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Imp: Must Read RBI’s FAQ Page Summary for Prelims 2022
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1. Passive Funds:
The Securities and Exchange Board of India (SEBI) recently issued a circular on passive funds covering matters related to transparency, liquidity and operational aspects of exchange-traded funds (ETFs) and index funds.
What are Passive Funds?
- A passive fund is an investment vehicle that tracks a market index, or a specific market segment, to determine what to invest in.
- Unlike with an active fund, the fund manager does not decide what securities the fund takes on.
- This normally makes passive funds cheaper to invest in than active funds, which require the fund manager to spend time researching and analyzing opportunities to invest in.
- Tracker funds, such as ETFs (exchange traded funds) and index funds fall under the banner of passive funds.
2. Initial Public Offer:
Last year IPO was making huge attention in India after Paytm and Zomato IPOs were open.
What is an IPO?
- Every company needs money to grow and expand.
- They do this by borrowing or by issuing shares.
- If the company decides to opt for the second route of issuing shares, it must invite public investors to buy its shares.
- This is its first public invitation in the stock market and is called the Initial Public Offering (IPO).
How does an IPO work?
- The Securities and Exchange Board of India (SEBI) regulates the entire process of investment via an IPO in India.
- A company intending to issue shares through IPOs first registers with SEBI.
- SEBI scrutinizes the documents submitted, and only then approves them.
Who can hold IPOs?
- It could be a new, young company or an old company that decides to be listed on an exchange and hence goes public.
3. Derivatives:
- A derivative is a contract between two parties which derives its value/price from an underlying asset.
- The value of the underlying asset is bound to change as the value of the underlying assets keep changing continuously.
- Generally, stocks, bonds, currency, commodities and interest rates form the underlying asset.
Types of Derivatives
The most common types of derivatives are futures, options, forwards and swaps:
(1) Futures
- Futures are standardized contracts that allow the holder to buy/sell the asset at an agreed price at the specified date.
- The parties to the futures contract are under an obligation to perform the contract. These contracts are traded on the stock exchange.
- The value of future contracts is marked to market every day.
- It means that the contract value is adjusted according to market movements till the expiration date.
(2) Options
- Options are derivative contracts that give the buyer a right to buy/sell the underlying asset at the specified price during a certain period of time.
- The buyer is not under any obligation to exercise the option.
- The option seller is known as the option writer. The specified price is known as the strike price.
(3) Forwards
- Forwards are like futures contracts wherein the holder is under an obligation to perform the contract.
- But forwards are unstandardized and not traded on stock exchanges.
- These are available over-the-counter and are not marked-to-market.
- These can be customized to suit the requirements of the parties to the contract.
(4) Swaps
- Swaps are derivative contracts wherein two parties exchange their financial obligations.
- The cash flows are based on a notional principal amount agreed between both parties without the exchange of principal.
- The amount of cash flows is based on a rate of interest.
- One cash flow is generally fixed and the other changes on the basis of a benchmark interest rate.
- Swaps are not traded on stock exchanges and are over-the-counter contracts between businesses or financial institutions.
4. What are Agri-Futures?
Like equity, currency or interest rate futures, they allows to buy or sell an underlier at a preset price on a future date. All agri contracts end in compulsory delivery.
- Agri products available for trade include wheat, sugar, chana, soyabean, castor, chilli , jeera futures, etc. Edible oil seeds and oils, spices and items like guar are among the more liquid contracts.
- An objective of futures trading is gains reaching farmers, by establishing an efficient price-discovery platform.
- This has been achieved to a large extent on NCDEX, in products such as castor, chana, soy complex, mustard, guar, cumin, etc.
Securities & Exchange Board of India (SEBI) has issued an order suspending futures trading in paddy (non-basmati), wheat, Bengal gram (chana dal), mustard seeds and its derivatives, soyabean and its derivatives, crude palm oil and green gram (moong dal) for a year.
5. Infrastructure Investments Trusts:
The National Highway Authority of India’s first infrastructure investment trust has raised more than Rs 5,000 crore, informed the Ministry of Road Transport and Highways of India.
