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Subject: Economics

  • Virtual Digital Assets

    The government has clarified that investors won’t be allowed to offset losses in one crypto asset against gains in another, and that crypto mining infrastructure costs will not be included in the cost of acquisition to be claimed as a deduction.

    How are crypto investments taxed?

    • The Union Budget 2022-23 in February proposed that gains from virtual digital assets or crypto assets would be taxed at 30% irrespective of the individual’s income tax slab.
    • In addition, a 1% tax deducted at source or TDS was introduced on the transfer of such assets.
    • The government did not say if crypto assets are to be treated as currency, commodity, or security, and a clarification is expected in due course via separate legislation.
    • Gifting of crypto assets to non-relatives is also taxed in the hands of the recipient if the value exceeds ₹50,000 in a year.

    How does crypto tax differ from others?

    • If listed shares are sold within 12 months of purchase, short-term capital gains (STCG) tax is applied on the gains, while beyond one year, long-term capital gains (LTCG) tax is levied.
    • STCG is levied at 15.6%, including cess, while LTCG for gains over ₹1 lakh is 10.4%, including cess.
    • There is no provision of long-term or short-term crypto assets, while gains are taxed at a flat rate of 30%.
    • Investors in equities can offset the loss in one stock against another, while they can carry forward both short-term and long-term loss for eight assessment years.
    • This has not been allowed in crypto.

    How will crypto tax impact investors?

    • In a fiscal year, if an investor had made gains in bitcoin and losses in ether, he or she will have to pay tax at 30% on gains in bitcoin.
    • Further, the absence of loss set-off provision would cause a double whammy —paying taxes on gains and no offset of losses.
    • Tax experts believe that in certain cases, the effective rate of taxation can even cross 100% on crypto investments.

    How will miners be affected?

    • The government has clarified that mining infrastructure will also not be eligible to be deducted as the cost of acquisition.
    • So far, it was understood by some that crypto generated during the ‘mining’ process is taxable only on the profits, after accounting for mining expenses such as electricity.
    • But with the latest explanation, a 30% tax plus cess and surcharges will be levied on such transactions.
    • Experts believe that crypto mining operations would become non-profitable under the current announcement.

    Will crypto tax trigger an investor exodus?

    • The crypto industry has been unequivocal in criticizing the tax proposals.
    • Thanks to the tearing rally in crypto assets over the past two years, it is estimated by some that more than 20 million Indian investors have poured more than ₹1 trillion into cryptos.
    • However, the industry leaders fear that the lack of provision to offset losses will drive away users from KYC-compliant exchanges and platforms to the underground peer-to-peer grey market, which would defeat the purpose of regulation.

     

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  • Russia’s offer of cheaper oil is tempting, but India must be cautious

    Context

    With oil above $100, the government now has to spend twice as much to import oil as it did earlier. Russia has offered to sell oil at lower prices to India. It is a hard temptation for India to resist. But one that comes with profound and long-lasting consequences.

    Issues in buying oil from Russia

    1] Impact on India’s export due to threat of the secondary sanction by the US

    • The demise of the Soviet Union made it easier for India to abandon the Soviet-influenced ideology of a planned economy and veer towards the American version of a market economy.
    • Now, in the reverse ideological direction, Russia’s offer of cheaper oil has hidden and direct costs that India will have to deliberate upon.
    • Whenever global crude oil prices have risen above $100 in the past, India was able to cushion that shock primarily through growth in exports.
    • When oil prices were similarly high, exports rose to nearly 25 per cent of nominal GDP, which helped India withstand the shock.
    • However, exports now have fallen dramatically to 18 per cent of GDP, which must be revived.
    • The US is India’s biggest export market.
    • The US has already cautioned India about abetting Russia by buying Russian oil.
    • It remains to be seen if the US will impose secondary sanctions against India for buying discounted Russian oil, but that threat looms large.

