In 2023, India became the world’s most populous country, contrasting China’s declining birth rate. This prompts a comparison of their consumption patterns and geopolitical implications.
Consumer size of India and China
Private Final Consumption Expenditure (PFCE):
India’s PFCE as a percentage of GDP is significantly higher than China’s, with India spending over 58% of its GDP on consumption compared to China’s 38%.
Final consumption, including government expenditure, constitutes 68% of India’s GDP and 53% of China’s GDP.
Despite China’s larger economy, its PFCE is only about 3.5 times that of India’s, indicating a higher contribution of consumption to India’s GDP.
Expenditure by Categories:
India’s consumption expenditure is characterized by higher spending on food, clothing, footwear, and transport, typical of a developing market.
In contrast, China’s consumption basket represents a relatively developed market, with higher spending on housing, white goods, recreation, education, and healthcare.
India spends approximately half of what China spends on food, transport, and clothing and footwear, despite being a fifth of China’s economy.
Real growth rates of individual consumption categories in India often outperform nominal growth rates observed in China.
Conclusion: India’s higher PFCE as a percentage of GDP reflects a greater reliance on consumption-driven growth compared to China.The composition of consumption expenditure in India and China highlights differences in market maturity and consumer behavior.Despite China’s larger economy, India’s consumption expenditure is relatively significant, indicating the potential for continued growth and economic development.
Mains PYQ
Q The time has come for India and Japan to build a strong contemporary relationship, one involving global and strategic partnership that will have a great significance for Asia and the world as a whole. Comment. (UPSC IAS/2019)
An Indian inter-ministerial delegation visited the UAE to discuss the operational aspects of the India-Middle East-Europe Economic Corridor (IMEC), marking a significant step forward since the signing of the agreement.
About IMEC Project
IMEC is part of the broader Partnership for Global Infrastructure and Investment (PGII), which focuses on infrastructure development in economically developing regions.
The MoU for IMEC was formally endorsed on September 10, 2023, during the 2023 G20 New Delhi summit.
Signatories to this agreement: India, United States, United Arab Emirates, Saudi Arabia, France, Germany, Italy, and the European Union.
Aim: To integrate Asia, Europe, and the Middle East, enhancing economic cooperation across these regions.
Objectives:
Improve transportation efficiency, lower costs, and promote economic cohesion among participating nations.
Generate employment opportunities and reduce Greenhouse Gas (GHG) emissions.
Facilitate trade and connectivity, thereby reshaping regional integration among Asia, Europe, and the Middle East.
Corridor Configuration:
IMEC comprises two primary corridors:
East Corridor: Linking India to the Arabian Gulf.
Northern Corridor: Connecting the Gulf region to Europe.
Key ports integral to the project’s success include:
India: Mundra, Kandla, and Jawaharlal Nehru Port Trust (Mumbai).
Middle East: Fujairah (UAE), Jebel Ali (Dubai, UAE), Abu Dhabi (UAE), Dammam (Saudi Arabia), and Ras Al Khair (Saudi Arabia).
Israel: Haifa port.
Europe: Piraeus (Greece), Messina (Italy), and Marseille (France).
Additionally, it encompasses various infrastructure components such as railway networks, ship-to-rail connections, road transport routes, electricity cables, hydrogen pipelines, and high-speed data cables.
Significance:
IMEC, upon completion, will establish a dependable and cost-efficient cross-border ship-to-rail transit network, complementing existing maritime and road transport networks.
The IMEC Project holds significant promise in redefining regional trade dynamics and fostering sustainable economic growth and cooperation among the involved countries.
PYQ:
[2018] The China-Pakistan Economic Corridor (CPEC) is viewed as a cardinal subset of China’s larger ‘One Belt One Road’ initiative. Give a brief description of CPEC and enumerate the reasons why India has distanced itself from the same. (150 Words, 10 Marks)
[2016] ‘Belt and Road Initiative’ is sometimes mentioned in the news in the context of the affairs of:
(a) African Union
(b) Brazil
(c) European Union
(d) China
Back2Basics: Partnership for Global Infrastructure Investment (PGII)
The PGII was first announced in June 2021 during the G7 (or Group of Seven) summit in the UK.
The G7 countries include the United Kingdom, the United States, Canada, France, Germany, Italy, Japan, and the European Union (EU).
US President Joe Biden had called it the Build Back Better World (B3W) framework. However, it did not register much progress.
In 2022, during the G7 summit in Germany, the PGII was officially launched as a joint initiative to help fund infrastructure projects in developing countries through public and private investments.
Objective: To mobilise nearly $600 billion from the G7 by 2027 to invest in critical infrastructure.
It is essentially in response to the infrastructure projects being undertaken and funded by China under the Belt and Road Initiative (BRI) at a global level.
