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Foreign Policy Watch: India – EU

Is there a role for India in divided AUKUS?

Note4Students

From UPSC perspective, the following things are important :

Prelims level : AUKUS

Mains level : Paper 2- Role for India in issues over AUKUS

Context

France recalled its ambassadors to the US and Australia in a diplomatic slap intended to convey its anger over a deal forged in secrecy that saw Paris lose a multi billion dollar submarine contract.

Depth and diversity of India’s relations

  • That Delhi today is a part of a difficult conversation between the US, UK, France, Europe, and Australia points to the growing depth and diversity of India’s relations with different parts of the West.
  • Popular and academic discourse on India’s foreign policy has been obsessed with the concept of “non-alignment” —was about keeping distance from the West as a whole.
  • India’s contemporary diplomacy, in contrast, takes a nuanced view of internal dynamics in the West, and recognises the political agency of individual states, and develops wide-ranging relationships with the Western nations.

Relations with France

  • Paris has always taken an independent view of the world, while remaining within the broad framework of the American alliance.
  •  In the 1990s, Paris championed the construction of a multipolar world to constrain American “hyperpower” but India did not join it.
  • The last few years, however, have seen an intensification of India’s strategic engagement with France.
  • For example, India has overcome the earlier reluctance to work with France on Indian Ocean security.

Engagement as collective and sub-region

  • The government has also stepped up on the political engagement with Europe as a collective as well as its sub-regions — from Baltics to the Balkans and from Iberia to Mitteleuropa.
  •  As India discovers that every European nation, from tiny Luxembourg to a rising Poland, has something to offer, Europe has become a thriving hub of India’s international relations.

Relations with the UK

  • Due to the bitter colonial legacy, relations between India and UK have always been underdeveloped.
  • In the last couple of years, India has made a determined effort to build a new partnership with Britain, which is the fifth-largest economy in the world, a leading financial hub, a technological powerhouse, and punches well above its weight in global affairs.

Relations with “Anglosphere”

  • India’s neglect of London also meant Delhi had no time for the “Anglosphere” that binds the UK to Australia, Canada, and New Zealand.
  • Many had presumed that the Anglosphere was irrelevant — AUKUS, however, is a reminder that Anglo-Saxon political bonds endure.
  • Instead of treating the Anglosphere with scepticism, India has begun to vigorously engage with the “settler colonies” that have so much to offer India — from natural resources to higher education and critical technologies.
  • The UK and its settler colonies have long been the preferred destination for the Indian diaspora (besides the US).
  • Leveraging diaspora politics: While the diaspora tends to connect the domestic politics of the Anglosphere with that of India, Delhi is figuring out that the diaspora politics can be played both ways.

Relations with Japan and Australia

  • The transformation of India’s relations with Australia has occurred despite entrenched scepticism in the foreign policy bureaucracy.
  • Finally, Japan has been a part of the West in the post-War era and Delhi’s relations with Tokyo have never been as rounded as they are today. They are also fellow members of the Quad.

Way forward for India

  • This wide-ranging engagement with the West should help Delhi convey two important messages to its partners this week.
  • Not undermining the larger goal: India needs to remind France, Australia, the UK and US of the shared interests in securing the Indo-Pacific and the dangers of letting the current quarrel undermine that larger goal.
  • Effective deterrence in Indo-Pacific: The other is to highlight the region’s vast requirements for effective deterrence in the Indo-Pacific;
  • And that there is enough room for the US, UK, France, and Europe to collaborate with Indo-Pacific partners in overlapping coalitions to develop high technology and defence-industrial cooperation in all the areas highlighted by AUKUS — effective underwater capabilities to AI, quantum computing and cyber warfare.
  • Deeper cooperation: India’s interests lie in deeper strategic cooperation with France and Europe as well as the Quad and the Anglosphere.

Conclusion

India’s diverse relationships in the West must be deployed in full measure to prevent a split in the Indo-Pacific coalition.

