Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Exploring potential for a Westward trade push
After walking away from the RCEP, India needs to find alternative trading partners that can offer the potential for trade expansion. The article suggests a Westward trade push as an alternative.
Forging trade deals with the Western countries
- Our rejection of RCEP, which covers much of the eastern hemisphere, had exposed us to the risk of losing out on cross-border commercial relations in a highly dynamic part of the world.
- To compensate for the opportunity cost of that decision, it was imperative to strike other alliances.
- As a part of this, India adopted a roadmap for the rest of this decade to elevate ties with the UK and also moving to revive free-trade talks with the EU.
- An India-UK plan unveiled recently will raise our bilateral relationship to a ‘comprehensive strategic partnership in such areas as economic affairs, defence and health.
- The two countries signed a £1-billion trade investment pact that is expected to generate jobs in both.
- Separately, India and the EU are reportedly working out how to resume stalled negotiations for a trade deal.
Issues India may face
- The signing of pacts would involve mutual tariff reductions and the lowering of other barriers, both of which have proven thorny so far.
- In general, while the West wants us to lower import duties, our negotiators have been citing India’s sovereign right to protect domestic businesses under World Trade Organization rules.
- Globally, even before covid knocked the wind out of the sails of cargo ships, commerce across borders had been doing badly under the extended effects of a financial crisis that shook things up in 2008-09.
- But world trade remains a reliable path to global prosperity and must therefore regain its gusto.
- For us, deal-making would mean opening up markets to imports in lieu of easier access to foreign ones.
Way forward
- Concessions that cause very few job losses in India can easily be made. A broad cost-benefit analysis will have to guide our approach to talks, on complex issues like US visa rules which affect our software exports.
- Since it is governments that thrash out deals, geopolitical convergences are often sought too.
- We seem to be in a favourable position on this, given the West’s need to keep China’s rise in check.
- The UK’s Rolls-Royce has just inked a memorandum with Hindustan Aeronautics Ltd for warship engines, a sign of our strategic ties.
- Technology could come our way from the US, too.
- If we can leverage an ability to play a role in Asia’s balance of power to our economic benefit, we should.
Conclusion
Mutually assured flexibility on tariff concessions would help India and its Western partners score economic gains and also counterbalance China’s growing dominance of world trade.
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B2B
[pib] India-UK Virtual Summit
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: 102nd Amendment
Mains level: Paper 2- Maratha quota judgement
- A five-judge Constitution Bench of the Supreme Court on Wednesday struck down the Maharashtra law granting reservation to the Maratha community.
- The court had framed six questions of law on the issue.
- The court unanimously agreed on three of those issues, while the verdict was split 3:2 on the other three.
Issue 1: Whether Indra Sawhney judgment needs to be revisited
- One of the key issues was to examine whether the 1992 landmark ruling by the nine-judge bench in Indra Sawhney v Union of India had to be revisited.
- First, it said that the criteria for a group to qualify for reservation is “social and educational backwardness”.
- Second, it reiterated the 50% limit to vertical quotas reasoning that it was needed to ensure “efficiency” in administration.
- However, the court said that this 50% limit will apply unless in “exceptional circumstances”.
- The Maratha quota exceeded the 50% ceiling.
- The arguments by state governments before the court was that the Indra Sawhney verdict must be referred to a 11-judge Bench for reconsideration since it laid down an arbitrary ceiling which the Constitution does not envisage.
- The court said that the 50% ceiling, although an arbitrary determination by the court in 1992, is now constitutionally recognized and held that there is no need to revisit the case.
Issue 2 and 3: Does Maratha quota law come under exceptional circumstances
- The state government’s argument was that since the population of backward class is 85% and reservation limit is only 50%, an increase in reservation limit would qualify as an extraordinary circumstance.
- All five judges disagreed with this argument.
- The bench ruled that the above situation is not extraordinary.
Issue 4,5 and 6: Validity of 102nd Amendment
- The Constitution (One Hundred and Second Amendment) Act, 2018 gives constitutional status to the National Backward Classes Commission.
- The Amendment also gives the President powers to notify backward classes.
- The Bench unanimously upheld the constitutional validity of the 102nd Amendment but differed on the question of whether it affected the power of states to identify socially and economically backward classes (SEBCs).
- Attorney General, appearing for the central government, clarified that this was not the intention of the law.
- The Attorney General argued that it is inconceivable that no State shall have the power to identify backward class”.
- The Attorney General explained that the state government will have their separate list of SEBCs for providing reservations in state government jobs and education.
- The Parliament will only make the central list of SEBCs which would apply for central government jobs.
- However, the Supreme Court held that “the final say in regard to inclusion or exclusion (or modification of lists) of SEBCs is firstly with the President, and thereafter, in case of modification or exclusion from the lists initially published, with the Parliament”.