    2] Cascading de-dollarisation

    • With US sanctions against Russia, it will insist on payment in rubles.
    • If India is forced to accept trading in rubles with Russia, then it is very likely that China, which is India’s second-largest trading partner, may also insist on payments in Chinese yuan.
    • Saudi Arabia may also insist on trading in a currency other than the US dollar.
    • This cascading “de-dollarisation” phenomenon will further irk and antagonise the US, since it weakens the dollar’s status as the world’s reserve currency.
    • If India is forced to purchase Russian oil in rubles and potentially trade in yuan with China and others, it can catapult India into the centre of a geo-economic war that it can ill afford.

    Opportunity for India

    • The Russia-Ukraine conflict can be an opportunity for India to step up and capture global market share in goods and services.
    • There is already talk of India capitalising on wheat exports, albeit a tiny share of India’s overall exports, as a fallout of global sanctions against Russian wheat.

    Conclusion

    Exports remain India’s biggest hope for a long-term sustainable economic recovery with ample job creation. India cannot risk being isolated in future global trade for near-term discounted oil deals with Russia.

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  • Textile Industry in India

    Context

    South Asia became a major player in the global textiles and clothing market with the onset of the third wave of global production.

    Textile industry in Bangladesh

    • Bangladesh overtook India in exports in the past decade as Indian labour costs resulted in products becoming 20% more expensive.
    • Bangladesh joined the league in the 1980s, owing to the outbreak of the civil war in Sri Lanka.
    • Lower production costs and free trade agreements with western buyers are what favour Bangladesh, which falls third in the line as a global exporter.
    • Bangladesh has been ahead of time in adopting technology.
    • Bangladesh also concentrates on cotton products, specialising in the low-value and mid-market price segment.

    Where does India stand?

    • The progress of India and Pakistan in readymade garments is recent when compared to their established presence in textiles.
    • India holds a 4% share of the U.S.$840 billion global textile and apparel market, and is in fifth position.
    • India has been successful in developing backward links, with the aid of the Technical Upgradation Fund Scheme (TUFS), in the cotton and technical textiles industry.
    • However, India is yet to move into man-made fibres as factories still operate in a seasonal fashion.

    Challenges ahead

    1] Fourth Industrial revolution and robotic automation

    • The Fourth Industrial Revolution (4IR) has been shifting focus from production machinery to integrating technology in the entire production life cycle.
    • The production cycle incorporates all digital information and automation including robotics, artificial intelligence (AI), virtual reality, 3D printing, etc.
    • Robotic automation exemplifies production efficiency, especially in areas such as cutting and colour accuracy.
    • The Asian Development Bank anticipates the challenges of job losses and disruption, inequality and political instability, concentration of market power by global giants and more vulnerability to cyberattacks.
    •  With a 7% unemployment rate, India faces the challenge of job creation in the wake of increased automation.
    • The World Bank expects this trend to accelerate in the post-COVID-19 market.
    • The 4IR may result in unemployment or poor employment generation, primarily affecting a low skill workforce.

    2] Sustainability challenge

    • Sustainability is also an important consideration for foreign buyers.
    • Bangladesh’s readymade garments initiated ‘green manufacturing’ practices to help conserve energy, water, and resources.
    • Textile and apparel effluents account for 17%-20% of all water pollution.
    •  The Indian government is committed to promoting sustainability through project sustainable resolution.

    3] Labour issues

    • Access to affordable labour continues to be an advantage for south Asia.
    •  In addition, a country such as India with a very high number of scientists and engineers could lead, as is evident in the areas of drones, AI and blockchain.
    • India’s potential lies in its resources, infrastructure, technology, demographic dividend and policy framework.
    • The creation of a Centre for the Fourth Industrial Revolution is indicative of India’s intent.

    Way forward

    • Digitalisation and automation in areas such as design, prototyping, and production are key in order to stay abreast, and in controlling production quality and timely delivery.
    • Sustainable practices such as regenerative organic farming (that focuses on soil health, animal welfare, and social fairness), sustainable manufacturing energy (renewable sources of energy are used) and circularity are being adopted.
    • Tax exemptions or reductions in imported technology, accessibility to financial incentives, maintaining political stability and establishing good trade relations are some of the fundamental forms of support the industry needs from governments.
    • The U.S. trade war on China owing to human rights violations along with its economic bottlenecks, opens doors for India and Pakistan as they have strong production bases.
    • Similar to China, India has a big supply — from raw material to garments.
    • Bangladesh has also risen as a top exporter in a cost competitive global market.
    • India’s proposed investments of US$1.4 billion and the establishment of all-in-one textile parks are expected to increase employment and ease of trade.
    • India extended tax rebates in apparel export till 2024, with the twin goals of competitiveness and policy stability.
    • Labour law reforms, additional incentives, income tax relaxations, duty reductions for man-made fibre, etc. are other notable moves.
    •  Newer approaches in the areas of compliance, transparency, occupational safety, sustainable production, etc. are inevitable changes in store for South Asia to sustain and grow business.
    • Finally, there is a need for governments’ proactive support in infrastructure, capital, liquidity and incentivisation.