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Capital Markets: Challenges and Developments

SEBI introduces T+1 Settlement System

Note4Students

From UPSC perspective, the following things are important :

Prelims level : T+1, T+2 settlement

Mains level : NA

The Capital markets regulator Securities and Exchange Board of India (SEBI) has introduced T+1 settlement cycle for completion of share transactions on optional basis in a move to enhance market liquidity.

What is T+1 Settlement System?

  • T+1 means that settlements will have to be cleared within one day of the actual transactions taking place.
  • Currently, trades on the Indian stock exchanges are settled in two working days after the transaction is done (T+2).
  • In April 2002, stock exchanges had introduced a T+3 rolling settlement cycle. This was shortened to T+2 from April 1, 2003.

What has Sebi allowed?

  • SEBI has allowed stock exchanges to start the T+1 system as an option in place of T+2.
  • If it opts for the T+1 settlement cycle for a scrip, the stock exchange will have to mandatorily continue with it for a minimum 6 months.
  • Thereafter, if it intends to switch back to T+2, it will do so by giving one month’s advance notice to the market.
  • Any subsequent switch (from T+1 to T+2 or vice versa) will be subject to a minimum period.
  • A stock exchange may choose to offer the T+1 settlement cycle on any of the scrips, after giving at least one month’s advance notice to all stakeholders, including the public at large.

Why T+1 settlement?

  • Reduced settlement time: A shortened cycle not only reduces settlement time but also reduces and frees up the capital required to collateralize that risk.
  • Quick settlement: T+1 also reduces the number of outstanding unsettled trades at any instant, and thus decreases the unsettled exposure to Clearing Corporation by 50%.
  • Speedy recovery of assets: The narrower the settlement cycle, the narrower the time window for a counterparty insolvency/bankruptcy to impact the settlement of a trade.
  • Risk reduction: Systemic risk depends on the number of outstanding trades and concentration of risk at critical institutions such as clearing corporations, and becomes critical when the magnitude of outstanding transactions increases.

How does T+2 work?

  • If an investor sells shares, settlement of the trade takes place in two working days (T+2).
  • The broker who handles the trade will get the money, but will credit the amount in the investor’s account only.
  • In effect, the investor will get the money only after three days.
  • In T+1, settlement of the trade takes place in one working day and the investor will get the money on the following day.
  • The move to T+1 will not require large operational or technical changes by market participants, nor will it cause fragmentation and risk to the core clearance and settlement ecosystem.

Why are foreign investors opposing it?

  • Foreign investors operating from different geographies would face time zones, information flow process, and foreign exchange problems.
  • Foreign investors will also find it difficult to hedge their net India exposure in dollar terms at the end of the day under the T+1 system.
  • In 2020, SEBI had deferred the plan to halve the trade settlement cycle to one day (T+1) following opposition from foreign investors.

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Back2Basics: SEBI

  • The SEBI is the regulatory body for securities and commodity market in India under the jurisdiction of Ministry of Finance Government of India.
  • It was established on 12 April 1988 and given Statutory Powers on 30 January 1992 through the SEBI Act, 1992.

Jurisdiction of SEBI

  • SEBI has to be responsive to the needs of three groups, which constitute the market:
  1. Issuers of securities
  2. Investors
  3. Market intermediaries

SEBI has three powers rolled into one body: quasi-legislative, quasi-judicial and quasi-executive.

  • It drafts regulations in its legislative capacity, it conducts investigation and enforcement action in its executive function and it passes rulings and orders in its judicial capacity.
  • Though this makes it very powerful, there is an appeal process to create accountability.
  • There is a Securities Appellate Tribunal which is a three-member tribunal and is currently headed by Justice Tarun Agarwala, former Chief Justice of the Meghalaya High Court.
  • A second appeal lies directly to the Supreme Court.

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Industrial Sector Updates – Industrial Policy, Ease of Doing Business, etc.

The end of the doing business rankings

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Ease of Doing Business Report

Mains level : Read the attached story

The World Bank Group has scrapped its flagship publication, the ‘Doing Business’ report.