What are InvITs?
- InvITs are like a mutual fund, which enables direct investment of small amounts of money from possible individual/institutional investors in infrastructure to earn a small portion of the income as return.
- They work like mutual funds or real estate investment trusts (REITs) in features.
- They can be treated as the modified version of REITs designed to suit the specific circumstances of the infrastructure sector.
How are they notified in India?
- SEBI notified the Sebi (Infrastructure Investment Trusts) Regulations, 2014 on September 26, 2014, providing for registration and regulation of InvITs in India.
- The objective of InvITs is to facilitate investment in the infrastructure sector.
Their structure
InvITS are like mutual funds in structure. InvITs can be established as a trust and registered with Sebi. An InvIT consists of four elements:
- Trustee: He inspects the performance of an InvIT is certified by Sebi and he cannot be an associate of the sponsor or manager.
- Sponsor(s): They are people who promote and refer to any organisation or a corporate entity with a capital of Rs 100 crore, which establishes the InvIT and is designated as such at the time of the application made to SEBI, and in case of PPP projects, base developer.
- Investment Manager: It is an entity or limited liability partnership (LLP) or organisation that supervises assets and investments of the InvIT and guarantees activities of the InvIT.
- Project Manager: It is the person who acts as the project manager and whose duty is to attain the execution of the project and in case of PPP projects.
6. Important Points from RBIs FAQs Page:
What is a Bond?
A bond is a debt instrument in which an investor loans money to an entity (typically corporate or government) which borrows the funds for a defined period of time at a variable or fixed interest rate. Bonds are used by companies, municipalities, states and sovereign governments to raise money to finance a variety of projects and activities. Owners of bonds are debt holders, or creditors, of the issuer.
What is Government Security (G-Sec)?
A Government Security (G-Sec) is a tradable instrument issued by the Central Government or the State Governments. Such securities are short term (usually called treasury bills, with original maturities of less than one year) or long term (usually called Government bonds or dated securities with original maturity of one year or more). In India, the Central Government issues both, treasury bills and bonds or dated securities while the State Governments issue only bonds or dated securities, which are called the State Development Loans (SDLs). G-Secs carry practically no risk of default and, hence, are called risk-free gilt-edged instruments.
- Treasury Bills (T-bills): Treasury bills or T-bills, which are money market instruments, are short term debt instruments issued by the Government of India and are presently issued in three tenors, namely, 91 day, 182 day and 364 day. Treasury bills are zero coupon securities and pay no interest. Instead, they are issued at a discount and redeemed at the face value at maturity.
- Cash Management Bills (CMBs): In 2010, Government of India, in consultation with RBI introduced a new short-term instrument, known as Cash Management Bills (CMBs), to meet the temporary mismatches in the cash flow of the Government of India. The CMBs have the generic character of T-bills but are issued for maturities less than 91 days.
- Dated G Secs: Dated G-Secs are securities which carry a fixed or floating coupon (interest rate) which is paid on the face value, on a half-yearly basis. Generally, the tenor of dated securities ranges from 5 years to 40 years.
The Public Debt Office: The Public Debt Office (PDO) of the Reserve Bank of India acts as the registry / depository of G-Secs and deals with the issue, interest payment and repayment of principal at maturity. Most of the dated securities are fixed coupon securities.
Fixed Rate Bonds – These are bonds on which the coupon rate is fixed for the entire life (i.e. till maturity) of the bond. Most Government bonds in India are issued as fixed rate bonds.
Floating Rate Bonds (FRB) – FRBs are securities which do not have a fixed coupon rate. Instead it has a variable coupon rate which is re-set at pre-announced intervals (say, every six months or one year).
Capital Indexed Bonds – These are bonds, the principal of which is linked to an accepted index of inflation with a view to protecting the Principal amount of the investors from inflation.
Inflation Indexed Bonds (IIBs) – IIBs are bonds wherein both coupon flows and Principal amounts are protected against inflation. The inflation index used in IIBs may be Wholesale Price Index (WPI) or Consumer Price Index (CPI). Globally, IIBs were first issued in 1981 in the UK. In India, the Government of India through RBI issued IIBs (linked to WPI) in June 2013.