    Conclusion

    Ensuring government support for financial incentives, upgrading technologies and reskilling labour are key challenges.

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  • What is the NPPA’s role in fixing drug prices?

    Consumers may have to pay more for medicines and medical devices if the National Pharmaceutical Pricing Authority (NPPA) allows a price hike of over 10% in the drugs and devices listed under the National List of Essential Medicines (NLEM), this coming month.

    Who regulates Drugs prices?

    • The NPPA was set up in 1997 to fix/revise prices of controlled bulk drugs and formulations and to enforce price and availability of the medicines in the country, under the Drugs (Prices Control) Order, 1995-2013.
    • Its mandate is:
    1. To implement and enforce the provisions of the DPCO in accordance with the powers delegated to it
    2. To deal with all legal matters arising out of the decisions of the NPPA
    3. To monitor the availability of drugs, identify shortages and to take remedial steps
    • The NPPA is also mandated to collect/maintain data on production, exports and imports, market share of individual companies, profitability of companies etc., for bulk drugs and formulations and undertake and/ or sponsor relevant studies in respect of pricing of drugs/ pharmaceuticals.

    How does the pricing mechanism work?

    • Prices of Scheduled Drugs are allowed an increase each year by the drug regulator in line with the Wholesale Price Index (WPI) and the annual change is controlled and rarely crosses 5%.
    • But the pharmaceutical players pointed out that over the past few years, input costs have flared up.
    • The hike has been a long-standing demand by the pharma industry lobby.
    • All medicines under the NLEM are under price regulation.

    Do you know?

    As per the Drugs (Prices) Control Order 2013, scheduled drugs, about 15% of the pharma market, are allowed an increase by the government as per the WPI while the rest 85% are allowed an automatic increase of 10% every year.

    How are the prices determined?

    • The ceiling price of a scheduled drug is determined by first working out the simple average of price to retailer in respect of all branded and generic versions of that particular drug formulation.
    • It should have a market share of more than or equal to 1%, and then adding a notional retailer margin of 16% to it.
    • The ceiling price fixed/revised by the NPPA is notified in the Gazette of India (Extraordinary) from time to time.

    When are the prices revised?

    • Prices are revised when there is a rise in the price of bulk drugs, raw materials, cost of transport, freight rates, utilities like fuel, power, diesel, and changes in taxes and duties.
    • The cost rises for imported medicines with escalation in insurance and freight prices, and depreciation of the rupee.
    • The annual hike in the prices of drugs listed in the NLEM is based on the WPI.
    • The NLEM lists drugs used to treat fever, infection, heart disease, hypertension, anaemia etc and includes commonly used medicines like paracetamol, azithromycin etc.

    Why are inputs costs high?

    • One of the challenges is that 60%-70% of the country’s medicine needs are dependent on China.
    • WPI is dependent on price rise in a basket of a range of goods that are not directly linked with the items that go into the cost of medicines.

     

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  • Par Tapi Narmada River-Linking Project

    The tribals in Gujarat held a public meeting in Kaprada in Valsad district to protest against the Centre’s Par Tapi Narmada (PTN) river-linking project.

    Par Tapi Narmada river-linking project

    • The PTN link project was envisioned under the 1980 National Perspective Plan under the former Union Ministry of Irrigation and the Central Water Commission (CWC).
    • The project proposes to transfer river water from the surplus regions of the Western Ghats to the deficit regions of Saurashtra and Kutch.
    • It proposes to link three rivers — Par, originating from Nashik in Maharashtra and flowing through Valsad, Tapi from Saputara that flows through Maharashtra and Surat in Gujarat, and Narmada originating in Madhya Pradesh and flowing through Maharashtra and Bharuch and Narmada districts in Gujarat.