Doing Business Report

  • This report publishes the influential annual ranking of countries on the Ease of Doing Business (EDB) index.
  • It ranks countries by the simplicity of rules framed for setting up and conducting businesses.

Utility of the index

The World Bank’s decision has wide ramifications, as the index serves varied purposes.

  • Many countries showcase improved ranking to signal market-friendly policies to attract foreign investments. National leaders often set EDB rank targets.
  • This helps them measure domestic policies against global “best practices” and browbeat domestic critics.
  • India, for instance, wanted its administration to ensure that India breaks into the top 50 ranks of the EDB index.
  • Some countries seem to use their political heft to improve their rank, polish their international image and sway public opinion (as appears to be China’s case).

Issues with the credibility of the report

  • The Group acted on its commissioned study to examine the ethical issues flagged in preparing the 2018 and 2020 editions of the EDB index.
  • It is accused of having exerted pressure on the internal team working on the Doing Business report to falsely boost China’s rank by doctoring the underlying data.
  • Similarly, tensions were also reportedly brought to bear in the case of Saudi Arabia’s rank, among others.

EDB index rank vs economic outcomes

  • There is a disconnect between the stellar rise in EDB index rank and economic outcomes.
  • The theory underlying the EDB index could be suspect, the measurement and data could be faulty, or both.
  • For example, China’s phenomenal economic success, especially its agricultural performance (after the reforms in 1978), is perhaps the most unmistakable evidence demonstrating that lack of clarity of property rights may not be the binding constraint in a market economy.
  • What matters is economic incentives.
  • Measuring regulatory functions underlying the index could be tricky and subjective and possibly politically motivated as well, as the controversies surrounding the index seem to suggest.

EODB in India: At what cost

Ans. Weakening labour regulations

  • Closer home, India has weaponised the mandate to improve the rank in the EDB index to whittle down labour laws and their enforcement and bring them close to the free-market ideal of ‘hire and fire’.
  • Most States have emulated Maharashtra’s lead of administrative fiat, which renders labour laws toothless by dismantling official labour inspection systems and allowing employers to file self-regulation reports.
  • The government has farmed out critical safety regulations such as annual inspection and certification of industrial boilers to ‘third party’ private agencies.
  • The Labour Department’s inspection is now not mandated; it is optional only by prior intimation to employers.

Implications of such moves

  • Such abdication of the government’s responsibility towards workers has reportedly affected industrial relations.
  • The workers’ strike at Wistron’s iPhone assembly factory in Karnataka last year is an example.
  • Further, severe industrial accidents are rising, damaging life and productive industrial assets.

Why did World Bank scrap the index?

  • Investigations into “data irregularities” in preparing the EDB index, as brought out by the independent agency, seems to confirm many shortcomings repeatedly brought to light for years now.
  • The index appears motivated to support the free-market ideal.
  • It is dressed up under scientific garb and is underpinned by seemingly objective methods and data collection.
  • Strong leaders (and motivated officials) seem to have used their position to manipulate the index to suit their political and ideological ends.

Conclusion

  • India claimed the success of its Make in India initiative by relying on its ranking on the EDB index without tangible evidence.
  • Handing over law enforcement to employers by self-reporting compliance seems to have increased industrial unrest and accidents.
  • It perhaps calls for honest soul-searching as to what havoc a questionable benchmark can wreak.

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Food Safety Standards – FSSAI, food fortification, etc.

Front-of-pack labelling of Food Stuffs

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Front of Pack Labelling System

Seven years, four committees and two draft regulations later, India still does not have a clear labelling system to warn consumers about harmful levels of fat, salt and sugar in processed foods.

Context

  • According to the Food Safety and Standards (Packaging and Labelling) Regulations, 2011, every pre-packed processed food product sold in the country must be labelled with nutritional information.
  • To ensure that consumers are able to easily see and interpret the nutritional information on food packets, an expert committee was established by the Food Safety and Standards Authority of India (FSSAI).
  • The committee, set up following an order of the Delhi High Court which was hearing a public interest petition seeking a ban on the sale of junk food in and around schools.