Present Maritime Routes between India and Europe
Trade Route
Route
Issues
Advantages
Suez Canal Route
Indian Ocean -> Arabian Sea -> Red Sea -> Suez Canal -> Mediterranean Sea -> Europe
High traffic causing congestion.
Potential for piracy, especially near the Horn of Africa.
Most efficient and shortest maritime route.
Well-established with advanced port facilities.
Cape of Good Hope Route
Indian Ocean -> Arabian Sea -> Indian Ocean (southern tip of Africa) -> Atlantic Ocean -> Europe
Longer transit time compared to the Suez Canal.
Higher fuel costs and longer journey duration.
Avoids congestion and security risks of the Suez Canal.
Suitable for large vessels unable to transit the Suez Canal.
It is widely believed that renewing the Generalised System of Preferences (GSP) program would pave the way for comprehensive U.S.-India trade negotiations, potentially elevating the bilateral trade relationship to new heights.
What is the ‘Generalised System of Preferences (GSP)’ Program about?
The Generalised System of Preferences (GSP) is a trade initiative by developed countries to aid developing countries.
Nearly all developed countries have their versions of the GSP, tailored to their economic and policy goals.
It involves reducing tariffs on imports from these countries, aiming to stimulate their economic development. (It is not formally part of the World Trade Organization).
Origin and its Evolution:
During the 1960s: The idea of the GSP emerged during the 1960s as part of broader efforts within the United Nations Conference on Trade and Development (UNCTAD) to help developing countries gain better access to markets in developed countries.
During 1968: UNCTAD proposed the GSP as a mechanism to offer non-reciprocal, non-discriminatory tariff preferences to developing countries, aiming to promote their economic growth and industrialization.
During 1974: The US officially established its GSP program under the Trade Act of 1974. This act authorized the U.S. to provide duty-free treatment for selected products imported from designated beneficiary developing countries (BDCs).
The Significance of Renewing the GSP:
US Factor: The GSP program is unique because it requires periodic reauthorization by Congress. This program of the U.S. expired in 2020 and has not yet been renewed, despite bipartisan support.
For Stability in the Market: Renewal is challenging in a polarized political environment but is crucial for maintaining stable market access for developing countries.
For Diversification: The GSP supports small businesses and women-owned enterprises, encouraging economic empowerment and diversification away from Chinese imports.
To bring Reform: It will promote labor and environmental reforms and reduce tariff costs for American businesses, particularly small and medium-sized enterprises.
Significance of US – India Trade Relationship:
Broader the Trade agreement: The U.S. and India have a significant trade relationship, with bilateral trade worth around $200 billion. Renewing the GSP could facilitate further negotiations and potentially lead to a broader trade agreement.
Need for GSP renewal: Before the GSP expired, the U.S. and India were close to a trade deal covering various sectors including medical devices, agriculture, ethanol, and IT products.
Despite ongoing trade dialogues, the U.S. is currently not negotiating new Free Trade Agreements (FTAs), making GSP renewal a key tool for enhancing trade relations.
A renewed GSP could cover multiple areas such as labour rights, environmental laws, and regulatory practices, fostering a more robust and ambitious trade partnership.
Strategic Importance:
In the Indo-Pacific region.
It can significantly boost trade and economic cooperation between the two countries.
It would signal a mutual commitment to deepening their trade relationship and addressing broader economic and regulatory issues.
Way forward:
Utilize GSP as a Negotiation Tool: Leverage GSP renewal as a platform to initiate broader trade negotiations between the U.S. and India, potentially leading to a more comprehensive trade agreement.
Focus on Strategic Sectors: Identify and prioritize sectors such as technology, pharmaceuticals, and agriculture where both countries have mutual interests and complementary strengths.
Mains PYQ:
Q “What introduces friction into the ties between India and the United States is that Washington is still unable to find for India a position in its global strategy, which would satisfy India’s National self-esteem (UPSC IAS/2019)
White House National Security Adviser Jake Sullivan will visit Saudi Arabia to discuss a Civil Nuclear Cooperation Agreement, aiming to foster Israeli-Saudi normalization.
What is a Civil Nuclear Cooperation Agreement?
A civil nuclear cooperation agreement, often referred to as a “123 Agreement” after Section 123 of the U.S. Atomic Energy Act of 1954, sets the terms under which the United States can engage in significant nuclear cooperation with other countries.
This includes the transfer of nuclear materials, technology, and information. Such agreements are designed to ensure that the cooperation is for peaceful purposes and to prevent nuclear proliferation.
They require the partner country to adhere to nine nonproliferation criteria, including physical security measures, safeguards, and a commitment not to use the technology for nuclear weapons development. Additionally, these agreements must be reviewed and approved by the U.S. Congress.
