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

    India should go all out in its Westward trade push

    op-ed snap | Economics | Mains Paper 3: Indian Economy

    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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  • Important Judgements In News

    Reading Maratha quota verdict

    Explained | Polity | Mains Paper 2: Executive & Judiciary

    • 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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  • Tax Reforms

    Digital Service tax

    | Economics | Mains Paper 3: Indian Economy

    • 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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  • Important Judgements In News

    Supreme Court struck down law for reservation to Maratha community

    SC Judgements | Polity | Mains Paper 2: Executive & Judiciary

    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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  • Telecom and Postal Sector – Spectrum Allocation, Call Drops, Predatory Pricing, etc

    Govt. gives nod for 5G trials

    | Science Tech | Mains Paper 3: Awareness in various sc and tech fields

    Trials for 5G technology

    • The Department of Telecommunications (DoT) on Tuesday gave permission to Telecom Service Providers (TSPs) to conduct trials for the use and application of 5G technology.
    • The applicant TSPs include Bharti Airtel Ltd., Reliance JioInfocomm Ltd., Vodafone Idea Ltd. and MTNL.
    • These TSPs have tied up with original equipment manufacturers and technology providers which are Ericsson, Nokia, Samsung and C-DOT.
    • Each TSP will have to conduct trials in rural and semi-urban settings also in addition to urban settings so that the benefit of 5G technology proliferates across the country.
    • This formally leaves out Chinese companies like Huawei and ZTE from the 5G race in India.

    About 5Gi technology

    • TSPs are encouraged to conduct trials using 5Gi technology in addition to the already known 5G technology.
    •  5Gi technology was advocated by India, as it facilitates much larger reach of the 5G towers and radio networks.
    • The 5Gi technology has been developed by the Indian Institute of Technology, Madras (IIT-M), Centre of Excellence in Wireless Technology (CEWiT) and IIT Hyderabad.

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  • How Covid would impact India’s foreign policy canvass

    op-ed snap | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

    Foreign policy consequences

    • The devastation caused by the second Covid wave prompted India to accept foreign aid after a gap of 17 years.
    • This is bound to have far-reaching strategic implications for India.
    • As a direct consequence of the pandemic, India’s claim to regional primacy and leadership will take a major hit.
    • India ‘leading power’ aspirations will be dented, and accentuate its domestic political contestations.
    • These in turn will impact the content and conduct of India’s foreign policy in the years to come.

    What would be the strategic implications?

    1) Impact on India’s regional primacy

    • COVID 2.0 has quickened the demise of India’s regional primacy.
    • India’s geopolitical decline is likely to begin in the neighbourhood itself.
    • India’s traditional primacy in the region was built on a mix of material aid, political influence and historical ties.
    • Its political influence is steadily declining, its ability to materially help the neighbourhood will shrink in the wake of COVID-19.
    • Its historical ties alone may not do wonders to hold on to a region hungry for development assistance and political autonomy.

    2) Impact on India’s great power aspiration

    •  India aspires to be a leading power, rather than just a balancing power.
    • While the Indo-Pacific is geopolitically keen and ready to engage with India, the pandemic could adversely impact India’s ability and desire to contribute to the Indo-Pacific and the Quad.
    • COVID-19, for instance, will prevent any ambitious military spending or modernisation plans.
    • Covid-19 will also limit the country’s attention on global diplomacy and regional geopolitics, be it Afghanistan or Sri Lanka or the Indo-Pacific.
    • With reduced military spending and lesser diplomatic attention to regional geopolitics, New Delhi’s ability to project power and contribute to the growth of the Quad will be uncertain.

    3) Domestic political contestation  and its impact on strategic ambition

    • Domestic political contestations in the wake of the COVID-19 devastation in the country could also limit India’s strategic ambitions.
    • General economic distress, a fall in foreign direct investment and industrial production, and a rise in unemployment have already lowered the mood in the country.
    • A depressed economy, politically volatile domestic space combined with a lack of elite consensus on strategic matters would hardly inspire confidence in the international system about India.