Special Securities – Under the market borrowing program, the Government of India also issues, from time to time, special securities to entities like Oil Marketing Companies, Fertilizer Companies, the Food Corporation of India, etc. (popularly called oil bonds, fertiliser bonds and food bonds respectively) as compensation to these companies in lieu of cash subsidies These securities are usually long dated securities and carry a marginally higher coupon over the yield of the dated securities of comparable maturity. These securities are, however, not eligible as SLR securities but are eligible as collateral for market repo transactions.
STRIPS – Separate Trading of Registered Interest and Principal of Securities. – STRIPS are the securities created by way of separating the cash flows associated with a regular G-Sec i.e. each semi-annual coupon payment and the final principal payment to be received from the issuer, into separate securities. They are essentially Zero Coupon Bonds (ZCBs). Being G-Secs, STRIPS are eligible for SLR. All fixed coupon securities issued by Government of India, irrespective of the year of maturity, are eligible for Stripping/Reconstitution, provided that the securities are reckoned as eligible investment for the purpose of Statutory Liquidity Ratio (SLR) and the securities are transferable.
State Development Loans: :State Governments also raise loans from the market which are called SDLs. SDLs are dated securities issued through normal auction similar to the auctions conducted for dated securities issued by the Central Government. Interest is serviced at half-yearly intervals and the principal is repaid on the maturity date.
Under the amended RBI Act, the monetary policy making is as under:
- The MPC is required to meet at least four times in a year.
- The quorum for the meeting of the MPC is four members.
- Each member of the MPC has one vote, and in the event of an equality of votes, the Governor has a second or casting vote.
The resolution adopted by the MPC is published after the conclusion of every meeting of the MPC in
according to the provisions of Chapter III F of the Reserve Bank of India Act, 1934.- On the 14th day, the minutes of the proceedings of the MPC are published which include:
- a. the resolution adopted by the MPC;
- b. the vote of each member on the resolution, ascribed to such member; and
- c. the statement of each member on the resolution adopted.
- Once in every six months, the Reserve Bank is required to publish a document called the Monetary Policy Report to explain:
- a. the sources of inflation; and
- b. the forecast of inflation for 6-18 months ahead.
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How the Quad can become more than an anti-China grouping
Context
On May 23, before the Quad leaders’ summit in Tokyo, the United States launched the Indo-Pacific Economic Framework (IPEF).
Significance IPEF
- The Indo-Pacific Economic Framework (IPEF) will consist of a diverse group of 12 countries initially — Australia, Brunei, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam.
- The IPEF — which covers fair trade, supply chain resilience, infrastructure, clean energy, and decarbonisation, among others — is likely to complement the other Indo-Pacific projects like the Supply Chain Resilience Initiative (SCRI) that also seeks to build resilient and secure trade linkages by reducing dependence on China.
- Decoupling from Chinese over-dependence: The US-led economic engagement is a salient attempt to allow countries to decouple from Chinese over-dependence in order to ultimately strengthen the existing free and open rules-based global order.
- Extension of plus grouping: The launch of IPEF signifies the essence of the Quad and its extension as a “plus” grouping.
- It brings together seven critical countries of the Association of Southeast Asian Nations (ASEAN), all Quad states, and dialogue partners, including South Korea, solidifying a case for the “plus” characterisation of the Quad process.
- Thus, it is an encouraging sign that the Quad countries are investing their strategic orientation in this regard.
- Importantly, both the IPEF launch, and the Tokyo summit dispel any remaining misgivings about the Quad disintegrating and certify that it is a cohesive unit where it matters.
- It would potentially represent an amalgamation of the eastern and western “like-minded” countries.
- The expanded grouping and the related Quad initiatives will build a comprehensive and integrated approach to combating shared challenges arising out of Chinese aggression.
- A hallmark of Biden’s latest Asia visit has been South Korea’s embrace of the Indo-Pacific framework.
- This is a long-awaited turn that could potentially lead to South Korea participating in a more meaningful manner in the Quad in the near future.