Why does Saudi Arabia want a US nuclear cooperation agreement?
Saudi Arabia’s interest in a Nuclear Cooperation Agreement with the U.S. is driven by two primary motivations:
Energy Diversification and its Vision 2030: Crown Prince Mohammed bin Salman’s Vision 2030 plan aims to diversify the Saudi economy and reduce its reliance on oil.
Part of this vision includes developing renewable energy sources, and nuclear energy is seen as a key component.
Strategic Considerations: There is also speculation that Saudi Arabia seeks to develop nuclear expertise as a hedge against Iran’s nuclear capabilities. The Saudi leadership has indicated that if Iran were to develop nuclear weapons, Saudi Arabia might consider doing the same.
This potential for nuclear proliferation is a concern for arms control advocates and some U.S. lawmakers.
How would the US benefit from such a deal?
Strategic Gains: The agreement could be a component of a broader effort to normalize relations between Saudi Arabia and Israel, thereby enhancing regional stability and security. This would bolster U.S. efforts to counter Iranian influence in the Middle East and build a coalition of allies in the region.
Commercial Opportunities: U.S. nuclear companies could secure lucrative contracts to build and operate nuclear power plants in Saudi Arabia. This would provide a significant boost to the U.S. nuclear industry, which faces competition from Russian and Chinese firms.
Geopolitical Influence: Strengthening ties with Saudi Arabia would reinforce U.S. influence in the Gulf region at a time when China is seeking to expand its presence. This would help maintain the U.S. strategic foothold in one of the world’s most geopolitically significant areas.
What are some likely hurdles to it?
Several challenges could impede the realization of a U.S.-Saudi nuclear cooperation agreement:
Gaza Conflict: The ongoing conflict in Gaza, particularly the high Palestinian casualties resulting from Israeli military actions, complicates Saudi willingness to normalize relations with Israel.
Nonproliferation Concerns: There are substantial concerns about the potential for nuclear proliferation. Ensuring that Saudi Arabia complies with stringent nonproliferation standards and does not pursue nuclear weapons capabilities will be a critical and contentious issue.
Congressional Approval: Any agreement would need to pass through the U.S. Congress, where it could face opposition from lawmakers worried about proliferation risks and regional security dynamics. Congressional scrutiny could delay or block the agreement.
Need of high Technical and Operational Details: Negotiating the specifics of nuclear technology transfer, including whether Saudi Arabia would be allowed to enrich uranium on its soil, and ensuring robust safeguards to prevent misuse of nuclear materials, are complex issues that require careful handling.
Way Forward:
Need for Strict Safeguards: Establish stringent nonproliferation safeguards within the agreement, ensuring that Saudi Arabia adheres to international standards and commits to using nuclear technology solely for peaceful purposes.
Need Regular Inspections: Implement a robust regime of regular inspections by the International Atomic Energy Agency (IAEA) to monitor Saudi nuclear facilities and ensure compliance with the agreement.
Mains PYQ:
Q In what ways would the ongoing US-Iran Nuclear Pact Controversy affect the national interest of India? How should India respond to its situation? (15) (UPSC IAS/2018)
PYQ Relevance: [2022] ‘India is an age-old friend of Sri Lanka.’ Discuss India’s role in the recent crisis in Sri Lanka in light of the preceding statement. [2013] In respect of India — Sri Lanka relations, discuss how domestic factors influence foreign policy.
Note4Students:
Prelims: NA
Mains: Disruptions in Sri Lanka’s development trajectory post the Civil War
Mentor Comment: A decade and a half after Sri Lanka’s civil war, deep wounds persist, with tens of thousands dead and widespread destruction. Truth, accountability, and justice remain unresolved, and political polarisation hinders progress. Economic reconstruction lags, further stunted by crises. The Tamil middle class aspires to emigrate, while the working class remains destitute.
Let’s learn
___
Why in the News?
The future of the Tamil people relies on creating a renewed vision for themselves and the whole nation, founded on the ideals of equality and freedom.
Back2Basics: Sri Lankan Civil War It was a protracted armed conflict that lasted for nearly three decades, from 1983 to 2009, between the government of Sri Lanka and the Liberation Tigers of Tamil Eelam (LTTE).
LTTE was a separatist militant organisation seeking an independent Tamil state in the northern and eastern regions of the island nation. The conflict was characterised by violence, human rights abuses, and widespread displacement of civilians.
The LTTE, known for its guerrilla tactics and suicide bombings, controlled significant territory in the north and east of Sri Lanka and waged a violent insurgency against the government.
Key Hindrances to Sri Lanka’s Progress
Limited Progress: While infrastructure like trains, banks, supermarkets, and hotels returned to the north, rural areas continue to struggle with unstable livelihoods.
