India’s Foreign Trade Policy
GS Paper III
Context: By the end of this month, India’s Foreign Trade Policy revision, which has been overdue for three years and hasn’t altered since 2015, could finally be made public.
What is a Foreign Trade Policy?
- India’s Foreign Trade Policy (FTP) is a collection of regulations for importing and exporting products and services.
- They are created by the Directorate General of Foreign Trade (DGFT), which is in charge of promoting and facilitating exports and imports under the Ministry of Commerce and Industry.
- The Foreign Trade Development and Regulation Act of 1992 provides for the enforcement of FTPs.
What is India’s Foreign Trade Policy?
- The Foreign Trade Policy (2015-20) was introduced on April 1 in accordance with the “Made in India,” “Digital India,” “Skill India,” “Startup India,” and “Ease of Doing Business” objectives.
- It offers a framework for boosting the nation’s value addition, employment creation, and exports of products and services.
- The FTP statement details the market and product strategy in addition to the actions required to advance trade, increase infrastructure, and enhance the complete trade ecosystem.
- It aspires to make trade a significant contributor to the economic growth and development of the nation while also assisting India in responding to external issues and remaining on top of rapidly evolving global trading infrastructure.
Issues with FTP (2015-2020):
- A WTO dispute settlement panel determined in 2019 that India’s export subsidy schemes are unlawful and must be discontinued in response to Washington’s objection.
- Among these were tax breaks offered by the well-known Merchandise Exports from India Scheme (MEIS) and Service Exports from India Scheme (SEIS) programmes.
- The panel determined that India is no longer permitted to give subsidies based on export performance since its per capita gross national product surpasses $1,000 per year.
Why such a delay in Foreign Trade Policy?
- Uncertain geopolitical environment: According to the Union Commerce Minister, the current geopolitical environment is unsuitable for long-term international trade policy.
- Global recession: At the moment, investors are in a panic as a result of worries about a recession in key economies including the US and Europe.
- Reduced Dollar inflows: Foreign investors are starting to withdraw money from stocks.
- Depreciation of the rupee: As the US dollar is at a 22-year high, the rupee recorded a fresh record low of $81.6.
- Massive trade imbalance: From April to August 2022, the trade deficit increased by more than $2 times, to $125.22 billion, compared to $53.78 billion during the same time period in 2017.
Source: The Hindu
GS Paper II
Context: The McMahon Line in Arunachal Pradesh serves as the international border between China and India, according to a resolution that was sponsored by Republican and Democratic senators to the US Congress.
Significance of such move:
- This unwavering affirmation of US (both the government and opposition parties) support for India comes at a time when China threatens the Free and Open Indo-Pacific.
- The resolution reiterates India’s stance that Arunachal Pradesh, also known as South Tibet by China, is a fundamentally a part of India.
What is the McMahon Line?
- The McMahon Line designates the border between Arunachal Pradesh and Tibet as well as the de facto border between China and India in the Eastern Sector.
- Chinese officials contest the line of demarcation and assert that Arunachal Pradesh is a part of the Tibetan Autonomous Region (TAR).
Under what circumstances was the McMahon Line drawn?
- The Simla Conference of 1914—officially known as the Convention between Great Britain, China, and Tibet—saw the establishment of the McMahon Line.
- As a result of their concern over the expansion of Russian power in the area, the British organised an expedition into Tibet and signed the Convention of Lhasa in 1904.
- At the same time that China invaded, seizing control of the southeast Kham area, British authorities were pressured to support extending British authority into the tribal realm.
- The agreement made an effort to resolve the sovereignty issue involving Tibet and prevent further territorial conflicts in the area.
What happened at the Simla Convention of 1913-14?
- PaljorDorjeShatra, the plenipotentiary of the Tibetan government in Lhasa, and Sir Arthur Henry McMahon, the foreign secretary of British India in Delhi, respectively, represented their respective governments there.
- Ivan Chen served as the Chinese plenipotentiary.
- In accordance with the treaty, Tibet was split into “Outer Tibet” and “Inner Tibet,” and the boundaries between Tibet and British India were established.
- Only Shatra and McMahon signed the final convention on behalf of Lhasa and the British government, respectively.
