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  • Italian Marines Case

    Italian Marines case judgement could set a dangerous precedent

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

    The tribunal’s judgement in the Italian marines case was in Italy’s favour. But the basis used in the judgement could set a wrong precedent. India also ensures a fair trial against the marines in Italy. So, what would be the wrong precedent and why would be trial against marines will continue in Italy? Read to know…

    Background

    • On February 15, 2012 two Italian marines were held for killing two Indian fishermen
    • Fishermen were in India’s Contiguous Zone, 20.5 nautical miles off the Kerala coast.
    • And the marines were part of a security contingent on the Enrica Lexie, an Italian commercial oil tanker.

    What is said in the judgement

    • The tribunal was established by the International Tribunal for the Law of the Sea (ITLOS).
    • ITLOS was under the provisions of the United Nations Convention on the Law of the Sea (UNCLOS).
    • Only the operative portion of the tribunal’s award is available till now.
    • It held that the marines were entitled to immunity in relation to the acts that they committed.
    • The tribunal also said that India is precluded from exercising its jurisdiction over the Marines.
    • However, the tribunal found that by firing on the fishermen Italy was guilty of “violating India’s freedom and right of navigation”.
    • The tribunal majority agreed with the Italian plea that the marines had immunity for they were state officials.

    The judgement could set the wrong precedent

    • India’s stand was that UNCLOS is not concerned with issues relating to immunity.
    • Immunity of state officials has to be governed by specific multilateral or bilateral treaties or agreements.
    • It should not be invoked to settle issues of jurisdiction.
    • Even if Italian marines are considered as state officials, they were serving on a commercial vessel.
    • Italy did so unilaterally without the cover of any multilateral or bilateral arrangement.
    • There is no convention that such persons as the marines in such cases are immune from local criminal jurisdiction.
    • Only heads of states, heads of governments and foreign ministers customarily enjoy immunity abroad apart from accredited diplomats who are covered by the
    • Countries may now enact specific laws to give immunity to their military and para-military personnel and others by declaring them state official.
    •  This can lead to an increase in tensions generally and especially between inimical states.

    What should be the next course of action for India

    • Indian government should ensure that Italy is made to pay fully for the loss of life and the suffering it has caused in this matter.
    • The government should also ensure that it closely monitors the case proceedings in the Italian court against two marines.
    • This is also a time for the executive and judicial branches of the Indian state to introspect on how they handled the whole affair politically, diplomatically and legally.

    Consider the question “The judgement of the International Tribunal for the Law of the Sea in Italian marines case was based on the immunity of state officials. What could be the implication of invoking immunity of state official in this judgement? What should be the next course of action for India?”

    Conclusion

    As a good international citizen, India has accepted the tribunal’s award. Now it must ensure that Italy fully honours it. The matter remains open.

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  • Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

    How to counter China

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

    There is no doubt that an economically prosperous India will be well placed to deal with China effectively. So, to achieve this prosperity India urgently needs to embark upon the path of reforms. 

    How much China has moved ahead

    • In 1987, both countries’ nominal GDPs were almost equal.
    • China’s economic opening-up has left India behind, contributing to a military imbalance.
    • China’s economy was nearly five times larger than India’s in 2019.
    • Not coincidentally, from rough parity in 1989, China’s military spending last year more than tripled India’s.
    • Heightened vigilance along the LAC demands summoning scarce resources.
    • If India cannot close the economic gap and build military muscle, Beijing may feel emboldened to probe the subcontinent’s land and maritime periphery.

    Reforms: Key to progress

    • In 1991, India enacted changes allowing markets to set commodity prices.
    • But it did not similarly liberalise land, labour and capital.
    • Now, the government has delivered mixed messages about a revitalised reform agenda.
    • Some States have temporarily lifted labour restrictions.
    • Some others intend to make land acquisition easier.

    But a call for self-sufficiency could do harm

    • India emphasis on self-reliance could inhibit growth and constrain investment in a more vigorous foreign and defence policy.
    • Greater self-sufficiency is desired.
    • Home-grown manufacturing of critical medicinal ingredients or digital safeguards on citizens’ personal data would reduce vulnerabilities.
    • Imposing restriction to help the local defence industry would hamper acquisitions helping balance China.