Setback from Terror Attack: The Easter bombings in April 2019, followed by the COVID-19 pandemic and an ongoing economic crisis since 2022, have exacerbated economic hardships, marking the worst crisis since Independence.
Economic Crisis: Economic misery is pervasive, with outmigration and hunger becoming the norm, particularly impacting the deprived and landless in war-torn areas.
Challenges in Reconstruction Efforts
Economic Challenges
Failed Investments: Expectations of substantial investments from the Tamil diaspora have not materialised, failing to stimulate local economic revival.
International Donor Projects: Projects focused on infrastructure have not effectively revitalised the local economy, while NGO aid has sometimes led to dependency and microfinance debt traps.
Political Polarisation and Neglect
Political Neglect: Tamil political leadership has often prioritised international accountability over addressing local livelihoods, perpetuating dependency on diaspora remittances.
Parallel Nationalisms: Tamil nationalist politics mirrors Sinhala nationalism, focusing on rights and international intervention, rather than fostering local reconciliation.
Reconciliation Challenges: Efforts towards political reconciliation and power-sharing have faltered due to political expediency, exacerbating tensions and marginalising minorities.
Communal polarization: Relations between Tamil and Muslim communities remain strained, with unresolved issues from historical displacements and marginalization.
Future Prospects for Tamil People
V. Karalasingham’s Reflections (1963): Highlighted the paradox of Tamil leadership and the continued suffering and humiliation of Tamil-speaking people.
Aragalaya Movement (2022): Sri Lankans united to oust a President promoting Sinhala-Buddhist nationalism, showing potential for collective action.
Path to Change: Embracing inclusive politics, moving away from isolationist strategies, and advocating for economic and social justice can pave the way for a democratic future based on equality and freedom.
India’s Economic Assistance to Sri Lanka:
Bailout Package: During Sri Lanka’s economic crisis in 2022, India was quick to extend financial support, amounting to over USD 4 billion. This surpassed even the International Monetary Fund’s (IMF) bailout package over 48 months.
Facilitating IMF Engagement: India’s role was instrumental in the early stages of Sri Lanka’s negotiations with the IMF. India’s Finance Minister, Mrs Sitharaman, played a significant part in these discussions, showcasing India’s commitment to its neighbour’s recovery.
Private Investment: The expansion of the Colombo port’s west container terminal in 2023 by India’s Adani Group was a key development project.
Cricket Diplomacy: Cricket surprisingly became a focal point, with international matches hosted in Sri Lanka, including a notable India-Pakistan game during the World Cup.
Way Forward
Political Reconciliation: Advocate for genuine political reconciliation, including devolution of power and addressing historical grievances.
Community Integration: Foster solidarity and mutual understanding between ethnic and religious communities to promote social integration.
Local Empowerment: Support local initiatives and reduce dependency on external aid, empowering communities to drive their development.
Unified Movements: Promote movements that unite diverse groups towards common goals of justice, equality, and inclusive governance.
SRI Lanka’s Cabinet has approved a new economic law to stabilize its debt-to-GDP ratio that will cover key targets set by the International Monetary Fund (IMF).
The debt-to-GDP ratio measures the proportion of a country’s national debt to its gross domestic product.
According to the World Bank, the countries whose debt-to-GDP ratios exceed 77% for prolonged periods experience significant slowdowns in economic growth.
What are the IMF Targets?
The IMF has various targets and initiatives aimed at achieving sustainable economic growth and prosperity for its member countries.
It includes promoting financial stability, monetary cooperation, and transparency in economic policies to enhance productivity, job creation, and economic well-being.
Indian Scenario:
India has not taken any financial assistance from the IMF since 1993.
India’s current quota in the IMF is SDR (Special Drawing Rights) 5,821.5 million, making it the 13th largest quota-holding country at IMF and giving it shareholdings of 2.44%.
For Sri Lanka:
The IMF targets Sri Lanka to reduce its debt to gross domestic product (GDP) ratio to 95% by 2030.
Another target set by the IMF is to reduce debt servicing costs to 4.5% of GDP. It means Sri Lanka needs to focus on managing the costs associated with servicing it’s debt obligations, aiming to make it more sustainable and manageable in the long term.
How will the debt-to-GDP ratio be reduced?
Fiscal Discipline: Sri Lanka may need to implement measures to improve fiscal discipline, such as reducing government Expenditure, increasing Tax revenue, and narrowing Budget Deficits.
Debt Restructuring: Sri Lanka can explore negotiating with creditors to extend debt maturities, reduce interest rates, or reprofile debt payments.
Revenue Enhancement: The government could focus on enhancing revenue generation through tax reforms, improved tax administration, and efforts to broaden the tax base.