    Components of the project

    • The link mainly includes the construction of seven dams (Jheri, Mohankavchali, Paikhed, Chasmandva, Chikkar, Dabdar and Kelwan), three diversion weirs and two tunnels.
    • Of these, the Jheri dam falls in Nashik, while the remaining dams are in Valsad and Dang districts of South Gujarat.

    Centre’s role

    • A Memorandum of Understanding (MoU) was signed between Gujarat, Maharashtra and the central government on May 3, 2010.
    • It envisaged that Gujarat would get the benefit of the Par Tapi Narmada link project through en-route irrigation from the link canal and in the drought-prone Saurashtra Kutch region by way of substitution.

    Issues with the Project

    • About 6065 hectares of land area will be submerged due to the proposed reservoirs.
    • A total of 61 villages will be affected, of which one will be fully submerged and the remaining 60 partly.
    • The total number of affected families would be 2,509 of which 98 families would be affected due to the creation of the Jheri reservoir, the only one in Maharashtra, spread over six villages.
    • The affected families may lose their lands or houses or both in the submergence when the reservoirs are created.
    • The districts where the project will be implemented are largely dominated, by tribals who fear displacement.

     

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  • India’s Crude Oil Trade with Russia

    The Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Ltd (HPCL) has bought two million barrels of Russian crude oil as Indian energy majors forge ahead with attempts to secure a part of the Russian energy supply.

    What is the news?

    • India is exploring alternative payment channels for trade with Russia and the possibility of sourcing additional oil at a discount, even as the West reduces its exposure to Russian oil.
    • Now India needs to make some necessary adjustments in the financial front because of the challenges posed by the American sanctions.

    India’s import dependence and Russia

    • India is heavily dependent on oil imports, the bulk of which comes from the Middle East, Africa, Europe, North America, South America, and South-East Asia.
    • Russia’s oil-related exports to India are only about $1 billion.
    • However, Russia is keen to scale this up even as the US has announced a ban on oil imports from the country and the UK has adopted a more gradual reduction.
    • This offers the opportunity for a lucrative supply deal with the second largest oil exporter after Saudi Arabia.

    Do you know?

    India’s nuclear power project in Kudankulam in Tamil Nadu is built with Russian collaboration.

    What is at stake in oil trade with Russia?

    • India, however, needs to find alternative payment channels due to the evolving crisis.
    • This is also crucial for bilateral non-oil trade.

    Risks posed by payment crisis

    • Western curbs cutting off some Russian banks from the SWIFT payment system has proven to be a setback for bilateral trade.
    • Many payments worth $500 million to Indian exporters for goods already shipped reportedly being stuck.
    • A steady supply of critical commodities such as fuel and fertilizer from Europe is crucial in India’s efforts to manage inflation.
    • A spike in natural gas in global markets is pushing up the cost of procuring commonly used urea, which is sold at a subsidized price to farmers.

    Why is oil supply from Russia important?

    • As much as 85% of India’s oil requirement is met through imports.
    • The government has tried diversifying its supply sources.
    • This would add more gas into the energy basket, giving a strong push to electric mobility, building strategic reserves and blending ethanol in auto fuel to reduce oil import dependence.
    • Extra oil supplies from Russia could aid in this effort.

    How’re the two nations handling the situation?

    • India and Russia are exploring a Rupee-Rouble trade mechanism using currency of a third country as a reference.
    • This would allow Indian exporters to be paid in rupees.
    • This would need an Indian and a Russian bank opening shop on each other’s soil.
    • Another option is routing payments via a bank with limited overseas exposure so that it will not attract curbs.
    • For additional Russian oil shipments, India needs access to more vessels and containers.
    • Indian refiners’ ability to process larger quantities of crude oil also needs to be assessed.

    Extending the collaborations

    • New Delhi has for long followed the policy of acquiring energy assets abroad to reduce risks related to heavy import dependence on oil.
    • Oil and Natural Gas Corp. Ltd’s investment in Russia’s Sakhalin project is one example.
    • Besides, Russian company PJSC Rosneft Oil Co. is a stakeholder in Nayara Energy Ltd that runs the second largest single-site refinery in Gujarat.