    Competition from other countries

    • China is facing intense scrutiny for its role in the pandemic, geopolitical competition, trade wars, and economic coercion.
    • Businesses are revisiting whether or not to diversify suddenly exposed international value chains.
    • India’s competitors [like Bangladesh, Vietnam] are trying to attract the businesses shifting out form China.
    • These countries are highlighting their regulatory predictability, stable tax policies, and fewer trade obstacles.
    • While India remains outside the Regional Comprehensive Economic Partnership, competitors are wooing companies seeking lower trade barriers.
    • Asian countries are pushing ahead: Vietnam just inked a trade deal with the European Union that threatens to eat into India’s exports.

    Way forward

    • India needs increased exports and investments to provide more well-paying jobs, technology.
    • Before committing to long-term, multi-billion investments, companies often want to test India’s market through international sales.
    • Liberalisation remains the tried-and-true path to competitiveness.
    • If India can unite its people and rapidly strengthen capabilities, it will likely discover that it can deal with China effectively.

    Consider the question “Do you agree with the view that slowdown in the reforms in land, labour and capital after the reforms of 1991 restricted Indias economic progress? Give reasons in support of your argument.

    Conclusion

    The choices that India makes to recapture consistent, high growth will determine its future. Bold reforms offer the best option to manage Beijing and achieve greater independence on the world stage.

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  • Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

    Aatamnirbhar in Agriculture

    op-ed snap | Agriculture | Mains Paper 3: Transport & Marketing Of Agricultural Produce

    India has been the net exporter of agricultural commodities since 1991, however, there is scope for increasing its net export. This article suggests the strategy to achieve this.

    Foreign exchange reserve: then and now in terms of grains

    • In the mid-1960s the country had about $400 million.
    • If India had spent all its foreign currency reserves just on wheat imports, it could have imported about seven million tonnes (mt) of wheat.
    • Today, India has foreign exchange reserves of more than $500 billion.
    • Even if the country has to buy 20 mt of wheat at a landed cost of $250/tonne, it will spend just $5 billion it is just one per cent of its foreign exchange reserves.
    • In that sense, the biggest reform in the last three decades that has led to “aatma nirbharta” in food is the correction of the exchange rate.
    • Another factor is coupling and the gradual integration of India with the world economy.
    • This has helped India increase its foreign exchange reserves from $1.1 billion in 1991 to more than $500 billion today.

    India: Net exporter of agricultural products

    • India has been the net exporter of agricultural products ever since the economic reforms began in 1991.
    • The golden year of agri-trade was 2013-14 when net agricultural trade surplus was $24.7 billion.
    • In 2019-20, agri-exports were just $36 billion, and the net agri-trade surplus at $11.2 billion.
    • With this dull performance doubling agri-exports by 2022 looks almost impossible.

    Let’s look at what India exports

    • Marine products with $6.7 billion exports top the list.
    • The second is rice at $6.4 billion of which basmati is at $4.6 billion and common rice at $2.0 billion.
    • Next is spices at $3.6 billion.
    • Other items are buffalo meat at $3.2 billion, sugar at $2.0 billion, tea and coffee at $1.5 billion, fresh fruits and vegetables at $1.4 billion, and cotton at $1 billion.

    Strategy to increase export

    • If one chalks out a strategy we would need to keep in mind the principle of “comparative advantage”.
    • That means exporting more where we have a competitive edge, and importing where we lack competitiveness.
    • Together power and fertiliser subsidies account for about 10-15 per cent of the value of rice and sugar produced on a per hectare basis.
    • So, we should offer similar incentives for exports of high-value agri-produce like fruits and vegetables, spices, tea and coffee, or even cotton, as we do for rice and sugar?

    Decreasing the edible oil imports

    • On the agri-imports front, the biggest item is edible oils — worth about $10 billion i.e. more than 15 MT.
    • India needs to decrease imports through augmenting productivity and increasing the recovery ratio of oil from oilseeds and in case of palm oil, from fresh fruit bunches.
    • The maximum potential of increasing production lies in oil palm.
    • This is the only plant that can give about four tonnes of oil on a per hectare basis.
    • India has about 2 million hectares that are suitable for oil palm cultivation — this can yield 8 mt of palm oil.
    • But it needs a long term vision and strategy.

    Issue of subsidy to rice and sugar

    • Rice and sugar cultivation are subsidised through free power and highly subsidised fertilisers, especially urea.
    • It is leading to the virtual export of water because of their high water requirements.
    • One kg of rice requires 3,500-5,000 litres of water for irrigation, and one kg of sugar consumes about 2,000 litres of water.
    • This leads to increased pressure on scarce water and highly inefficient use of fertilisers.
    • It may be worth noting that almost 75 per cent of the nitrogen in urea is not absorbed by plants.
    • It either evaporates into the environment or leaches into groundwater making it unfit for drinking.