Economic Growth: Promoting economic growth is essential for reducing the debt-to-GDP ratio over the long term. Sri Lanka could implement policies to stimulate investment, boost productivity, and enhance competitiveness, leading to higher GDP growth rates and a more sustainable debt trajectory.
What does India do presently to reduce its debt-to-GDP ratio?
Targeted Reduction: According to a research paper by the Reserve Bank of India (RBI), the government aims to lower the general government debt-GDP ratio to 73.4% by 2030-31. This target is approximately 5% points lower than the trajectory projected by the IMF, indicating ambitious yet achievable goals.
Promotes Fiscal Space: The Indian Central Bank – RBI emphasized reducing debt burdens to free up fiscal space for new investments, particularly in critical areas like the green transition. This suggests a strategic focus on investing in sustainable and environmentally friendly initiatives.
Aligning with IMF: The IMF projects a positive trend in India’s debt reduction efforts, forecasting a decline in government debt from 81% of GDP in 2022 to 80.5% in 2028. This indicates that India’s debt reduction measures are consistent with international expectations and standards.
Conclusion: Focus on enhancing revenue generation through Comprehensive Tax reforms, improved tax compliance, and efforts to broaden the tax base is needed. Secondly, rationalizing Tax revenues can provide additional resources to finance government expenditures without relying heavily on borrowing, thus reducing the debt-to-GDP ratio.
Mains PYQ:
Q The World Bank and the IMF, collectively known as the Bretton Woods Institutions, are the two inter-governmental pillars supporting the structure of the world’s economic and financial order. Superficially, the World Bank and the IMF exhibit many common characteristics, yet their role, functions and mandates are distinctly different. Elucidate. (UPSC IAS/2013)
PYQ Relevance: Mains: Q How far are India’s internal security challenges linked with border management particularly in view of the long porous borders with most countries of South Asia and Myanmar? (UPSC IAS/2013) Q Border management is a complex task due to difficult terrain and hostile relations with some countries. Elucidate the challenges and strategies for effective border management. (UPSC IAS/2016)
Prelims:
Consider the following statements: (UPSC IAS/2020) 1) The value of Indo-Sri Lanka trade has consistently increased in the last decade. 2) “Textile and textile articles” constitute an important item of trade between India and Bangladesh. 3) In the last five years, Nepal has been the largest trading partner of India in South Asia. Which of the statements given above is/are correct? (a) 1 and 2 only (b) 2 only (c) 3 only (d) 1, 2 and 3
Note4Students:
Prelims: Political Theories; Secularism
Mains: Society; Secularism;
Mentor comment: Despite frequent changes in government and the emergence of leaders perceived as anti-India or pro-China, India has maintained a non-partisan approach focused on supporting inclusive economic development, interdependence, communication links, and people-to-people contacts with Nepal. India’s deep historical, cultural, and economic ties with Nepal, as well as its ability to manage security concerns, have allowed it to navigate these challenges. There is the need for fresh thinking on a range of issues, including economic recovery, bilateral and regional cooperation, supply chain restructuring, energy cooperation, and development.
Let’s learn.
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Why in the News?
Being a neighboring country of both – India and China, Nepal grapples with restlessness and uncertainty amid political and economic challenges.
Questions arise on its rushed transition to democracy, identity, and governance amidst regional geopolitics.
About India-Nepal Bilateral Relations:
Strategic Relations: Geopolitical Dynamics: India is actively countering China’s influence in Nepal through economic diplomacy and expanding cooperation in various sectors. Energy Cooperation: Both countries have signed agreements to boost cooperation in the energy sector, with India involved in developing several hydropower projects for long-term power trade agreements. For example, the Pancheshwar Multipurpose Project (PMP) is a bi-national Multi-Purpose Project, primarily aimed at energy production and augmenting irrigation.
Infrastructure Projects: Efforts are underway to work on infrastructure projects to improve connectivity, such as the unveiling of railway line sections and the inauguration of Integrated Checkposts. India is also undertaking three High Impact Community Development Projects (HICDPs) in Nepal.
Soft Relations:
Cultural and Religious Ties: Steps have been taken to strengthen cultural and religious ties between India and Nepal, including discussions on projects related to the Ramayana circuit, reflecting their shared cultural heritage. Improvement in Relations: After a period of strain, relations between India and Nepal have been improving, especially with several high-level visits, indicating efforts to enhance cooperation and resolve contentious issues.
Border Disputes:
Recent Developments in Nepal under China’s Influence
Political Shifts: Recent coalition changes in Nepal have seen a shift towards leaders perceived as pro-China and anti-India, notably with K.P. Sharma Oli’s return to power. China has actively supported the left alliance in Nepal, pushing for closer ties and cooperation, including on the Belt and Road Initiative (BRI).