Importance of Taiwan
- Taiwan is a major economy in the Indo-Pacific region (as also the US’s eighth-largest trading partner in 2021 and a critical partner in diversifying the US supply chains), which is already engaged in the US-Taiwan Economic Prosperity Partnership Dialogue that includes many of the issues proposed in the IPEF.
- The inclusion of Taiwan, which already has a critical role in the global semi-conductor supply chain network, in the SCRI and the IPEF as well as, by extension, in the Quad format, in some manner would be a welcome addition.
- Geopolitical statement against coercive tactics: Importantly, Taiwan’s inclusion would also be a geopolitical statement against coercion tactics by international actors.
Inclusivity characteristics based on a commitment to the existing international order
- In its current abstract framework, the plus framework includes a wide array of states (which also comprise the IPEF) — developing and developed economies as well as middle and major powers that are committed to maintaining an inclusive, rules-based and liberal institutional order.
- The inclusivity angle is suspect as the grouping is essentially what China calls a US-led “anti-China” tool.
- Therefore, what interested states must envision is a broad, all-embracing, and comprehensive framework that can stand as a pillar for regional security and stability, multilateralism, and defence of global institutionalism and the status quo.
Conclusion
States are showing their willingness, and now it is incumbent on the Quad states to allow for the creation of a “corridor of communication” that ultimately leads to a “continental connect” to strengthen a rules-based order.
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QUAD: its origins, goals and future plans
Why was it formed?
- While not stated explicitly by the leaders, a major basis for the grouping is to check China’s growing influence in the region.
- After the Indian Ocean tsunami in 2004 wreaked havoc in the region now called the Indo-Pacific, India stepped up its rescue efforts.
- India provided assistance to its maritime neighbours: Sri Lanka, the Maldives and Indonesia.
- Soon, the disaster relief effort was joined by three other naval powers — the U.S., Australia and Japan.
- Then US President George W. Bush announced that the four countries would set up an international coalition to coordinate the massive effort.
- While the charge of the rescue operations was handed over to the United Nations shortly after, it led to the birth of a new framework: the Quadrilateral or Quad.
Development of present day QUAD
- Then Japanese PM Shinzo Abe had been promoting the idea of an “arc of prosperity and freedom”.
- This brought the Quad countries closer together, further developed the concept and discussed it with then PM Manmohan Singh during a summit in December 2006.
- The 2007 Indo-U.S. Malabar naval exercises also saw the partial involvement of Japan, Australia and Singapore.
- The exercises and coordination were seen by China as an attempt to encircle it, which termed the grouping as trying to build “an Asian NATO”.
Descent and revival in its formation
- The Quad lost momentum post the 2007 meeting as the effort “dissipated amidst member leadership transitions.
- The grouping was only revived an entire decade later in 2017, at a time when all four countries had revised their assessment of the China challenge; and India had witnessed the Doklam standoff.
- Leaders of all four countries met in the Philippines for the ‘India-Australia-Japan-U.S.’ dialogue, not referred to as a Quad dialogue to avoid the notion of a “gang-up”.
Basis: Indo-Pacific
- Even at this point, a set of objectives, areas of cooperation, and even the definition of Indo-Pacific were not fixed among Quad members.
- It was in March 2021 that Mr. Biden, Mr. Modi, Australia’s outgoing PM Scott Morrison, and then Japanese PM Yoshihide Suga met virtually, for the first time as an official Quad summit.
- It released a set of objectives for the grouping in a joint statement called the ‘The Spirit of the Quad’.
What were the objectives of the grouping?
- Coming together to foster a free and open Indo-Pacific formed the bedrock of cooperation.
- Now it commits to promoting the free, open, rules-based order, rooted in international law and undaunted by coercion, to bolster security and prosperity in the Indo-Pacific and beyond.
- Emphasis was laid on “rule of law, territorial integrity, freedom of navigation and overflight, peaceful resolution of disputes, and democratic values” in the region.
Various initiatives of QUAD
- Quad leaders launched the Quad Vaccine Initiative (QVI) with the aim of manufacturing and distributing at least a billion COVID-19 vaccines for the Asia region by the end of 2022.
