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December 2018

FDI in Indian economy

[op-ed snap] Why High-Profile Foreign Investors and Multinational Companies Sue India


Mains Paper 2: IR | Bilateral, regional & global groupings & agreements involving India &/or affecting India’s interests

From the UPSC perspective, the following things are important:

Prelims level: Bilateral investment treaties

Mains level: India’s new model BIT and inherent flaws in it


Legal cases arising out of BITs

  1. Ever since foreign investors started bringing cases against India under different bilateral investment treaties (BITs), the focus on the so-far neglected area of international investment law has increased
  2. BIT disputes against India, involving billions of dollars, revolve around measures triggered “by public health emergencies, economic crises or other matters directly involving public welfare — which would, therefore, be permissible under the Constitution, but which a corporation believes have negatively impacted its financial interests”

How do BITs work?

  1. Signing a BIT, like entering into any treaty, is in itself a sovereign function
  2. By signing, states voluntarily accept certain restrictions on the exercise of their sovereign public power
  3. If a state adopts a public measure which is not in accordance with these accepted restrictions, the multinational corporations, subject to jurisdictional requirements, are very much within their right to challenge such measures as breaches of the BIT
  4. Whether such measures are permissible under the state’s constitution or not is immaterial as regards that state’s international law obligations are concerned

Are MNCs wrong in bringing these claims?

  1. Contrary to popular perception, none of these claims have been brought because India exercised her sovereign public power to attain an important public welfare objective that allegedly hurt the financial interests of a foreign investor
  2. If the judiciary cannot get its act together; if the executive, Central and state, behaves in a manner that disregards due process, or goes back on the assurances and promises that lured foreign investors to invest; if the legislature amends laws retrospectively ignoring the decision of the apex court of the country, then what is a foreign investor expected to do?
  3. To bemoan these claims suggests not accepting to be governed by rule of law (but by the rule of whims and fancies) and telling foreign investors to accept whatever treatment is dished out to them in the name of third world sovereignty

India’s new model BIT

  1. The new model BIT is a major departure from earlier models (1993 and 2003) as it provides protection to foreign investors in limited circumstances
  2. Under the new Model, controversial clauses such as most favoured nation have been completely dropped while the scope of national treatment and fair and equitable treatment clauses has been considerably narrowed down
  3. Although investor-state dispute settlement (ISDS) mechanism – which allows investors to initiate international arbitration against states and thereby bypass domestic courts entirely – has been retained but access to ISDS mechanism has been made conditional on the exhaustion of local remedies
  4. In simple words, foreign investors will have to first approach the relevant domestic courts for the resolution of an investment dispute before commencing an arbitration case
  5. Besides, the new model provides an exhaustive list of economic, environmental and social measures, which shall be exempted under the treaty
  6. This includes taxation matters, intellectual property rights and measures to protect macroeconomic stability

Redrawing BIT

The redrawing of BITs should be based on two factors

  • First, there has to be a recognition that BITs are an integral element of the legal infrastructure necessary for the functioning of the global economy based on rules, not power politics
  1. Looked this way, BITs are an important component of international rule of law holding states accountable internationally for the exercise of their public power vis-à-vis foreign investors
  • Second, the functioning of the international investment relations between countries, under a rule of law framework, has to be informed by the normativity of ‘embedded liberalism’
  1. ‘Embedded liberalism’, different from the laissez faire liberalism of the 19th century, focuses on shaping an economic order that represents a compromise between free markets and States intervening in favour of their regulatory goals

Flaws in model BIT

  1. It significantly dilutes international scrutiny of India’s exercise of public power
  2. It undermines international rule of law and is divorced from the conception of ‘embedded liberalism’
  3. It takes India back to the pre-economic liberalisation era by giving a new template of the old-fashioned economic nationalism prioritising Indian government’s interests over foreign investors

Way forward

  1. The BIT cases against India should have triggered an introspection of the overall governance and decision-making processes
  2. Instead, India has used these cases to play the victim
  3. This victimhood narrative has ignored the fact that these cases deserved to be brought due to India’s poor governance and abuse of public power

Original article: Why High-Profile Foreign Investors and Multinational Companies Sue India

With inputs from the article: Remodeling India’s Investment Treaty Regime

Innovations in Biotechnology and Medical Sciences

[op-ed snap] Manufacturing drugs on demand


Mains Paper 3: Science & Technology | developments & their applications & effects in everyday life

From the UPSC perspective, the following things are important:

Prelims level: 3D printing, Drug API

Mains level: Scope of small drug manufacturing facility via 3D printing


Changes in manufacturing processes

  1. Unlike in the days before the Industrial Revolution when shoemakers, tailors, carpenters and other artisans made every last bit of their products by hand, very few production facilities today are capable of producing the entire finished product from scratch
  2. The process of modern manufacturing at industrial scale involves the establishment of multiple production facilities designed to individually produce vast quantities of components that are themselves designed to be combined, in even larger assembly lines, into the final finished product
  3. While this approach has given us the ability to manufacture products at a scale that was completely inconceivable before the invention of these industrial machines, it has left us at the mercy of the vast intercontinental supply chains that feed into these production facilities so that minor variations in quality and unpredictable disruptions in production anywhere in the chain of suppliers can have a devastating effect up the line

How these changes impact pharma industry

  1. This is of particular concern in the context of the pharmaceutical industry where non-continuous, “batch” processes are the heart and soul of the drug manufacturing process
  2. Most manufacturers produce the active pharmaceutical ingredient (API) using molecular fragments obtained from different sources
  3. The API is then mixed with excipients in a separate facility and the final drug product is formulated at yet another plant
  4. Due to this complex multi-stage process, it can take up to 12 months to produce the final finished product and manufacturing units throughout the supply chain are required to maintain large inventories of intermediates at all steps along the way
  5. This sort of a manufacturing process is particularly susceptible to variations in quality and supply—a fact that could literally mean the difference between life and death in the event of an epidemic when the production of life-saving drugs needs to be accelerated rapidly

The scope of 3D printing in the pharma sector

  1. 3D printing and desktop manufacturing will revolutionise industrial production, making it possible to produce small-batch custom designs at affordable prices
  2. Recently the excitement has begun to build up around the possibility of a similar approach to the manufacture of pharmaceuticals
  3. It is likely that machines like this will be able to synthesize many drugs—eventually, in time, all the drugs on the World Health Organization’s essential list

Advantages of a desktop manufacturing system

  1. It allows medical staff in small patient populations to only produce those pharmaceuticals that are necessary to meet patient needs
  2. For drugs with a short shelf life, the ability to manufacture the active ingredient on demand removes the requirement to include complex formulations that are included to improve their long-term stability
  3. In a country like India, where healthcare benefits need to reach the far corners of this vast country, machines that can manufacture essential drugs on demand in rural medical facilities will be invaluable

Impediments in applying this technology

  1. Producing drugs this way runs contrary to everything our existing regulatory framework says we should do
  2. Our laws, like those of countries around the world, are designed to monitor large centralized pharmaceutical facilities through tests and periodic inspections
  3. Our regulators simply do not have the tools to deal with distributed manufacturing of small-dose pharmaceuticals

Way forward

  1. Given the apparent benefits of this new technology, the government would do well to figure out how to redesign regulations to facilitate its adoption

Human Rights Issues

UN members sign Global Migration Compact


Mains Paper 2: IR | Important International institutions, agencies & fora, their structure, mandate

From UPSC perspective, the following things are important:

Prelims level: Details of the compact

Mains level: Illegal migrants issue in India


Global Compact for Safe, Orderly and Regular Migration

  1. To mark the 70th anniversary of the Universal Declaration of Human Rights, the global leaders inked this historical accord to help millions of women and men who are not exercising their basic human rights.
  2. The first-ever Global Compact for Safe, Orderly and Regular Migration was adopted by 164 countries in order to help as many as 258 million migrants worldwide achieve a life of safety and dignity.
  3. The Conference was hosted by the Government of Marrakesh, Morocco as agreed to by UN member states in the ‘New York Declaration for Refugees and Migrants’.
  4. The aim of the Global Compact is to improve the cooperation and management of cross-border movements of people.
  5. The Global Compact also makes clear that it is legally non-binding, fully respecting the sovereignty of all States.

Aim and Objectives of Compact

  1. The Global Compact encompasses 23 objectives to help manage migration at all levels – global, national and local. The issues were discussed on these lines,
  • Adverse drivers that impede people from accessing sustainable livelihoods in their countries of origin
  • Risks and vulnerabilities faced by people during various stages of migration
  • Concerns of states and communities
  • The economic and social effects and implications migration may have on social and environmental levels as communities undergo demographic changes.
  1. It strives to create conditions to help migrants add value to societies through their human, economic and social contributions to sustainable development.

4 key objectives of Global Compact for Migration

  • Ease the pressures on host countries
  • Enhance refugee self-reliance
  • Expand access to third-country solutions
  • Support conditions in countries of origin for return in safety and dignity.

Why is it important to discuss the Global Compact for Migration?