     

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  • BARC resumes ratings of news channels

    The BARC India had temporarily suspended the viewership ratings of news channels in October 2020, amid the allegations of a Television Rating Point (TRP) scam. Now it has resumed the ratings.

    What is TRP?

    • In simple terms, anyone who watches television for more than a minute is considered a viewer.
    • The TRP or Target Rating Point is the metric used by the marketing and advertising agencies to evaluate this viewership.
    • In India, the TRP is recorded by the Broadcast Audience Research Council (BARC) using Bar-O-Meters that are installed in televisions in selected households.
    • As on date, the BARC has installed these meters in 44,000 households across the country. Audio watermarks are embedded in video content prior to broadcast.
    • These watermarks are not audible to the human ear, but can easily be detected and decoded using dedicated hardware and software.
    • As viewing details are recorded by the Bar-O-Meters, so are the watermarks.

    What is BARC?

    • It is an industry body jointly owned by advertisers, ad agencies, and broadcasting companies, represented by The Indian Society of Advertisers, the Indian Broadcasting Foundation and the Advertising Agencies Association of India.
    • Though it was created in 2010, the I&B Ministry notified the Policy Guidelines for Television Rating Agencies in India on January 10, 2014, and registered BARC in July 2015 under these guidelines, to carry out television ratings in India.

    How are the households selected?

    • Selection of households where Bar-O-Meters are installed is a two-stage process.
    • The first step is the Establishment Survey, a large-scale face-to-face survey of a sample of approximately 3 lakh households from the target population. This is done annually.
    • Out of these, the households which will have Bar-O-Meters or what the BARC calls the Recruitment Sample are randomly selected. The fieldwork to recruit households is not done directly by BARC.
    • The BARC on its website has said that the viewing behaviour of panel homes is reported to BARC India daily. Coincidental checks either physically or telephonically are done regularly.

    Vigilance activities by BARC

    • Certain suspicious outliers are also checked directly by BARC India.
    • BARC India also involves a separate vigilance agency to check on outliers that it considers highly suspicious.
    • And as per the guidelines of the Ministry of Information and Broadcasting, these households rotate every year.
    • This rotation is in such a manner that older panel homes are removed first while maintaining the representativeness of the panel.
    • The Ministry guidelines further say that the secrecy and privacy of the panel homes must be maintained, and asked the BARC to follow a voluntary code of conduct.

    What are the loopholes in the process?

    • Several doubts have been raised on many previous occasions about the working of the TRP.
    • As per several reports, about 70% of the revenue for television channels comes from advertising and only 30% from subscriptions.
    • It is claimed that households were being paid to manipulate the TRP.

     

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  • Why ‘de-dollarisation’ is imminent

    Context

    The war in Ukraine and the subsequent economic sanctions will trigger central banks to go back to their drawing boards to reassess their dependency on the greenback.

    How sanctions on Russia could lead to de-dollarisation

    • The imposition of sanctions and the exclusion from SWIFT by the US could trigger a faster de-dollarisation. 
    • The “de-dollarisation” by several central banks is imminent, driven by the desire to insulate them from geopolitical risks, where the status of the US dollar as a reserve currency can be used as an offensive weapon.
    • This can also trigger a shift in the overall global forex market framework.
    • The US dollar, which is the world’s reserve currency, can see a steady fall in the current context as leading central banks may look to diversify their reserves away from it to other assets or currencies like the Euro, Renminbi or gold.

    How China and Russia are responding?