    4) Impact on India-China equation

    • From competing with China’s vaccine diplomacy a few months ago, New Delhi today is forced to seek help from the international community.
    • China has, compared to most other countries, emerged stronger in the wake of the pandemic.
    • The world, notwithstanding its anti-China rhetoric, will continue to do business with Beijing — it already has been, and it will only increase.
    • Claims that India could compete with China as a global investment and manufacturing destination would be dented.
    • India’s ability to stand up to China stands vastly diminished today: in material power, in terms of balance of power considerations, and political will.

    5) Depressed foreign policy

    • Given the much reduced political capital within the government to pursue ambitious foreign policy goals, the diplomatic bandwidth for expansive foreign policy goals would be limited.
    • This, however, might take the aggressive edge off of India’s foreign policy.
    • Less aggression could potentially translate into more accommodation, reconciliation and cooperation especially in the neighbourhood, with Pakistan on the one hand and within the broader South Asian Association for Regional Cooperation (SAARC) framework on the other.
    •  COVID-19 has forced us to reimagine, to some extent at least, the friend enemy equations in global geopolitics.
    • While the United States seemed hesitant, at least initially, Russia was quick to come to India’s aid. 

    6) Implications for strategic autonomy

    • The pandemic would, at the very least indirectly, impact India’s policy of maintaining strategic autonomy.
    • As pointed out above, the strategic consequences of the pandemic are bound to shape and structure India’s foreign policy choices as well as constrain India’s foreign policy agency.
    • It could, for instance, become more susceptible to external criticism for, after all, India cannot say ‘yes’ to just aid and ‘no’ to criticism.

    Consider the question “Examine the strategic implications of Covid for India.” 

    Way forward

    • COVID-19 will also do is open up new regional opportunities for cooperation especially under the ambit of SAARC.
    • India might do well to get the region’s collective focus on ‘regional health multilateralism’ to promote mutual assistance and joint action on health emergencies such as this.
    • Classical geopolitics should be brought on a par with health diplomacy, environmental concerns and regional connectivity in South Asia.

    Conclusion

    While the outpouring of global aid to India shows that the world realises India is too important to fail, the international community might also reach the conclusion that post-COVID-19 India is too fragile to lead and be a ‘leading power’.

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  • [pib] Cabinet approval to MoU between India and UK on Global Innovation Partnership

    PIB | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

    Cabinet approval to GIP

    • The Union Cabinet gave ex-post facto approval to the signing of Memorandum of Understanding (MoU) India and Foreign, Commonwealth and Development Office (FCDO) of the United Kingdom on Global Innovation Partnership (GIP).
    • GIP will support Indian innovators to scale up their innovations in third countries thereby helping them explore new markets and become self-sustainable.

    How GIP will help India

    • It will also foster an innovative ecosystem in India.
    • GIP innovations will focus on Sustainable Development Goals (SDG) related sectors thereby assisting recipient countries achieve their SDGs.
    • Through seed funding, grants, investments and technical assistance, the Partnership will support Indian entrepreneurs and innovators to test, scale-up and take their innovative development solutions to select developing countries.
    • GIP will also develop an open and inclusive e-marketplace (E-BAAZAR) for cross-border innovation transfer and will focus on results-based impact assessment thereby promoting transparency and accountability.

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  • Coronavirus – Health and Governance Issues

    Scientists see flaws in SUTRA’s approach to forecast pandemic

    | Governance | Mains Paper 2: Health & Education

    About SUTRA

    • SUTRA (Susceptible, Undetected, Tested (positive), and Removed Approach) first came into public attention when one of its expert members announced in October that India was “past its peak”.
    • Unlike many epidemiological models that extrapolated cases based on the existing number of cases, the behaviour of the virus and manner of spread, the SUTRA model chose a “data centric approach”.
    • However, the surge in the second wave was several times what any of the modellers had predicted.
    • The predictions of the SUTRA model were too variable to guide government policy.

    So, what went wrong in the model

    • The SUTRA model was problematic as it relied on too many parameters, and recalibrated those parameters whenever its predictions broke down.
    • The more parameters you have, the more you are in danger of overfitting.
    • One of the main reasons for the model not gauging an impending, exponential rise was that a constant indicating contact between people and populations went wrong.
    • Further the model was ‘calibrated’ incorrectly.
    • The model relied on a serosurvey conducted by the ICMR in May that said 0.73% of India’s population may have been infected at that time.
    • This calibration led our model to the conclusion that more than 50% population was immune by January.
    • The SUTRA model’s omission of the importance of the behaviour of the virus; the fact that some people were bigger transmitters; a lack of accounting for social or geographic heterogeneity and not stratifying the population by age as it didn’t account for contacts between different age groups also undermined its validity.