  1. It is, indeed, the need of the hour to discuss migration as the issue is becoming a global tension by giving rise to illegal activities across borders like smuggling, terrorism.
  2. Unregulated migration bears a terrible human cost: a cost in lives lost on perilous journeys across deserts, oceans and rivers; and a cost in lives ruined at the hands of smugglers, unscrupulous employers and other predators.
  3. More than 60,000 migrants have died on the move since the year 2000.

Difference between migrant and refugee


  1. Refugees are persons who are outside their country of origin for reasons of feared persecution, conflict, generalized violence, or other circumstances that have seriously disturbed public order ; as a result, require international protection.
  2. The refugee definition can be found in the 1951 Convention and regional refugee instruments, as well as UNHCR’s Statute.


  1. While there is no formal legal definition of an international migrant, most experts agree that an international migrant is someone who changes his or her country of usual residence, irrespective of the reason for migration or legal status.
  2. Generally, a distinction is made between short-term or temporary migration, covering movements with a duration between three and 12 months, and long-term or permanent migration, refering to a change of country of residence for a duration of one year or more.

Terrorism and Challenges Related To It

UN launches new framework to strengthen fight against terrorism


Mains Paper 2: IR | Bilateral, regional & global groupings & agreements involving India &/or affecting India’s interests

From UPSC perspective, the following things are important:

Prelims level: UN Global Counter-Terrorism Coordination Compact

Mains level: Anti-terror measures undertaken by UN.


  • UN Secretary-General Antonio Guterres has launched a new framework to combat the scourge of international terrorism and coordinate efforts across the peace and security, humanitarian, human rights and sustainable development sectors.


  1. Terrorist organization like Da’esh and Al Qaida continue to twist religion to serve their ends.
  2. At the same time, neo-Nazi and far right groups are also using the Internet as a platform to mobilize support across borders, exploit economic anxieties, radicalize, recruit and carry out attacks.

UN Global Counter-Terrorism Coordination Compact

  1. The framework is an agreement between the UN chief, 36 organizational entities, the International Criminal Police Organisation (INTERPOL) and the World Customs Organisation.
  2. It aims to serve better the needs of Member States when it comes to tackling the scourge of international terrorism.
  3. Policies that limit human rights only end up alienating the very communities they aim to protect and which normally have every interest in fighting extremism.
  4. Such policies can effectively drive people into the hands of terrorists and undermine our efforts on prevention.

A new Task Force

  1. The UN Global Counter-Terrorism Coordination Compact Task Force will replace the Counter-Terrorism Implementation Task Force.
  2. The former was established in 2005 to strengthen UN system-wide coordination and coherence of counter-terrorism efforts.

Why such move?

  1. This year’s Global Terrorism Index was released by the Institute for Economic and Peace.
  2. It indicates that despite a 27 % fall in the number of deaths from acts of terrorism worldwide, the impact of terrorism remains widespread, with 67 countries experiencing deadly attacks.
  3. This is the second highest recorded number of countries in the past twenty years

Wildlife Conservation Efforts

SC directs Centre to declare area around national parks as Eco-sensitive


Mains Paper 3: Environment | Conservation, environmental pollution and degradation, environmental impact assessment

From UPSC perspective, the following things are important:

Prelims level: ESZs and provisions related to it.

Mains level: Wildlife conservation in India


Expand ESZ

  1. The Supreme Court has directed the Union Environment Ministry to declare 10 km area around 21 national parks and wildlife sanctuaries across the country as ‘eco-sensitive zones’.
  2. A Bench led by Justice Madan B. Lokur took the initiative after its amicus curiae informed the court that the State governments have taken no effort to protect the area around these sanctuaries and parks.
  3. The court recorded that the issue has been pending for the past 12 years.

The parks and sanctuaries are:

  • Pobitora sanctuary in Assam;
  • Hemis High Altitude and Kishtewar national parks, Changthang, Hokersar, Trikuta sanctuaries in Jammu and Kashmir;
  • Jogimatti, Thimlapura and Yadahalli Chinkara sanctuaries in Karnataka;
  • Deolgaon Rehekuri and Thane Creek Flamingo sanctuaries and the Malvan marine sanctuary in Maharashtra;
  • Siroi National Park and Khongjaingamba Ching sanctuary in Manipur;
  • Baghmara Pitcher Plant sanctuary in Meghalaya;
  • Fakim and Puliebadze and Rangapahar sanctuaries in Nagaland;
  • Bhimrao Ambedkar bird sanctuary and Pilibhit sanctuary in Uttar Pradesh and
  • Jorepokhri sanctuary in West Bengal.