    • Efforts are already underway for the possible introduction of a new Russia-China payment system, bypassing SWIFT and combining the Russian SPFS (System for Transfer of Financial Messages) with the Chinese CIPS (Cross-Border Interbank Payment System).
    • Russia had started its three-pronged efforts towards de-dollarisation in 2014 when sanctions were imposed on it for the annexation of Crimea.
    • However, these steps haven’t sufficed to effectively shield “fortress Russia”.
    • China, on the other hand, aims to use trading platforms and its digital currency to promote de-dollarisation.
    • China has established RMB trading centres in Hong Kong, Singapore and Europe.
    • In 2021, the People’s Bank of China submitted a “Global Sovereign Digital Currency Governance” proposal at the Bank for International Settlements to influence global financial rules via its digital currency, the e-Yuan.
    • The IMF has already added Yuan to its SDR (Special Drawing Rights) basket in 2016.
    • In 2017, the European Central Bank exchanged EUR 500 million worth of its forex reserves into Yuan-denominated securities.
    • However, the lack of full RMB convertibility will hinder China’s de-dollarisation ambition.

    Why the dominance of the dollar continues and how the US benefits from its dominance

    • Currently, about 60 per cent of foreign exchange reserves of central banks and about 70 per cent of global trade is conducted using USD.
    • The status of the dollar was enhanced by the collapse of the Bretton Woods system, which essentially eliminated other developed market currencies from competing with the USD.
    • The association of the USD as a “safe-haven” asset also has a psychological angle to it and like old habits, people continue to view the currency as a relatively risk-free asset.
    • This status of the reserve currency allows the US government to refinance its debt at low costs in addition to providing foreign policy leverage.
    •  Additionally, sudden dumping of dollar assets by adversarial central banks will also pose balance sheet risks to them as it will erode the value of their overall dollar-denominated holdings.

    Consider the question “Examine the factors that explain the dominance of the dollar in the global economy? How such dominance benefits the US?”

    Conclusion

    While the frequent use of the US dollar as a potential weapon for achieving foreign policy objectives will no doubt accelerate the process of de-dollarisation, there is still a long road ahead.

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    Back2Basics: What is Special Drawing Rights?

    • The SDR is an international reserve asset created by the IMF to supplement the official reserves of its member countries.
    • The SDR is not a currency.
    • It is a potential claim on the freely usable currencies of IMF members.
    • As such, SDRs can provide a country with liquidity.
    • A basket of currencies defines the SDR: the US dollar, Euro, Chinese Yuan, Japanese Yen, and the British Pound.

  • Back in news: Foreign Contribution Regulation Act (FCRA)

    The Union Home Ministry has placed a US based NGO on its watchlist following an investigation that foreign contributions it sent were being used for climate awareness campaigns, an activity not permissible under the FCRA [Foreign Contribution (Regulation) Act].

    About Foreign Contribution Regulation Act (FCRA)

    • The FCRA regulates foreign donations and ensures that such contributions do not adversely affect internal security.
    • First enacted in 1976, it was amended in 2010 when a slew of new measures was adopted to regulate foreign donations.
    • The FCRA is applicable to all associations, groups and NGOs which intend to receive foreign donations.
    • It is mandatory for all such NGOs to register themselves under the FCRA.
    • The registration is initially valid for five years and it can be renewed subsequently if they comply with all norms.

    Why was FCRA enacted?

    • The FCRA sought to consolidate the acceptance and utilisation of foreign contribution or foreign hospitality by individuals, associations or companies.
    • It sought to prohibit such contributions from being used for activities detrimental to national interest.

    What was the recent Amendment?

    • The FCRA was amended in September 2020 to introduce some new restrictions.
    • The Government says it did so because it found that many recipients were wanting in compliance with provisions relating to filing of annual returns and maintenance of accounts.
    • Many did not utilise the funds received for the intended objectives.
    • It claimed that the annual inflow as foreign contributions almost doubled between 2010 and 2019.
    • The FCRA registration of 19,000 organisations was cancelled and, in some cases, prosecution was also initiated.

    How has the law changed?

    There are at least three major changes that NGOs find too restrictive.

    • Prohibition of fund transfer: An amendment to Section 7 of the Act completely prohibits the transfer of foreign funds received by an organisation to any other individual or association.
    • Directed and single bank account: Another amendment mandates that every person (or association) granted a certificate or prior permission to receive overseas funds must open an FCRA bank account in a designated branch of the SBI in New Delhi.
    • Utilization of funds: Fund All foreign funds should be received only in this account and none other. However, the recipients are allowed to open another FCRA bank account in any scheduled bank for utilisation.
    • Shared information: The designated bank will inform authorities about any foreign remittance with details about its source and the manner in which it was received.
    • Aadhaar mandate: In addition, the Government is also authorised to take the Aadhaar numbers of all the key functionaries of any organisation that applies for FCRA registration or for prior approval for receiving foreign funds.
    • Cap on administrative expenditure: Another change is that the portion of the receipts allowed as administrative expenditure has been reduced from 50% to 20%.