- As for emerging technologies, the four countries aimed to work on the development and diversification of 5G telecommunications.
- They aim for creation of supply chains for critical minerals and technologies for making semiconductors used in smartphones, another area where China is a leader.
- Quad nations had also agreed to build joint connectivity projects and transparent infrastructure funding for countries in the region.
- The Quad also created a working group for combating climate change which would oversee efforts to foster green shipping by decarbonising maritime supply chains and promoting the use of clean hydrogen.
What are the future plans of the Quad?
- The Leaders will review the progress of Quad initiatives and Working Groups, identify new areas of cooperation and provide strategic guidance and vision for future collaboration.
- The Quad summit is expected to discuss the Russian war in Ukraine, and the impact of three months of Western sanctions.
- US also unveiled the ‘Indo-Pacific Economic Framework’ (IPEF) which is a programme to bind countries in the region more closely through common standards.
- Quad members also launched a maritime monitoring plan to curb illegal fishing in the Indo-Pacific.
Various challenges
- How to deal with China thus remains the central question for Quad. Each Quad member views the Chinese threat differently.
- For Australia too, trade was the biggest issue until the recent establishment of a Chinese military base in the Solomon Islands brought a new dimension.
- Japan and India are closest to China, and both face belligerent Chinese claims to territory.
- The security build-up of QUAD is also yet to materialize.
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Qutub Minar not a Place of Worship: ASI
The Qutub Minar complex is not a place of worship and its character cannot be changed now, the Archaeological Survey of India submitted in a Delhi Court while opposing a plea challenging the dismissal of a civil suit seeking “restoration” of temples on the premises.
What is the case?
- The original suit claimed that 27 temples were demolished to build the Quwwat-ul-Islam mosque at the Qutub Minar complex.
- This pleas was dismissed last year under the provisions of Places of Worship (Special Provisions) Act, 1991.
- The Additional District Judge (ADJ) has now reserved the order.
- The petitioner said that the dismissal of the original suit based on the 1991 Act was wrong.
- The Qutub Minar complex comes under the purview of the Ancient Monuments and Archaeological Sites and Remains (AMASR) Act of 1958.
Why in news now?
- The ASI now submitted that the Qutub Minar complex was not a place of worship when it was first notified as a protected monument in 1914.
- The ASI, explained that the character of a monument is decided on the date when it comes under protection.
About Qutub Minar
- The Qutub Minar is a minaret and “victory tower” that forms part of the Qutb complex, which lies at the site of Delhi’s oldest fortified city, Lal Kot, founded by the Tomar Rajputs.
- It is a UNESCO World Heritage Site in the Mehrauli area of South Delhi.
- It can be compared to the 62-metre all-brick Minaret of Jam in Afghanistan, of c. 1190, which was constructed a decade or so before the probable start of the Delhi tower.
- The surfaces of both are elaborately decorated with inscriptions and geometric patterns.
- The Qutb Minar has a shaft that is fluted with “superb stalactite bracketing under the balconies” at the top of each stage.
Its construction
- The Qutb Minar was built over the ruins of the Lal Kot, the citadel of Dhillika.
- Qutub Minar was begun after the Quwwat-ul-Islam Mosque, which was started around 1192 by Qutb-ud-din Aibak, first ruler of the Delhi Sultanate.
- It is usually thought that the tower is named for Qutb-ud-din Aibak, who began it.
- It is also possible that it is named after Khwaja Qutbuddin Bakhtiar Kaki a 13th-century sufi saint, because Shamsuddin Iltutmish was a devotee of his.
- Quwwat-ul-Islam Mosque, to the north-east of the Minar was built by Qutub-ud-Din Aibak in A.D. 1198.
- It consists of a rectangular courtyard enclosed by cloisters, erected with the carved columns and architectural members of 27 Jain and Hindu temples, which were demolished by Qutub-ud-Din.
- This is recorded in his inscription on the main eastern entrance.
Back2Basics:
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Who was Prithviraj Chauhan?
There is controversy around a new film where some communities of Rajasthan are laying claim over the 12th century emperor Prithviraj Chauhan.