Eco-sensitive Zones

  1. Eco-Sensitive Zones (ESZs) or Ecologically Fragile Areas (EFAs) are areas notified by the MoEFCC around Protected Areas, National Parks and Wildlife Sanctuaries.
  2. The purpose of declaring ESZs is to create some kind of “shock absorbers” to the protected areas by regulating and managing the activities around such areas.
  3. They also act as a transition zone from areas of high protection to areas involving lesser protection.
  4. The Environment (Protection) Act, 1986 does not mention the word “Eco-Sensitive Zones”.
  5. However, Section 3(2)(v) of the Act, says that Central Government can restrict areas in which any industries, operations or processes or class of industries, operations or processes shall be carried out  or shall not, subject to certain safeguards.
  6. Besides Rule 5(1) of the Environment (Protection) Rules, 1986 states that central government can prohibit or restrict the location of industries and carrying on certain operations or processes on the basis of certain considerations.
  7. The same criteria have been used by the government to declare No Development Zones (NDZs).

Defining its boundaries

  1. An ESZ could go up to 10 kilometres around a protected area as provided in the Wildlife Conservation Strategy, 2002.
  2. Moreover, in case where sensitive corridors, connectivity and ecologically important patches, crucial for landscape linkage, are beyond 10 km width, these should be included in the Eco-Sensitive Zones.
  3. Further, even in the context of a particular Protected Area, the distribution of an area of ESZ and the extent of regulation may not be uniform all around and it could be of variable width and extent.

Trade Sector Updates – Falling Exports, TIES, MEIS, Foreign Trade Policy, etc.

[pib] PCS 1x System


Mains Paper 3: Economy | Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

From UPSC perspective, the following things are important:

Prelims level: PCS 1x portal and its features

Mains level: Improving logistics sector of India


  • Indian Ports Association (IPA) under the guidance of Ministry of Shipping launched the Port Community System ‘PCS1x’ with url
  • The platform has the potential to revolutionize maritime trade in India and bring it at par with global best practices and pave the way to improve the Ease of Doing Business world ranking and Logistics Performance Index (LPI) ranks.

PCS 1x

  1. ‘PCS 1x’ is a cloud based new generation technology, with user-friendly interface.
  2. This system seamlessly integrates 8 new stakeholders besides the 19 existing stakeholders from the maritime trade on a single platform.
  3. The platform offers value added services such as notification engine, workflow, mobile application, track and trace, better user interface, better security features, improved inclusion by offering dashboard for those with no IT capability.
  4. A unique feature of ‘PCS1x’ is that it can latch on to third party software which provides services to the maritime industry thereby enabling the stakeholders to access wide network of services.
  5. Another major feature is the deployment of a world class state of the art payment aggregator solution which removes dependency on bank specific payment eco system.

Features of this Portal

  1. This system will enable trade to have an improved communication with the customs as they have also embarked on Application Programming Interface (API) based architecture, thereby enabling real time interaction.
  2. This System offers a database that acts as a single data point to all transactions.
  3. It captures and stores data on its first occurrence thereby reducing manual intervention, the need to enter transaction data at various points and thereby reducing errors in the process.
  4. It is estimated that this feature alone will reduce 11/2 to 2 days in a life of transaction.
  5. The application will have a cascading effect in reducing dwell time and overall cost of transaction.
  6. A major training and outreach program is under way to educate the stakeholders about the uses and benefits of ‘PCS 1x’.

Digital India Initiatives

[pib] “ENSURE” Portal for Direct Benefit Transfer (DBT)


Mains Paper 3: Indian Economy| Economics Of Animal-Rearing

From UPSC perspective, the following things are important:

Prelims level: Particulars of the ENSURE Portal

Mains level: ICT initiatives for DBT in livestocks sector



  1. The portal “ENSURE”- National Livestock Mission-EDEG is developed by NABARD and is operated under the Department of Animal Husbandry, Dairying & Fisheries.
  2. Under the Mission’s component called Entrepreneurship Development and Employment Generation (EDEG), subsidy payment for activities related to poultry, small ruminants, pigs etc. through Direct Benefit Transfer (DBT) goes directly to the beneficiary’s account.
  3. In order to make it better, simpler and transparent, the NABARD has developed an online portal “ENSURE” ( so that the information related to beneficiary and processing of application can be made readily available.

Utility of the Portal

  1. Under the new process, controlling officer/branch manager of the bank, after scrutinizing & sanctioning of proposal, uploads the subsidy claims in the portal.
  2. The subsidy will be approved within 30 days from the date of sanction of loan.
  3. Earlier, even after the loan approval, subsidy took a long time to reach the beneficiary’s account.
  4. Through this process, the flow of information/funds will also be quicker and more accountable.
  5. The burden of extra interest due to delay in the disbursal of the subsidy would now be reduced after the launch of the portal.
  6. Access from the portal will also be on real-time basis and list of beneficiaries can be easily prepared.