    Consider the question “While India has been the net exporter of agricultural products ever since the economic reforms of 1991, it is far from realising its potential to become the leading agri-produce exporter. In light of this, suggest the strategy that India should follow to increase India’s net agri-exports.”

    Conclusion

    The government must focus on augmenting export and decrease import dependence in agricultural products which will further its goal of aatmanirbharta and doubling the farmers’ income.

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  • Railway Reforms

    Why have Indian Railways opened doors for private players?

    | Economics | Mains Paper 3: Infrastructure: Energy, Ports, Roads, Airports, Railways Etc.

    Indian Railways has launched the process of opening up train operations to private entities on 109 origin-destination (OD) pairs of routes using 151 modern trains.

    Practice question for mains:
    Q. Indian Railways has been the lifeline of India’s growth story since Independence. Discuss various opportunities and challenges ahead of its privatization.

    Why such a move?

    • From a passenger perspective, there is a need for more train services, particularly between big cities.
    • The Railway Board says five crore intending passengers could not be accommodated during 2019-20 for want of capacity, and there was 13.3% travel demand in excess of supply during summer and festival seasons.

    Moving the paralyzed system

    • The Railway Board has moved ahead with a long-pending plan, setting a tentative schedule for private train operations, expected to begin in 2023 and in 12 clusters.
    • At present, scheduled passenger train services remain paralyzed during the COVID-19 pandemic, and various railways have been running only specials such as those for workers.

    What is the background of the decision?

    • The present bid is only for a fraction of the total train operations — 5% of the 2,800 Mail and Express services operated by Indian Railways.
    • The overall objective, however, is to introduce a new train travel experience for passengers who are used to travelling by aircraft and air-conditioned buses.
    • Without an expansion, and with the growth of road travel, the share of the Railways would steadily decline in the coming years.

    Bibek Debroy Committee Recommendations

    • Several committees have gone into the expansion and the modernization of Indian Railways.
    • In 2015, the expert panel chaired by Bibek Debroy constituted by the Ministry of Railways a year earlier, recommended that the way forward for the railways was “liberalisation and not privatization”.
    • It asked for entry of new operators “to encourage growth and improve services.”
    • It also made it clear that a regulatory mechanism was a prerequisite to promote healthy competition and protect the interests of all stakeholders.

    Why is the move significant for Indian Railways?

    • For the Railways, one of the largest organisations in the country, operating not just trains for passengers and freight, but also social institutions such as hospitals and schools represents a radical change.
    • It was estimated that a one rupee push in the railway sector would have a forward linkage effect of increasing output in other sectors by ₹2.50.
    • Train services operated by Indian Railways cover several classes of passengers, meeting the social service obligation to connect remote locations, and adopting the philosophy of cross-subsidy.
    • In more recent years, it has focused on revenue generation through dynamic demand-based pricing.

    Private players will be game-changers

    • Private operators are not expected to shoulder the burden of universal service norms, and will focus on revenue.
    • Even the first IRCTC-run trains have a higher cost of travel between Lucknow and Delhi than a Shatabdi train on the same route that almost matches it for speed.
    • So private operators would have to raise the level of their offering even higher, to justify higher fares, and attract a segment of the population that is ready to pay for this difference.
    • The government would have to explain that it has monetized its expensive fixed assets such as track, signalling and stations adequately for the taxpayer, who has paid for them.

    Challenges ahead

    • Several critical issues remain unaddressed. For one, there will be questions over the financial viability of some routes.
    • Railways also tend to cross-subsidise passenger fares through freight revenue.
    • This translates to below-cost pricing, which will make it difficult for private players to compete.
    • On the other hand, higher fares needed to cover costs might bring them in direct competition with airlines, pricing them out of the market.

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  • Innovations in Biotechnology and Medical Sciences

    What is Raman Spectroscopy?

    Explained | Science Tech | Mains Paper 3: Achievements Of Indians In S&T,Awareness in various sc and tech fields

    Mumbai-based researchers have turned to Raman Spectroscopy to detect RNA viruses present in saliva samples.

