap for an assured 14% year on year tax growth for five years.

    Why is the Centre denying GST compensation

    • As the economy battles a pandemic and recession, the tax collection has dropped significantly.
    • At the same time, expenditure needs are sharply higher at the State level.
    • Using an equivalent of the Force Majeure clause in commercial contracts, the Centre is abdicating its responsibility of making up for the shortfall in 14% growth in GST revenues to the states.

    Why Central government is wrong in denying the compensation

    •  1) The States do not have recourse to multiple options that the Centre has.[like sovereign bond or a loan against public sector unit shares from the Reserve Bank of India]
    • 2) The Centre can get loans at lower rates of borrowing from the markets as compared to the States.
    • 3) In terms of aggregate public sector borrowing, it does not matter for the debt markets, nor the rating agencies, whether it is the States or the Centre that is increasing their indebtedness.
    • 4) Fighting this recession through increased fiscal stimulus is basically the job of macroeconomic stabilisation, which is the Centre’s domain.
    • 5) Using the alibi of the COVID-19 pandemic causes a serious dent in the trust built up between the Centre and States.
    • It will weaken the foundation of cooperative federalism.

    Reforms needed

    • GST is a destination-based consumption tax, which must include all goods and services with very few exceptions.
    • That widening of the tax base itself will allow us to go back to the original recommendation of a standard rate of 12%, to be fixed for at least a five-year period.
    • Some extra elbow room for the States’ revenue autonomy could be allowed by States non VATable surcharges on a small list of “sin” goods.
    • In the long term there are many changes in consumption patterns, production configurations and locations, which cannot be anticipated and hence a static concept of Revenue Neutral Rate cannot be reference.
    • The commitment to a low and stable rate is a must.
    • We must recognise the increasing importance of the third tier of government. 
    • After 28 years of the 73rd and 74th Amendments, the local governments do not have the promised transfer of funds, functions and functionaries.
    • Of the 12% GST, 10% should be equally shared between the States and the Centre, and 2% must be earmarked exclusively for the urban and rural local bodies.
    • Fresh approach also calls for an overhaul of the interstate GST and the administration of the e-way bill.

    Consider the question “Discuss the issue related to GST compensation to the States by the Central government. Suggest the measures changes in the GST regime to deal with flaws.”

    Conclusion

    GST is a crucial and long-term structural reform which can address the fiscal needs of the future, strike the right and desired balance to achieve co-operative federalism and also lead to enhanced economic growth. The current design and implementation has failed to deliver on that promise. A new grand bargain is needed.

  • What is Carbon-14 (C14) Battery?

    A California-based company has made a self-charging battery, which can run for 28,000 years on a single charge, by trapping carbon-14 (C14) nuclear waste in artificial diamond-case.

    Try this PYQ:

    Q.The known forces of nature can be divided into four classes, viz. gravity, electromagnetism, weak nuclear force and strong nuclear force. With reference to them, which one of the following statements is not correct?

    (a) Gravity is the strongest of the four

    (b) Electromagnetism act only on particles with an electric charge

    (c) Weak nuclear force causes radioactivity

    (d) Strong nuclear force holds protons and neutrons inside the nuclear of an atom.

    What is C14?

    • Carbon-14 (14C), or radiocarbon, is a radioactive isotope of carbon with an atomic nucleus containing 6 protons and 8 neutrons.
    • There are three naturally occurring isotopes of carbon on Earth: carbon-12, which makes up 99% of all carbon on Earth; carbon-13, which makes up 1%; and carbon-14, which occurs in trace amounts.
    • Its presence in organic materials is the basis of the radiocarbon dating method pioneered by Willard Libby and colleagues (1949) to date archaeological, geological and hydrogeological samples.

    C14 battery

    • The battery works by generating electricity on its own from a shower of electrons as a result of radioactive decay scattered and deposited in the artificial diamond-case.
    • The battery can be used in electric vehicles, mobile phones, laptops, tablets, drones, watches, cameras, health monitors and even sensors.
    • It is also said to be extremely safe and tamper-proof as it is coated with a non-radioactive diamond which prevents radiation leaks.

    Best example of nuke waste recycling

    • It is estimated that 33 million cubic metres of global nuclear waste will cost over $100 billion to manage and dispose of.
    • And a lot of this waste is graphite that is one of the higher risks of radioactive waste and one of the most expensive and problematic waste to store.

    Its applications

    • The company says its battery can be used to powerhouses, and that any excess electricity generated can be sold to the grid.
    • As the new battery need not be replaced, it can be installed in hard to reach places like pacemakers and implants, where a regular change of battery is not possible.
    • Another area of use is space electronics. The battery is said to power space equipment in rockets.
    • It can power the electrical needs of space crafts, like providing power to cockpits and assisting launch into the upper atmosphere.

  • Exercise Kavkaz 2020

    India has turned down Russia’s invitation to participate in the multilateral defence exercise Kavkaz 2020.

    Go through the list for once. UPSC may ask a match the pair type question asking exercise name and countries involved.

    https://www.civilsdaily.com/prelims-spotlight-defence-exercises/

    Exercise Kavkaz 2020

    • The Kavkaz 2020 is also referred to as Caucasus-2020.
    • The exercise is aimed at assessing the ability of the armed forces to ensure military security in Russia’s southwest, where serious terrorist threats persist and preparing for the strategic command-staff drills.
    • The main training grounds that will be involved are located in the Southern Military District.
    • The invitation for participation has been extended to at least 18 countries including China, Iran, Pakistan and Turkey apart from other Central Asian Republics part of the SCO.

    Why didn’t India participate?

    • While it is learned that China has confirmed its participation, Pakistan is also likely to send its troops for the exercise.
    • In the response communicated to Russia, New Delhi cited Covid-19 as the official reason to skip ‘Exercise Kavkaz 2020’.
    • The move comes in the backdrop of a border standoff with China in eastern Ladakh.

    Earlier instances

    • Exercise Tsentr last year had the participation of India, Pakistan and all Shanghai Cooperation Organisation (SCO) member-nations.
    • India had participated in SCO peace mission exercise in 2018, and in 2019, for the first time, was involved in a strategic command and staff exercise as part of Exercise Tsentr.