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  • Important Judgements In News

    Article 21 and the right of non-refoulement

    | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

    Significance of Manipur High Court judgement

    • The High Court of Manipur on Monday allowed seven Myanmar nationals, to travel to New Delhi to seek protection from the United Nations High Commissioner for Refugees (UNHCR).
    • “The far-reaching and myriad protection afforded by Article 21 of our Constitution, as interpreted and adumbrated by our Supreme Court time and again, would indubitably encompass the right of non-refoulement,” the court said.

    What is the principle of non-refoulemennt

    • Non-refoulement is the principle under international law that a person fleeing from persecution from his own country should not be forced to return.
    • Though India is not a party to the UN Refugee Conventions, the court observed that the country is a party to the Universal Declaration of Human Rights of 1948 and the International Covenant on Civil and Political Rights of 1966.

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  • Health Sector – UHC, National Health Policy, Family Planning, Health Insurance, etc.

    A ‘One Health’ approach that targets people, animals

    op-ed snap | Governance | Mains Paper 2: Health & Education

    The article highlights the need for a holistic approach to animal and human health as more than two-thirds of existing and emerging infectious diseases are zoonotic.

    Need to document the link between environment animal and human health

    • Studies indicate that more than two-thirds of existing and emerging infectious diseases are zoonotic, or can be transferred between animals and humans, and vice versa.
    • Another category of diseases, anthropozoonotic infections, gets transferred from humans to animals.
    • The transboundary impact of viral outbreaks in recent years such as the Nipah virus, Ebola, Severe Acute Respiratory Syndrome (SARS), Middle East Respiratory Syndrome (MERS) has reinforced the need for us to consistently document the linkages between the environment, animals, and human health.

    India’s ‘One Health’ vision

    • India’s ‘One Health’ vision derives its blueprint from the agreement between the tripartite-plus alliance.
    • The alliance comprises the Food and Agriculture Organization of the United Nations (FAO), the World Organisation for Animal Health (OIE), the World Health Organization (WHO) and the United Nations Environment Programme (UNEP) — a global initiative supported by the United Nations Children’s Fund (UNICEF) and the World Bank under the overarching goal of contributing to ‘One World, One Health’.
    • In keeping with the long-term objectives, India established a National Standing Committee on Zoonoses as far back as the 1980s.
    • This year, funds were sanctioned for setting up a ‘Centre for One Health’ at Nagpur.
    • Further, the Department of Animal Husbandry and Dairying (DAHD) has launched several schemes to mitigate the prevalence of animal diseases since 2015.
    • Hence, under the National Animal Disease Control Programme, ₹13,343 crore have been sanctioned for Foot and Mouth disease and Brucellosis control.
    • In addition, DAHD will soon establish a ‘One Health’ unit within the Ministry.
    • Additionally, the government is working to revamp programmes that focus on capacity building for veterinarians such as  Assistance to States for Control of Animal Diseases (ASCAD).
    • There is increased focus on vaccination against livestock diseases and backyard poultry.
    •  DAHD has partnered with the Ministry of Health and Family Welfare in the National Action Plan for Eliminating Dog Mediated Rabies.

    Need for coordination

    •  There are more than 1.7 million viruses circulating in wildlife, and many of them are likely to be zoonotic.
    • Therefore, unless there is timely detection, India risks facing many more pandemics in times to come.
    • There is need to address challenges pertaining to veterinary manpower shortages, the lack of information sharing between human and animal health institutions, and inadequate coordination on food safety at slaughter.
    • These issues can be remedied by consolidating existing animal health and disease surveillance systems — e.g., the Information Network for Animal Productivity and Health, and the National Animal Disease Reporting System.

    Conclusion

    As we battle yet another wave of a deadly zoonotic disease (COVID-19), awareness generation, and increased investments toward meeting ‘One Health’ targets is the need of the hour.

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