    Try this question from CSP 2017
    Q.Which Indian astrophysicist and Nobel laureate predicted rapidly rotating stars emit polarized light?
    (a) Subrahmanyan Chandrasekhar
    (b) CV Raman
    (c) Ramanujan
    (d) Amartya Sen

    The Raman Spectroscopy

    • Raman spectroscopy is an analytical technique where scattered light is used to measure the vibrational energy modes of a sample.
    • In 1928, Raman discovered that when a stream of light passes through a liquid, a fraction of the light scattered by the liquid is of a different colour.
    • While Raman was returning from London in a 15-day voyage, he started thinking about the colour of the deep blue Mediterranean.
    • He wasn’t convinced by the explanation that the colour of the sea was blue due to the reflection of the sky.
    • As the ship docked in Bombay, he sent a letter to the editor of the journal Nature, in which he penned down his thoughts on this.
      Subsequently, Raman was able to show that the blue colour of the water was due to the scattering of the sunlight by water molecules.
    • By this time he was obsessed with the phenomenon of light scattering.

    How does it work?

    • The Raman Effect is when the change in the energy of the light is affected by the vibrations of the molecule or material under observation, leading to a change in its wavelength.
    • Significantly, it notes that the Raman effect is “very weak” — this is because when the object in question is small (smaller than a few nanometres), the light will pass through it undisturbed.
    • But a few times in a billion, light waves may interact with the particle. This could also explain why it was not discovered before.
    • In general, when light interacts with an object, it can either be reflected, refracted or transmitted.
    • One of the things that scientists look at when light is scattered is if the particle it interacts with is able to change its energy.

    Applications

    • Raman spectroscopy is used in many varied fields – in fact, any application where non-destructive, microscopic, chemical analysis and imaging is required.
    • Whether the goal is qualitative or quantitative data, Raman analysis can provide key information easily and quickly.
    • It can be used to rapidly characterize the chemical composition and structure of a sample, whether solid, liquid, gas, gel, slurry or powder.

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  • Oil and Gas Sector – HELP, Open Acreage Policy, etc.

    What is Winter Diesel?

    Prelims Only | Science Tech | Mains Paper 3: Infrastructure: Energy, Ports, Roads, Airports, Railways Etc.

    India’s armed forces may soon be using winter diesel for operations in high altitude areas such as Ladakh, where winter temperatures plummet to extremely low as -30° Celsius.

    This year BS-VI compliant fuel was in news. Try differentiating the Winter Diesel with the BS-VI fuel.

    What is Winter Diesel?

    • Winter diesel is a specialised fuel that was introduced by Indian Oil Corp. Ltd. last year specifically for high altitude regions and low-temperature regions such as Ladakh, where ordinary diesel can become unusable.
    • The flow characteristics of regular diesel change at such low temperatures and using it may be detrimental to vehicles.
    • Winter diesel which contains additives to maintain lower viscosity can be used in temperatures as low as -30°C and that besides a low pour point, it had higher cetane rating — an indicator is the combustion speed of diesel and compression needed for ignition.
    • It has lower sulphur content, which would lead to lower deposits in engines and better performance.

    Back2Basics: BS-VI fuel

    • Sulphur content in fuel is a major cause for concern. Sulphur dioxide released by fuel burning is a major pollutant that affects health as well.
    • BS-VI fuel’s sulphur content is much lower than BS-IV fuel.
      It is reduced to 10 mg/kg max in BS-VI from 50 mg/kg under BS-IV.

    This reduction makes it possible to equip vehicles with better catalytic converters that capture pollutants. However, BS-VI fuel is expected to be costlier that BS-IV fuel.

    With inputs from:
    https://www.civilsdaily.com/news/pib-winter-grade-diesel/

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  • Modern Indian History-Events and Personalities

    Sindhu Darshan Puja

    Historical Sites | Trivia | Mains Paper 1: Arts & Culture

    During his day-long whirlwind visit, PM Narendra performed Sindhu Darshan Puja at Nimu, the forward brigade place in Ladakh.

    Sindhu Darshan Puja.

    ⦁ Sindhu Darshan Festival is a festival of India held every year on full moon day (on Guru Purnima) in the month of June.
    ⦁ It is held at Leh, in Ladakh District of Ladakh. It stretches for three days.
    ⦁ It was first started in the October by veteran politician L.K. Advani, 1997 and continues to be held every year since then, attracting large number of foreign and domestic tourists.
    ⦁ The main reason behind the celebration of Sindhu Darshan Festival is to endorse the Indus River (Sindhu River) as an icon of the communal harmony and unity of India.