Prithviraj Chauhan
- Prithviraj Chauhan (1177–1192 CE) popularly known as a king from the Chauhan (Chahamana) dynasty who ruled the territory of Sapadalaksha, with his capital at Ajmer in present-day Rajasthan.
- Ascending the throne as a minor in 1177 CE, Prithviraj inherited a kingdom which stretched from Thanesar in the north to Jahazpur (Mewar) in the south.
His legend
- He aimed to expand by military actions against neighbouring kingdoms, most notably defeating the Chandela’s.
- Prithviraj unified several Rajput clans and defeated the Ghurid army led by Muhammad Ghori near Taraori in 1191 AD.
- However, in 1192 CE, Ghori returned with an army of Turkish mounted archers and defeated the Rajput army on the same battlefield.
- Prithviraj fled the battlefield, but was captured near Sirsa and executed.
- His defeat at Tarain is seen as a landmark event in the Islamic conquest of India, and has been described in several semi-legendary accounts, most notably the Prithviraj Raso.
Prithviraj in literary works
- The image of Prithviraj as a fearless and skilled warrior that is now etched in the folk imagination can be traced back to his depiction in ‘Prithviraj Raso’.
- This was a poem in Brajbhasha attributed to Chand Bardai, which is thought to have been composed in the 16th century.
- James Mill’s ‘The History of British India’ (1817) categorized Indian history into the Hindu, Muhammadan and British periods.
- In this formulation, Prithviraj Chauhan would be the last ruler of ‘Hindu’ India.
Why is he being revived?
- To a vocal section of the Hindu right, Prithviraj Chauhan appears as “the last Hindu emperor” of India who made a valiant attempt to stop the radical invaders.
- In the popular imagination, he is the heroic figure who symbolises the exalted ideals of patriotism and national pride.
- However the historical evidence demonstrates rather different ways in which Prithviraj has been seen over the ages.
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FDI inflow ‘highest ever’ at $83.57 bn
The foreign direct investment (FDI) in the financial year 2021-22 has touched a “highest-ever” figure of $83.57 billion.
Get aware with the recently updated FDI norms. Key facts mentioned in this newscard can make a direct statement based MCQ in the prelims.
Ex. FDI source in decreasing order: Singapore – Mauritius – Netherland – Ceyman Islands – Japan – France
What is Foreign Direct Investment (FDI)?
- An FDI is an investment in the form of a controlling ownership in a business in one country by an entity based in another country.
- It is thus distinguished from a foreign portfolio investment by a notion of direct control.
- FDI may be made either “inorganically” by buying a company in the target country or “organically” by expanding the operations of an existing business in that country.
- Broadly, FDI includes “mergers and acquisitions, building new facilities, reinvesting profits earned from overseas operations, and intra company loans”.
- In a narrow sense, it refers just to building a new facility, and lasting management interest.
FDI in India
- Foreign investment was introduced in 1991 under Foreign Exchange Management Act (FEMA), driven by then FM Manmohan Singh.
- There are two routes by which India gets FDI.
1) Automatic route: By this route, FDI is allowed without prior approval by Government or RBI.
2) Government route: Prior approval by the government is needed via this route. The application needs to be made through Foreign Investment Facilitation Portal, which will facilitate the single-window clearance of FDI application under Approval Route.
- India imposes a cap on equity holding by foreign investors in various sectors, current FDI in aviation and insurance sectors is limited to a maximum of 49%.
- In 2015 India overtook China and the US as the top destination for the Foreign Direct Investment.
Features of FDI
- Any investment from an individual or firm that is located in a foreign country into a country is FDI.
- Generally, FDI is when a foreign entity acquires ownership or controlling stake in the shares of a company in one country, or establishes businesses there.
- It is different from foreign portfolio investment where the foreign entity merely buys equity shares of a company.
- In FDI, the foreign entity has a say in the day-to-day operations of the company.
- FDI is not just the inflow of money, but also the inflow of technology, knowledge, skills and expertise.
- It is a major source of non-debt financial resources for the economic development of a country.
Significance of rising FDI
- This is a testament of India’s status among global investors.