Why label nutritional information?

  • This helps the consumer know everything about the food they buy and make an informed decision about what and how much to eat.
  • Such information is particularly crucial because the packaged food contain ultra-processed foods that are high in fat, salt or sugar and low in fibre and other essential micronutrients.
  • On the one hand, these foods cause malnutrition.
  • On the other hand they are linked strongly with obesity and diet-related non-communicable diseases, such as Type-2 diabetes, hypertension, heart ailments and certain cancers, like that of the colon.
  • All these increase the risk of premature death.

Issues with labelling in India

  • Most products provide information in English understanding which can be daunting for a vast number of people in India.

What is FoP labelling?

  • The front-of-pack (FoP) labelling system has long been listed as one of the global best practices to nudge consumers into healthy food choices.
  • It works just the way cigarette packets are labelled with images to discourage consumption.
  • Countries such as Chile, Brazil and Israel have laws to push the packaged food industry to adopt FoP labelling.
  • They have used FoP labelling as a measure to fight obesity and NCDs.

FoP labelling in India

  • The system is yet to be implemented in India even seven years after it was first proposed by FSSAI.
  • The fact is, makers of packaged foods are also a powerful lot, with strong business acumen.
  • While companies in other countries have acceded to the FoP labelling laws, they are unwilling to do so in India — a country experiencing a dietary shift.

Why must we have FoP labels?

  • Countries are working to find ways to nudge consumers into healthy food choices and to contain the growing crisis of obesity and diet-related non-communicable diseases (NCDs).
  • It is a crisis that increasingly impacts children and also exacerbates novel coronavirus disease (COVID-19) symptoms. Front-of-pack (FoP) labelling is definitely an effective tool in this effort.

India definitely needs ‘warning labels’ on front-of-pack, but this must be a symbol-based label with no text and numbers. This is because:

(1) Junk foods have high levels of unhealthy nutrients

  • There is strong evidence that sugar, salt and fat in junk foods are addictive, like nicotine in tobacco.
  • FoP ‘warning’ labels have helped reduce cigarette consumption. It is time we adopted the same for junk foods.

(2) Warning labels are easy to notice and understand

  • They do not confuse consumers with mixed messages.
  • Their distinct shape, colour and size make them noticeable in the otherwise cluttered and colourful packaging.
  • With one label for one nutrient, it becomes easier to know if a product is high in more than one nutrient.

(3) Warning labels are the global best practice now

  • At least seven countries have adopted warning labels in the past five years. These include Chile, Peru, Mexico, Israel and Uruguay.
  • Low- and middle-income mothers have shown profound changes in attitudes towards food purchases as they now understand the nutritional content of packaged foods.
  • Even children can read the labels and take an informed decision. This has also forced food companies to reduce the amount of sugar and sodium in foods and beverages.

(4) They are best suited for India

  • Warning labels are best suited for India as they do not include numbers unlike many other FoP labels.
  • In fact, warning labels that are symbol-based, like that of Israel, can transcend the barriers of literacy and language in India.

(5) FSSAI has experience of successfully implementing symbol-based FoP labels

  • Its “green filled circle in green outlined square” logo to depict vegetarian food has been hugely successful in informing consumers.
  • In recent years, FSSAI also has made similar laws to depict fortification (+F logo) and organic food (a green-coloured tick for Jaivik Bharat logo).

Way forward

  • FoP labels must include information on nutrients that make food injurious to health.
  • This should be distinct from the details on the back-of-pack. FoP labels should aim to inform the consumer, while the back-of-pack label serves the purpose of scientific compliance and enforcement.
  • FoP labels should have information on ‘total sugar’ and not ‘added sugar’. There is no analytical laboratory method to differentiate ‘added sugar’ from total sugar and quantify it.

 

Innovation Ecosystem in India

India scores 46th rank in the Global Innovation Index 2021

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Global Innovation Index

Mains level : Innovation ecosystem in India

India has climbed 2 spots and has been ranked 46th by the World Intellectual Property Organization in the Global Innovation Index 2021 rankings.