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  • Waste Management – SWM Rules, EWM Rules, etc

    Plastic waste management in pandemic

    | Enviro & Biodiversity | : Conservation, Environmental Pollution & Degradation, Eia

    The threat posed by plastic waste to the environment is well established. The corona pandemic has led to an increase in plastic waste. This article suggests some ways to deal with the issue.

    Rising plastic use during pandemic

    •  In 2018, a report by McKinsey estimated that, globally, we generate 350 million tonnes of plastic waste.
    • Only 16 per cent of it is recycled.
    • Today, due to pandemic the amount of plastic waste we are generating is much higher than that estimated in the McKinsey report.
    • The Guardian recently reported that there are possibly more masks than jellyfish in the oceans today.

    Management of plastic in India

    • We have the Plastic Waste Management Rules of 2016, which were updated and amended in 2018.
    • In fact, India saw incredible momentum in its fight for effective management of plastic waste in the last year.
    • The Prime Minister made clarion calls for a jan andolan (people’s movement) to curb the use of single-use plastic(SUP).
    • Jan andolan was also to ensure proper disposal of all plastic waste.
    • Also, the entire country rallied together under the banner of the Swachhata Hi Seva campaign.

    Why single-use plastic is different

    • Plastic is not the problem, our handling of it is.
    • We need plastic, but not SUP, which is difficult to dispose of effectively, and that is where the problem lies.
    • It is important to understand this distinction.
    • By understanding this distinction we may change our behaviour and our lifestyles, to balance our need for plastic with effectively managing its waste.

    Way forward

    • One way to approach the issue is to treat it not just as an environmental problem but as an economic opportunity.
    •  We require new business models which are designed for sustainability.
    • In Uganda, they are melting plastic waste to make face shields which are being sold for just a dollar each.
    • But, most of all, we need a tectonic shift in the behaviour of consumers.
    • We need consumers to care about their role in the plastic waste value chain.
    • Under phase 2 of the Swachh Bharat Mission (Grameen) village communities are now starting to plan for setting up waste collection and segregation systems, with material recovery facilities at the block- level.
    • Change is possible when we take necessary steps to Refuse, Reduce, Reuse, Recycle and, when all else fails, Remove, or dispose of plastic waste safely and effectively.
    • Raising awareness amongst the public of the harm caused by plastic pollution through education and outreach programs to modify behavior.
      • A movement against plastic waste would have to prioritise the reduction of single-use plastic such as multi-layer packaging, bread bags, food wrap, and protective packaging.
    • Promote Alternatives, before the ban or levy comes into force, the availability of alternatives need to be assessed, hence the government may:
      • Provide economic incentives to encourage the uptake of eco-friendly and fit-for-purpose alternatives that do not cause more harm.
      • Support can include tax rebates, research and development funds, technology incubation, public-private partnerships and support to projects that recycle single-use items and turn waste into a resource that can be used again.
      • Reduce or abolish taxes on the import of materials used to make alternatives.
    • Provide incentives to the alternative industry by introducing tax rebates or other conditions to support its transition from plastic industry.
    • Expanding the use of biodegradable plastics or even edible plastics made from various materials such as bagasse (the residue after extracting juice from sugarcane), corn starch, and grain flour.
    • Use of microbeads in personal care products and cosmetics must be prohibited.
    • Target the most problematic single-use plastics by conducting a baseline assessment to identify the most problematic single-use plastics, as well as the current causes, extent and impacts of their mismanagement.
    • Consider the best actions to tackle the problem of plastic waste management (e.g. through regulatory, economic, awareness, voluntary actions) given the country’s socio-economic standing.
    • Assess the potential social, economic and environmental impacts (positive and negative) of the preferred short-listed plastic waste management measures/actions, by considering how will the poor be affected, or what impact will the preferred course of action have on different sectors and industries.
    • Identify and engage key stakeholder groups like retailers, consumers, industry representatives, local government, manufacturers, civil society, environmental groups, and tourism associations in order to ensure broad buy-in.
    • Explaining the decision and any punitive measures that will follow, as a result of non compliance of plastic management rule.
    • Use revenues collected from taxes or levies on single-use plastics to maximize the public good, thereby supporting environmental projects or boosting local recycling with the funds and creating jobs in the plastic recycling sector with seed funding.
    • Enforce the plastic waste management measure effectively, by making sure that there is clear allocation of roles and responsibilities.
    • Monitor and adjust the plastic waste management measure if necessary and update the public on progress.