Military Cooperation: High-level military visits and agreements indicate China’s intent to expand its influence in Nepal, potentially at India’s expense.
Nationalistic Trends: Rising ultra-nationalistic sentiments in Nepal, from far left to far right, pose challenges to India-Nepal relations.
Security Concerns: Historical instances of political instability in Nepal leading to security threats for India highlight the importance of stable relations between the two countries.
Geopolitical Dynamics: China’s increasing involvement in Nepal raises concerns for India, necessitating a strategic approach to counter potential challenges and maintain regional stability.
Regional and International Dynamics: While India has alliances like the QUAD (Australia, India, Japan, the United States) and other Indo-Pacific groupings, relying on them in case of a major crisis in Nepal would be risky.
The situation in Nepal could potentially lead to a new “Great Game” involving major regional and global powers.
What is India’s present stand?
Non-Interference policy: India has been keeping a low profile and avoiding involvement in Nepal’s internal affairs to prevent controversy.
Lending hand for development: India tries to always offer a new, holistic development roadmap aimed at improving the quality of lifestyle for Nepalese. This agenda includes transformative and sustainable development initiatives in sectors such as health, education, food and nutrition, child development, gender equality, and job creation.
High-Level Attention: Byhigh-level attention and promoting cross-party political consensus on major projects India tries to ensure continuity and achieve its time-bound results despite political instability.
Fostering Inter-linkages and Equality: Developing new inter-linkages between industries of both countries, India addresses the demographic dividend and fosters a sense of equality and sovereign space in Nepal.
Bone of Contention: Border Disputes
Way Forward:
Engage in Quiet Diplomacy: India can engage in quiet diplomacy, fostering dialogue with Nepal’s political stakeholders across the spectrum. This approach can help India understand Nepal’s internal dynamics better while also conveying India’s concerns and interests subtly.
India should be mindful of the “big brother-small brother” syndrome, understanding that the onus lies on India to overcome this dynamic.
India and Iran signed a 10-year agreement for the operation of the Chabahar port, marking a significant milestone in their cooperation.
Back2Basics: Chabahar Port
The port is located in southeastern Iran in the Sistan-Baluchistan province, on the Gulf of Oman and at the mouth of the Strait of Hormuz.
It is called the “Golden Gate” to Central Asian land-locked countries of Afghanistan, Turkmenistan and Uzbekistan.
It serves as Iran’s only oceanic port and consists of two separate ports named Shahid Kalantari and Shahid Beheshti.
It is only about 170 km west of the Gwadar port if Pakistan.
The development of Chabahar port was initiated by India with a MoU in 2015 and executed in 2016 during PM Narendra Modi’s visit to Iran.
About the Agreement
The contract, signed between Indian Ports Global Ltd. (IPGL) and Port and Maritime Organisation (PMO) of Iran, involves substantial investment and development initiatives.
IPGL will invest approximately $120 million in equipping the Shahid-Behesti terminal, enhancing the port’s efficiency and capacity.
India has extended a credit window of $250 million for mutually identified projects aimed at improving Chabahar-related infrastructure, emphasizing its commitment to regional development.
Strategic Importance of Chabahar Port to India
Chabahar port will boost India’s access to Iran, the key gateway to the International North-South Transport Corridor that has sea, rail and road routes between India, Russia, Iran, Europe and Central Asia.
Chabahar port will be beneficial to India in countering Chinese presence in the Arabian Sea which China is trying to ensure by helping Pakistan develop the Gwadar port.
India can bypass Pakistan in transporting goods to Afghanistan.
Economic Significance
Chabahar Port is at an important point on the Arabian Sea, with easy access from India’s west coast.
Kandla port in Gujarat is the closest port at 550 nautical miles, while the distance between Chabahar and Mumbai is 786 nautical miles.
Since 2019, the port has handled more than 80,000 twenty-foot equivalent units (TEUs) of container traffic and more than 8 million tonnes of bulk and general cargo.
The port also offers an alternative route from the Strait of Hormuz for cargo traffic between Central Asian countries and Afghanistan.
PYQ:
[2017] What is the importance of developing Chabahar Port by India?
(a) India’s trade with African countries will enormously increase.
(b) India’s relations with oil-producing Arab countries will be strengthened.
(c) India will not depend on Pakistan to access Afghanistan and Central Asia.
(d) Pakistan will facilitate and protect the gas pipeline installation between Iraq and India.