Recent amendments in 2020
- The govt. has amended para 3.1.1 of extant FDI policy as contained in Consolidated FDI Policy, 2017.
- In the event of the transfer of ownership of any existing or future FDI in an entity in India, directly or indirectly, resulting in the beneficial ownership, such subsequent change in beneficial ownership will also require Government approval.
The present position and revised position in the matters will be as under:
Present Position
- A non-resident entity can invest in India, subject to the FDI Policy except in those sectors/activities which are prohibited.
- However, a citizen of Bangladesh or an entity incorporated in Bangladesh can invest only under the Government route.
- Further, a citizen of Pakistan or an entity incorporated in Pakistan can invest, only under the Government route, in sectors/activities other than defence, space, atomic energy and sectors/activities prohibited for foreign investment.
Revised Position
- A non-resident entity can invest in India, subject to the FDI Policy except in those sectors/activities which are prohibited.
[spot the difference]
- However, an entity of a country, which shares a land border with India or where the beneficial owner of investment into India is situated in or is a citizen of any such country, can invest only under the Government route.
- Further, a citizen of Pakistan or an entity incorporated in Pakistan can invest, only under the Government route, in sectors/activities other than defence, space, atomic energy and sectors/activities prohibited for foreign investment.
In response to China
- China accused that India’s recently adopted policy goes against the principles of the World Trade Organisation (WTO).
- It tends to violate WTO’s principle of non-discrimination, and go against the general trend of liberalisation and facilitation of trade and investment.
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Norms eased for GM Crop Research
The Department of Biotechnology (DBT) has issued guidelines easing norms for research into genetically modified (GM) crops and circumventing challenges of using foreign genes to change crops profile.
Guidelines for Safety Assessment of Genome Edited Plants, 2022: Key Highlights
- It exempt researchers who use gene-editing technology to modify the genome of the plant from seeking approvals from the Genetic Engineering Appraisal Committee (GEAC).
- The environment ministry in March 2022 exempted SDN 1 and SDN 2 genomes from Rules 7-11 of the Environment Protection Act.
- Conventional breeding technique takes 8- 10 years for development of new crop varieties; genome-editing can do this faster.
- The Environment Ministry too has sanctioned this exemption.
What are the SDNs?
The genome edited plants derived from the use of genome editing techniques employing site- directed nucleases (SDNs) such ZFNs, TALENs, CRISPR and other nucleases with similar functions are generally classified under three categories as
- Site-Directed Nuclease (SDN)-1, a site-directed mutagenesis without using a DNA sequence template;
- SDN-2, a site-directed mutagenesis using a DNA sequence template; and
- SDN-3, site-directed insertion of gene/large DNA sequence using a DNA sequence template.
What are GM crops?
- The GM plants involve transgenic technology or introducing a gene from a different species into a plant, for instance BT-cotton, where a gene from soil bacterium is used to protect a plant from pest attack.
- The worry around this method is that these genes may spread to neighboring plants, where such effects are not intended and so their applications have been controversial.
- Genome editing involves the use of technologies that allow genetic material to be added, removed, or altered at particular locations in the genome. Several approaches to genome editing have been developed.
- A well-known one is called CRISPR-Cas9, which is short for clustered regularly interspaced short palindromic repeats and CRISPR-associated protein 9.
Try this PYQ:
Q.The Genetic Engineering Appraisal Committee is constituted under the:
(a) Food Safety and Standards Act, 2006
(b) Geographical Indications of Goods (Registration and Protection) Act, 1999
(c) Environment (Protection) Act, 1986
(d) Wildlife (Protection) Act, 1972
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About Genetic Engineering Appraisal Committee (GEAC)
- The Genetic Engineering Appraisal Committee (GEAC) is a statutory body conotified under the Environment (Protection) Act, 1986.
- It was formed as the Genetic Engineering Approval Committee and was renamed to its current name in 2010.
- It functions under the Ministry of Environment, Forests & Climate Change.
- The body regulates the use, manufacture, storage, import and export of hazardous microorganisms or genetically-engineered organisms and cells in India.