    Consider the question “What are the legal provisions for plastic waste management in India? Suggest the ways to deal with the issue of plastic waste effectively.”

    Conclusion

    The corona pandemic crisis should not blind us to the plastic crisis and we should try to bring about the behaviour change when it comes to the use of plastic and devise the economic model.

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  • FDI in Indian economy

    Differentiating FDI and trade

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

    Differentiating between trade and investment is necessary for reaping the benefits that come with foreign investment in firms. However, the concerns over the source of funds are not unfounded. So, some caution is warranted in dealing with FDI.

    Let’s look into the debate

    • Government is asking its citizens to aim for self-reliance.
    • So, should India continue to allow investment inflows from China? This is the debate.
    • China has invested $4 billion in Indian startups in the past 5 years.
    • This amount would be higher if funds located in tax havens with Chinese ownership are also accounted for.

    Some of the questions raised in the debate

    •  Is trade of products like buttons, crockery same as long-term foreign investments in high-risk new age technology-driven products?
    • Is it economically prudent for a country to fulfil all its capital requirements or compromise on innovation due to lack of thereof?

     Trade vs FDI

    • Trade just helps the country fulfil its requirements of those goods and services (G&S) that may not available in the country.
    • Investments provide the capital to build infrastructure that can plug the G&S deficit, even, sell it to other markets.
    • Trade just provides entry of G&S.
    • FDI inflow is a route for transferring capabilities, technology, building linkages, business capabilities etc.
    • FDI helps generate employment, public assets, tax revenues and develop markets, none of this is contributed by the trade of merchandise.
    • Foreign investment does have an adverse impact on domestic markets in the short-run by crowding out domestic competition or investment.
    • In fact, attracting FDI in employment-intensive sectors can create positive economic and social spillovers.
    • Possibilities to increase exports often arise from companies with significant levels of FDI.
    • Foreign investor exposes itself to regulatory, economic and geo-political risks of the country.

    Foreign investment in Indian firms: Two aspects to consider

    • While discussing the funding composition of the likes of Paytm, OYO hotel chain or Ola, two aspects need to be considered.
    • 1) These companies are Indian companies operating under the law of land, creating economic opportunities for the youth and contributing to the welfare of the Indian community.
    • 2) Success of these ventures is not solely due to the investment, but because of the novelty of the product offering.
    • Investments in start-ups involve high risk; the list of failed start-ups with Chinese investment is bound to be much longer.
    • In the absence of technology giants in India, we may also end up draining the brain to countries with a stronger financial ecosystem for fresh ideas.

    Apprehension over FDI in India

    • Apprehensions related to investments from any country per se, are not unwarranted in India.
    • This is mainly because history suggests foreign investment can potentially lead to economic colonisation.
    • However, times have changed and so has the world order.
    • Steady inflow of investments can exist without impacting the economic or political stability of the country.
    • To do so we should practice some of the following recommendations.

    How to address the concern over FDI

    • Investment funds can be set up outside the home country of the investor or be routed through companies located at tax havens.
    • It is not always possible to map the investor to the country.

    How to solve this problem

    • To solve this identify sectors based on sensitivity, the investment required, technology, employment and social impact.
    • Tighten regulations related to data storage and access by companies through data localisation in these sensitive sectors.
    • Modify the offset policy in defence to ensure a certain portion of the profits is invested in the SMEs.
    • To further India’s interests in nascent sectors such as machine learning, HealthTech, maximum period for an investor to be invested in a greenfield should be limited to 10 years.
    • All firms receiving foreign investment should have a plan to contribute to India’s exports within the product lifecycle and minimum employment generation.
    • Ease listing norms for firms so that funds through public and private placement can be raised by wholly Indian owned companies.
    •  BSE SME & Start-ups Platform has helped 322 companies raise Rs. 3,320.48 crores from the market. Start-ups should be encouraged to make use of the platform wherever possible.
    • Domestic procurement of raw material and intermediate goods has to be non-negotiable as far as possible.

    Consider the question “What are the challenges and opportunities associated with foreign investment and suggest the ways to address the challenges.”

    Conclusion

    From being treated as a ‘dumping bazaar’ to now attracting investors, India does not need to shy away from investments; it certainly needs to be wary of pure trade which limits India’s potential and drive to produce indigenously.