- Ivan Chen refused to sign on to the convention, claiming Tibet lacked the independence necessary to sign treaties with other countries.
How was the border between British India and China decided?
- Using the “highest watershed theory,” the 890 km boundary between Bhutan and the Burma border’s IsuRazi Pass was mostly drawn along the top of the Himalayas.
- However there were few outliers, including Tawang, which was included into British India because of its closeness to the Assam Valley.
What has the status of the McMahon line been since 1914?
- Even though there have always been disagreements about the McMahon line, once the communists seized over in 1949, China withdrew from all international accords.
- The Bandung Conference of 1955, which took place in Indonesia and saw leaders from Asia and Africa unite in opposition to colonialism and the Cold War, did not bring up the McMahon line.
- The McMahon line has lately been under scrutiny from the Chinese, and in 2017, Beijing formally changed the names of six locations in the Arunachal Pradesh province, including the contentious Tawang region.
Source: The Hindu
China-India: Facilitating an Asian Century
GS Paper II
Context: China’s recent advancements in stable growth, people’s welfare, opening up, and win-win cooperation, together with its readiness to increase communication and coordination with India, can offer up new prospects for all nations, particularly nearby nations. The significance of China-India ties and their contribution to the development of an Asian Century.
China’s focus areas of development:
- Modernization: Based on its practises and a focus on high-quality growth, China is actively pushing modernisation on all fronts.
- Global development: The nation seeks to modernise its enormous population while assuring everyone’s prosperity, making progress in all spheres of life, including the natural and material sciences, and promoting peace.
- New opportunities: The rise of China will bring about new possibilities for all nations, particularly those that are neighbours.
The development of China in recent years:
- China’s GDP expanded by 3% in 2022, and the nation gained 12.06 million new urban employment.
- The country’s GDP expanded by about 70 trillion yuan to 121 trillion yuan (around $18 trillion), with annual growth rates of 5.2% over the previous five years and 6.2% over the previous ten years.
- China’s economic might is always increasing.
- In the past, China has eradicated absolute poverty by removing close to 100 million rural citizens from it.
- The government spent more than 70% of its budget on protecting the welfare of its citizens.
- 1.05 billion individuals are now covered by basic old age insurance, an increase of 140 million. The level of living keeps becoming better.
- At an annual growth rate of 8.6%, China’s total volume of goods trade hit 40 trillion yuan in 2022.
- China continued to be one of the top destinations for foreign investors despite an increase of 8% in its actual usage of foreign money.
- The overall tariff level is now down to 7.4% from 9.8%. The country of China is becoming more open to the outside world.
China’s average contribution to global economic growth from 2013 to 2021 was 38.6%, above the combined contribution of the G7 nations (25.7%).
Since Chinese President Xi Jinping suggested it in a speech at the United Nations General Assembly in 2021, more than 100 nations have declared their support for it, and more than 60 nations have joined the Group of Friends of the Global Development Initiative (GDI).
- Emerging as Representatives: China and India are examples of developing nations and rising economies since they are close neighbours and possess ancient civilizations.
- National renewal: Both nations are now through a process of national renewal, which is a vital stage of modernisation when difficulties must be surmounted and issues must be resolved.
- Interests: There are much more similarities between China and India than differences.
- The magnitude of their bilateral commerce, which is expected to reach $135.984 billion in 2022, makes them significant trading partners.
- Despite a trade deficit, India imports supplies and equipment from China, which lowers the overall cost of Made-in-India products, benefits Indian consumers and downstream industries, increases the competitiveness of Indian exports, and ultimately makes it easier for India to join global supply and industrial chains.
Facilitating an Asian Century:
The development and rejuvenation of China and India, according to the Chinese Foreign Minister, represent a boost to the power of emerging nations, which will alter the fate of a third of the world’s population and have an impact on Asia’s future and beyond.
This confirms what S. Jaishankar, India’s minister of external affairs, said in 2022, according to which the Asian Century will begin when China and India cooperate.
The globe and the region benefit from China’s prosperity and its ties with India. Both nations need to overcome obstacles as they modernise and go through the process of modernisation. Important commercial partners, China and India can work together to create an Asian Century and promote peace and security throughout the region and beyond.