Mains: Q India is well endowed with fresh water resources. Critically examine why it still suffers from water scarcity. (UPSC IAS/2015)
Q What are the maritime security challenges in India? Discuss the organizational, technical, and procedural initiatives taken to improve maritime security. (UPSC IAS/2022)
Q ‘Climate change’ is a global problem. How India will be affected by climate change? How Himalayan and coastal states of India will be affected by climate change? (UPSC IAS/2017)
Note4Students:
Prelims: Non-renewable sources;
Mains: Non-renewable sources in India; Non-controversial legislative;
Mentor comment: Healthy freshwater environments supply water for drinking, growing crops, manufacturing, energy, and transport. They also help to prevent erosion, dispose of waste, and provide natural protection from flooding. But we’ve been careless with this vital resource. In addition, 10% of the world’s animal species live exclusively in freshwater habitats, many of which are currently threatened with extinction. Now in this Climate changing world, can you imagine that huge volumes of freshwater exist under the saline ocean? And what if this Saline Ocean becomes an opportunity as the ‘largest freshwater resource’?
Let’s learn
_
Why in the News?
A team of scientists from Vietnam and other countries have discovered underwater sources of Fresh water in the Oceanic body, previously, a river under the sea was discovered at the bottom of the Black Sea.
Context:
In the 1960s, the U.S. Geological Survey drilled boreholes off the New Jersey coast and unexpectedly struck freshwater.
According to the present researchers, this river appears to be 100 feet deep and has a flow rate of about 4 miles per hour; about 22,000 cubic meters of water passes through this channel.
It would count as one of the largest rivers in the world when compared to land-based rivers.
Freshwater is a depleting resource and countries will begin exploring for and exploiting freshwater from above or under their ocean bed, within their maritime zones. Eventually, they will try to expand their Exclusive Economic Zones (EEZ) as given in Part XI of UNCLOS.
India can take the lead in shaping Non-controversial Legislative text that addresses the gaps in the laws of the sea, especially in exploratory activities that concern freshwater extraction
About UNCLOS (United Nations Convention on the Law of the Sea):
It is an international treaty adopted in 1982 (in force since 1994) that sets out the legal framework for all marine and maritime activities. While UNCLOS is a comprehensive text governing oceans, customary international law remains significant in shaping maritime law. As of 2024, 168 parties have ratified the treaty. •Exploration and Exploitation of the “Area”: UNCLOS governs the exploration and exploitation of mineral resources in the Area, which includes solid, liquid, or gaseous mineral resources beneath the seabed. The International Seabed Authority regulates activities in this regard. •“Minerals”: While UNCLOS defines “resources” as including solid, liquid, or gaseous mineral resources, it’s unclear if this includes freshwater. •International Seabed Authority (ISA): The ISA administers and controls activities in the “Area” under UNCLOS, ensuring compliance with regulations and procedures. However, it does not have jurisdiction over states’ parties to the Geneva Conventions.
About Geneva Conventions on the Law of the Sea, 1958:
These conventions cover many issues addressed by UNCLOS and are often based on customary international law. •Article 311 of UNCLOS states that UNCLOS prevails over the Geneva Conventions, among state parties. This means that UNCLOS applies to signatory states over the Geneva Conventions. • The United States is a signatory to the Geneva Conventions but not UNCLOS, creating complexities in its adherence to maritime law. •Non-signatory states are not bound by UNCLOS and may not recognize concepts like the Exclusive Economic Zone (EEZ) or the “Area” beyond 200 nautical miles. • There is ambiguity regarding the regulation of state parties to the Geneva Conventions, especially concerning mining and exploratory activities in the “Area.”
Challenges for India in the “Zone of Exploration”:
Water Scarcity and Conflict: Anticipation that future wars may be fought over water due to its increasing scarcity and value, highlighting the importance of freshwater resources.
The potential of the “Area” for Freshwater: With freshwater becoming scarce and expensive, the “Area” could qualify as a potential zone for freshwater exploration and extraction, similar to oil exploration.
Lack of Legislation: Currently, there is a lack of specific legislation and terminologies governing the exploration and extraction of resources beyond national jurisdiction, particularly freshwater.
Complexities in Governance: The governance of activities beyond national jurisdiction, such as freshwater exploration, is complicated by multiple legislations governing the law of the sea.
Silver Lining for India:
Opportunity for Legislative Development: There is a need for the international community to develop laws of the sea, particularly concerning exploratory activities related to freshwater from the “Area.”
Sustainable Development Goals: The effort aligns with the global agenda of SDG 14, emphasizing the importance of sustainable resource management beyond national jurisdictions.
Potential Role for India: India is suggested to take a lead role in addressing these legislative challenges and advancing exploration activities in the “Area,” which could benefit mankind significantly.
Human Priorities Over Space Exploration: It advocates for prioritizing efforts to secure freshwater resources on Earth over investing in space exploration, highlighting the immediate and pressing need for water security.
The way for India to shape the “Non-controversial” Legislative text:
(The Non-controversial legislative text means the laws that are passed without an actual voice or recorded vote but by unanimous consent.)