    Back2Basics: Offset policy

    • The offset policy, introduced in 2005, mandates foreign suppliers to spend at least 30% of the contract value in India.
    • It was first revised in 2006 and then again in 2011 and in 2016. Another round of tweaking is currently underway.

     

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  • Pharma Sector – Drug Pricing, NPPA, FDC, Generics, etc.

    Decoupling pharmaceutical industry from China should be strategic

    op-ed snap | Economics | Mains Paper 3: Awareness in various sc and tech fields,Effects Of Liberalization On The Economy, Changes In Industrial Policy and their effects on Industrial Growth

    Abrupt ban on import from China would harm the India pharmaceutical industry and disrupt the supply of several essential medicines. Any attempt at reducing the dependence on China for APIs should be strategies, argues the author.

    Dependence of Indian pharma industry on China

    •  India is the third-largest producer of finished drugs in the world.
    • However, India relies significantly on China for supplies of active pharmaceutical ingredients APIs.
    • An estimated 70 per cent of API requirements of India’s pharmaceutical industry are sourced from China.
    • For some drugs, such as paracetamol and ibuprofen, this dependence is almost 100 per cent.
    • This import reliance has been fuelled by environmental controls in India and competition with China, which has higher volumes of production and lower costs.

    Implications of banning import from China

    • Restricting or banning the import of APIs would cause significant disruption to the Indian pharmaceutical industry
    • The pharmaceutical industry had $40 billion in revenues in 2018-19, according to Pharmexcil.
    • Such a prospect is especially of concern to potential patients.
    •  Indian pharmaceutical industry annually exports $20 billion worth of medicine.
    • An ad hoc or reactive decoupling could disrupt the production of a wide range of medicines in India and globally.
    • Such disruption could affect the availability of Dexamethasone and painkillers, such as paracetamol and ibuprofen, as well as antibiotics, such as penicillin.
    • The impacts would be especially high in low and middle-income countries.
    • In many African countries, in fact, India supplies almost 50 per cent of the medicines in value terms.

    Lessons from the past: Policy initiative matters

    • Market share of foreign-owned multinationals in India was 80-90 per cent in 1970 in the pharmaceutical industry.
    • It fell to 50 per cent by the early 1980s, and down to 23 per cent today.
    • The prices of medicines in India fell from being amongst the highest in the world to amongst the lowest.
    • But this did not happen through sudden decoupling from foreign multinationals or a complete boycott or ban on imports.
    •  The 1970 Indian Patent Act removed product patent protection in pharmaceuticals.
    • So, the 1970 Patent Act is widely lauded for facilitating the growth of India’s industry.
    • India also benefited from the 1973 Foreign Exchange Regulation Act (FERA) and the subsequent New Drug Policy (1978).
    • Thus, a series of policy initiatives succeeded in tilting the balance in favour of Indian-owned firms.

    But does it mean we have to depend on China forever?

    • No, but reducing dependence on China will not be easy to achieve.
    • In India, any decoupling from China must be strategic, with significant policy support.
    • It will take time for a paced indigenisation.

    Government moves to reduce dependence for API

    • In March, the government announced Rs 3,000 crore to develop three bulk drug parks.
    • The government also announced Rs 6,940 crore to manufacturers of 53 bulk drugs over the next eight years.
    • Planning ahead towards greater domestic production of APIs, as well as reduced dependence on China, is an understandable and sensible policy objective.
    • Despite a decline in recent decades, India has a stronger starting point than most countries given the continued presence of some API production capabilities.
    • Indian firms have capacities, for instance, to produce COVID-19 treatments, including Remdesivir.

    Consider the question “What are the APIs? Why India depends on other countries for it and what are implications of it? Suggest ways to reduce this dependence.”

    Conclusion

    In the short run, boycotts or bans would be counter-productive for the Indian industry, while also affecting access to much-needed medicines to India’s citizens and beyond. In the long run, however, reducing dependence on China would be strategically prudent.

    Back2Basics: What are APIs?

    • Active pharmaceutical ingredient (API), is the term used to refer to the biologically active component of a drug product (e.g. tablet, capsule).
    • Drug products are usually composed of several components.
    • The API is the primary ingredient.
    • Other ingredients are commonly known as “excipients” and these substances are always required to be biologically safe, often making up a variable fraction of the drug product.
    • The procedure for optimizing and compositing this mixture of components used in the drug is known as “formulation.”

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