Global Innovation Index

  • The Global Innovation Index (GII) is an annual ranking of countries by their capacity for, and success in, innovation.
  • It is published by Cornell University, INSEAD, and the World Intellectual Property Organization, in partnership with other organizations and institutions.
  • It is based on both subjective and objective data derived from several sources, including the International Telecommunication Union, the World Bank and the World Economic Forum.
  • The index was started in 2007 by INSEAD and World Business, a British magazine. It was created by Prof. Soumitra Dutta.

Components of GII

  • The GII is computed by taking a simple average of the scores in two sub-indices, the Innovation Input Index and Innovation Output Index, which are composed of five and two pillars respectively.

India’s performance

  • India has been on a rising trajectory, over the past several years in the Global Innovation Index (GII), from a rank of 81 in 2015 to 46 in 2021.
  • India attributed its improved performance due to the pivotal role played by the Department of Atomic Energy, the Department of Science and Technology, the Department of Biotechnology and the Department of Space.

Global scenario

  • Switzerland topped the league table, followed by Sweden, the US and the UK.
  • Among Asian economies, South Korea jumped to the fifth position, up from 10 last year.
  • China was in the 12th position.

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Historical and Archaeological Findings in News

What is Vishnuonyx?

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Vishnuonyx neptuni

Mains level : NA

Between 12.5 million and 14 million years ago, members of a genus of otters called Vishnuonyx lived in the major rivers of southern Asia.

Vishnuonyx neptuni

  • Vishnuonyx were mid-sized predators that weighed, on average, 10-15 kg.
  • Before this, the genus was known only in Asia and Africa (recent findings show that Vishnuonyx reached East Africa about 12 million years ago, according to the release).
  • Vishnuonyx depended on water and could not travel long distances over land.

Why in news?

  • German researchers have discovered the fossil of a previously unknown species, which they have named Vishnuonyx neptuni, meaning ‘Neptune’s Vishnu’.
  • Fossils of these now extinct otters were first discovered in sediments found in the foothills of the Himalayas.
  • Now, a newly found fossil indicates it had travelled as far as Germany. ‘
  • The dispersal of Vishnuonyx otters from the Indian subcontinent to Africa and Europe about 13 million years ago. ‘
  • This is the first discovery of any member of the Vishnuonyx genus in Europe; it is also its most northern and western record till date.

How did it travel as far as Europe?

  • According to the researchers, its travels over 6,000 km were probably made possible by the geography of 12 million years ago, when the Alps were recently formed.
  • These Alps and the Iranian Elbrus Mountains were separated by a large ocean basin, which would have made it easier for the otters to cross it.
  • Researchers believe ‘Neptune’s Vishnu’ first reached southern Germany, followed by Ancient Guenz and eventually, the Hammerschmiede.

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Wildlife Conservation Efforts

Species in news: Sea Cucumber

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Sea cucumber

Mains level : Illicit trade of exotic species

In a swift operation, the Indian Coast Guard (ICG) at Mandapam, Tamil Nadu seized two tonnes of sea cucumber, a banned marine species.

Sea Cucumbers

  • Sea cucumbers are part of a larger animal group called echinoderms, which also contains starfish and sea urchins.
  • Their body shape is similar to a cucumber, but they have small tentacle-like tube feet that are used for locomotion and feeding.
  • One way that sea cucumbers can confuse or harm predators is by propelling their own toxic internal organs from their bodies in the direction of an attacker.
  • The organs grow back, and it may save them from being eaten.
  • They are found in virtually all marine environments throughout the world, from shallow to deep-sea environments.
  • They are benthic, meaning they live on the ocean floor. However, their larvae are planktonic, meaning they float in the ocean with the currents.

Conservation status

  • Sea cucumber in India is treated as an endangered species listed under schedule I of Wildlife Protection Act of 1972.
  • It is primarily smuggled from Tamil Nadu to Sri Lanka in fishing vessels from Ramanathapuram and Tuticorin districts.

(IUCN status is not available for this species)

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