Diplomatic Leadership: India can leverage its diplomatic influence and engagement with other nations to initiate discussions and negotiations on developing new legislative frameworks for freshwater extraction in areas beyond national jurisdiction.
International Partnerships: India can forge partnerships with like-minded countries, international organizations, and stakeholders to collaboratively draft and promote legislative proposals addressing gaps in the laws of the sea related to freshwater extraction.
Expertise and Research: India can contribute its expertise in marine science, technology, and legal studies to inform the development of non-controversial legislative text. Investing in research and studies on freshwater resources can provide valuable insights for legislative discussions.
Conclusion: India needs to work towards involvement in amending existing conventions like UNCLOS or drafting new agreements tailored to address the unique challenges of freshwater resource management.
Nepal’s Cabinet last week decided to put a map on its Rs 100 currency note showing certain areas administered by India in Uttarakhand as part of its territory.
India’s External Affairs Ministry said that such “unilateral measures” by Kathmandu would not change the reality on the ground.
Genesis of the issue:
Territorial dispute: The territorial dispute is about a 372-sq-km area that includes Limpiadhura, Lipulekh, and Kalapani at the India-Nepal-China trijunction in Uttarakhand’s Pithoragarh district. Nepal has claimed for long that these areas belong to it both historically and evidently.
Treaty of Sugauli (1815-16): This treaty marked the end of the Anglo-Nepalese War and resulted in Nepal ceding significant territories to the British East India Company, including lands east of the Kali River. Article 5 of the treaty delineated the boundary along the river, thereby affecting Nepal’s jurisdiction over the area.
Historical division: Maps issued by the British Surveyor General of India in the 19th and early 20th centuries depicted the Kali River as originating from Limpiadhura. These maps served as crucial references for defining territorial boundaries between Nepal and British India.
Depiction of Kali River: Maps from different periods showed variations in the depiction of the Kali River, with some using the name “Kuti Yangti” and others referring to it as the Kali River. Additionally, discrepancies emerged regarding the river’s exact origin point, with some maps showing different sources.
Map issued by Britisher (1947): The last map issued by the British before they left India in 1947 reverted to showing the initial position of the Kali River originating in Limpiadhura, indicating a reaffirmation of the historical boundary according to British cartographic records.
Argument given by Nepal to claim land:
According to Shrestha, villages in this area — Gunji, Nabhi, Kuti, and Kalapani, also known as Tulsi Nyurang and Nabhidang — were covered by the Nepal government census until 1962, and the people paid land revenue to the government in Kathmandu.
However, the situation changed after the war between India and China in 1962.
Nepal also says that then Indian PM Jawaharlal Nehru approached King Mahendra of Nepal asking for permission to use Kalapani, which was strategically located close to the trijunction, as a base for the Indian Army.
Prominent personalities representing Nepal in bilateral talks have claimed that India has made assurances regarding the resolution of border disputes if Nepal could provide evidence for its claims.
Despite assurances and agreements to expedite the resolution process, progress has been slow or stalled.
Frictions in Bilateral Ties:
From 2005-2014: The period from 2005 to 2014 saw India mediating Nepal’s transition from a Hindu Kingdom to a secular federal republic.
However, tensions arose in 2015 when Nepal’s Maoist Party rejected India’s suggestion to delay the adoption of a new constitution until the concerns of the Terai parties were addressed.
The subsequent 134-day blockade by India in September 2015 exacerbated distrust and led Nepal to seek alternative trade routes, including agreements with China.
During 2020: Nepal’s inclusion of disputed territories, such as the 372 square kilometres in Uttarakhand, in its new map in 2020 escalated tensions with India. While Nepal aimed to assert sovereignty over these areas, India condemned the move as “cartographic aggression.”
Despite India’s stance that the issue should be resolved diplomatically based on evidence, no concrete steps have been taken to address the dispute.
During 2024: The decision by Nepal’s cabinet to include the new map on its currency notes in 2024 has reignited tensions between the two countries.
India-Nepal Border Dispute
Way Forward:
Need for Dialogue: While both India and Nepal agree on the need to resolve territorial disputes through dialogue and evidence-based discussions, there has been no concrete progress in scheduling meetings or setting a timeframe for resolution.
Need for Dispute settlement: Nepal has successfully resolved boundary issues with China in the past through bilateral meetings of the boundary commission. However, the unresolved disputes with India highlight the importance of timely and effective diplomatic engagement to prevent future complications and ensure peaceful coexistence between the two neighbours.
Joint Border Commission: Establishing a joint border commission comprising representatives from both countries can facilitate a systematic review of historical documents, maps, and evidence related to territorial claims.
Mains PYQ:
Q Border management is a complex task due to difficult terrain and hostile relations with some countries. Elucidate the challenges and strategies for effective border management.