- This raises a question: How does this impact interventions by other states to provide reservations for other communities, for example Jats in Haryana and Kapus in Andhra?
- The majority opinion essentially says that now the National Backward Classes Commission must publish a fresh list of SEBCs, both for states and the central list.
- The Supreme Court also issued a direction under Article 142 of the Constitution of India which says that till the publication of the fresh list the existing lists will continue to operate.
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BACK2BASICS
- National Commission for Backward Classes is a constitutional body (102nd amendment 2018 in the constitution to make it a constitutional body) (Article 338B of the Indian Constitution).
- It was constituted pursuant to the provisions of the National Commission for Backward Classes Act, 1993.
- According to Article 338B, Commission shall consist of a Chairperson, Vice-Chairperson and three other Members and the conditions of service and tenure of office of the Chairperson, Vice-Chairperson and other Members so appointed shall be such as the President may by rule determine. The Chairperson, Vice-Chairperson and other Members of the Commission shall be appointed by the President by warrant under his hand and seal.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Various thresholds for digital tax
Mains level: Paper 3- Rules for digital tax
- Starting April 2022, overseas entities that don’t have a physical presence in India but derive significant financial benefit from Indian customers will come under the Indian tax net.
- While the main legal provision was introduced in 2018, the revenue department notified the thresholds for the purposes of significant economic presence (SEP) on May 3.
- The concept was introduced via Finance Act, 2018, to enlarge the scope of income of non-residents that accrues or arises in India, by establishing a “business connection” of the foreign entities.
- The idea is to tax profits of those online and offline businesses that don’t have a physical presence in India but derive significant economic value from the country.
- Only those entities will get impacted by the SEP provisions who come from non-treaty jurisdictions.
- That’s because the treaties specify non-resident entities will come under the tax net only if they have a permanent establishment in India.
- India currently has a Double Taxation Avoidance Agreement with 97 countries.
Thresholds
- Transaction Threshold: Any non-resident whose revenue exceeds Rs 2 crore for transactions in respect of goods, services or property with any person in India. This will include transactions on the download of data or software.
- User Threshold: Any entity that systematically and continuously does business with more than 3 lakh users in India.
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BACK2BASICS
Revision of this topic further:
What are Digital Services Taxes?
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: 102nd Constitution Amendment
Mains level: Paper 2- The Supreme Court strikes down law granting reservation to Maratha community
About the judgment
- The Supreme Court on Wednesday struck down the provisions of a Maharashtra law providing reservation to the Maratha community.
- It rejected demands to revisit the verdict or to refer it to a larger Bench for reconsideration.
What the Supreme Court said
- The Bench said that “providing reservation for the advancement of any socially and educationally backward class in public services is not the only means and method for improving the welfare of backward class”
- The 50% rule is to fulfill the objective of equality as engrafted in Article 14 of which Articles 15 and 16 are facets.
- To change the 50% limit is to have a society that is not founded on equality but based on caste rule.
- If the reservation goes above the 50% limit, it will be a slippery slope, the political pressure, make it hard to reduce the same.
- It added that “the Constitution (Eighty-first Amendment) Act, 2000 by which sub-clause (4B) was inserted in Article 16 makes it clear that ceiling of 50% “has now received constitutional recognition”
- The Supreme Court disapproved the findings of the Justice M G Gaikwad Commission on the basis of which Marathas were classified as a Socially and Educationally Backward Class.
- It said that “the data collected and tabled by the Commission as noted in the report clearly proves that Marathas are not socially and educationally backward class”.
SC upheld 102nd Constitution amendment
- The SC also upheld the 102nd Constitution amendment, saying it does not violate the basic structure of the Constitution.
- The bench, by 3:2 majority, held that after the amendment, only the President will have the power to identify backward classes in a state or Union Territory.
- The amendment inserted Articles 338B and 342A in the Constitution.
- Article 338B deals with the structure, duties and powers of the National Commission for Backward Classes.
- Article 342A speaks about the power of the President to notify a class as Socially and Educationally Backward (SEBC) and the power of Parliament to alter the Central SEBC list. He can do this in consultation with Governor of the concerned State. However, law enacted by Parliament will be required if the list of backward classes is to be amended.
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BACK2BASICS
- 102nd Constitution Amendment Act, 2018 provides constitutional status to the National Commission for Backward Classes (NCBC).
- The Commission consists of five members including a Chairperson, Vice-Chairperson and three other Members appointed by the President by warrant under his hand and seal. It has the authority to examine complaints and welfare measures regarding socially and educationally backward classes.
- Previously NCBC was a statutory body under the Ministry of Social Justice and Empowerment.
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