    What is the criticism against these changes?

    • Arbitrary restrictions: NGOs questioning the law consider the prohibition on transfer arbitrary and too heavy a restriction.
    • Non-sharing of funds: One of its consequences is that recipients cannot fund other organisations. When foreign help is received as material, it becomes impossible to share the aid.
    • Irrationality of designated bank accounts: There is no rational link between designating a particular branch of a bank with the objective of preserving national interest.
    • Un-ease of operation: Due to Delhi based bank account, it is also inconvenient as the NGOS might be operating elsewhere.
    • Illogical narrative: ‘National security’ cannot be cited as a reason without adequate justification as observed by the Supreme Court in Pegasus Case.

    What does the Government say?

    • Zero tolerance against intervention: The amendments were necessary to prevent foreign state and non-state actors from interfering with the country’s polity and internal matters.
    • Diversion of foreign funds: The changes are also needed to prevent malpractices by NGOs and diversion of foreign funds.
    • Fund flow monitoring: The provision of having one designated bank for receiving foreign funds is aimed at making it easier to monitor the flow of funds.
    • Ease of operation: The Government clarified that there was no need for anyone to come to Delhi to open the account as it can be done remotely.

     

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  • Patent Rights on COVID-19 jabs may be waived

    The World Trade Organization chief has hailed a breakthrough between the EU, the United States, India and South Africa on waiving intellectual property rights on Covid-19 vaccines.

    What is a Patent?

    • A patent is an exclusive right granted for an invention.
    • In other words, a patent is an exclusive right to a product or a process that generally provides a new way of doing something, or offers a new technical solution to a problem.
    • To get a patent, technical information about the invention must be disclosed to the public in a patent application.
    • The patent owner may give permission to, or license, other parties to use the invention on mutually agreed terms.
    • The owner may also sell the right to the invention to someone else, who will then become the new owner of the patent.
    • Once a patent expires, the protection ends, and an invention enters the public domain; that is, anyone can commercially exploit the invention without infringing the patent.

    Terms of Patent

    • Patents may be granted for inventions in any field of technology, from an everyday kitchen utensil to a nanotechnology chip.
    • An invention can be a product – such as a chemical compound, or a process, for example – or a process for producing a specific chemical compound.
    • Patent protection is granted for a limited period, generally 20 years from the filing date of the application.
    • Patents are territorial rights. In general, the exclusive rights are only applicable in the country or region in which a patent has been filed and granted, in accordance with the law of that country or region.

    Back2Basics: Intellectual Properties

    • IP is protected in law by, for example, patents, copyright and trademarks, which enable people to earn recognition or financial benefit from what they invent or create.
    • By striking the right balance between the interests of innovators and the wider public interest, the IP system aims to foster an environment in which creativity and innovation can flourish.

    Types of IP:

    (1) Copyright

    • Copyright is a legal term used to describe the rights that creators have over their literary and artistic works.
    • Works covered by copyright range from books, music, paintings, sculpture and films, to computer programs, databases, advertisements, maps and technical drawings.

    (2) Patents

    Discussed above

    (3) Trademarks

    • A trademark is a sign capable of distinguishing the goods or services of one enterprise from those of other enterprises.
    • Trademarks date back to ancient times when artisans used to put their signature or “mark” on their products.

    (4) Geographical Indications

    • Geographical indications and appellations of origin are signs used on goods that have a specific geographical origin and possess qualities, a reputation or characteristics that are essentially attributable to that place of origin.
    • Most commonly, a geographical indication includes the name of the place of origin of the goods.

    (5) Trade secrets

    • Trade secrets are IP rights on confidential information which may be sold or licensed.
    • The unauthorized acquisition, use or disclosure of such secret information in a manner contrary to honest commercial practices by others is regarded as an unfair practice and a violation of the trade secret protection.

     

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