Source: Indian Express
Silicon Valley Bank crisis
GS Paper III
Context: Silicon Valley Bank has recently been shut down by its regulators.
More about the news:
- SVB, which was established in 1983, worked with high-risk, high-growth enterprises including start-ups in the technology sector.
- According to its website, Silicon Valley Bank offered banking services to more than 2,500 venture capital firms and approximately half of technology and life science enterprises with venture capital backing.
- SVB went on to have the second-largest collapse in American history.
Role in India:
With the ability to open accounts without a US Social Security Number or Income Tax Identification Number, the bank provided a convenient route for entrepreneurs in India, particularly those in the Software as a Service (SaaS) industry with a significant number of US clients, to park their money.
Global financial stocks:
One well-known source of funding for VC-backed digital start-ups is SVB. Global banking equities are thought to have lost $465 billion in market value in only two days following the crisis.
The focus is currently on all the IT firms affected by the bank’s free slide due to its unparalleled crisis.
Some businesses whose assets are locked at the bank are turning to loans to make payroll as the startup community struggles to make sense of Silicon Valley Bank’s collapse.
Damage to the financial system & domestic economy:
- Anywhere in the globe, the failure of a large bank may cause other countries to follow suit.
- If a bank’s operations make up a sizably big portion of domestic banking activity, its impairment or collapse is more likely to hurt the domestic economy.
- Hence, there is a higher likelihood that the financial system and domestic real economy would suffer more harm as a result of the impairment or failure of a larger bank.
Damage of confidence:
The impairment or failure of a bank with large size is also more likely to damage confidence in the banking system as a whole.
Possibility of failure of other banks:
If there is a significant degree of interconnectivity (contractual obligations) with other banks, an impairment or failure of one bank may have the potential to enhance the likelihood of an impairment or collapse of other banks.
Both sides of the balance sheet are affected by this chain effect.
The more a bank participates in the underlying market infrastructure, such as payment systems, the more disruption it is likely to produce in terms of service availability, service scope, and infrastructure liquidity after failure.
Costs borne by the bank customers:
If the collapsed bank had a larger market share in offering that specific service, the expenses to be spent by the clients of the failed bank to seek the same service at another bank would be significantly higher.
Impact on India:
Different structures & no impact:
The reasons for SVB’s failure are unlikely to play out in India as domestic banks have a different kind of balance sheet structure, according to bankers.
No bulk withdrawals:
- We don’t have a system like that in India where deposits may be withdrawn in such large amounts.
- In India, household savings make up a sizable component of bank deposits, in contrast to the US, where corporate deposits make up a sizable portion of bank deposits.
- Nowadays, a sizable portion of deposits are held by public sector banks, with the remainder being held by highly powerful private sector lenders like HDFC Bank, ICICI Bank, and Axis Bank.
Protection of depositors’ money:
- The regulator’s overall stance in India has been that the depositors’ money must be preserved at all costs.
- The government has stepped in to help banks whenever they have experienced problems. The best illustration is the bailout of Yes Bank, which received substantial liquidity support.
Affecting stock markets:
The SVB issue, however, created nervousness in the stock markets with bank shares taking a hit and investors losing money in the process.
Source: Indian Express
Learning Science via Standards’ initiative
GS Paper II
Context: The Ministry of Consumer Affairs, Food & Public Distribution launches an initiative for students to learn science via standards.
- Learning Science via Standards is a new educational initiative for students launched by the Bureau of Indian Standards (BIS), the nation’s national standards body.
- This programme aims to aid students in understanding various plans, regulations, and ideas via the prism of standards.
- The programme continues an earlier BIS project that saw the establishment of “Standards Clubs” at educational institutions all throughout India.
- More than 4200 of these clubs have been established throughout the years, with more than one lakh student members, and they provide exposure to businesses and laboratories in order to create standards.
What is the ‘Learning Science via Standards’ initiative?
- The effort focuses on a number of lesson plans designed to incorporate scientific ideas, rules, and laws into the Indian educational system.
- The project will assist students in comprehending their practical applications in product manufacture, operation, and testing as specified in the pertinent Indian Standards.
- Lesson plan topics have been selected based on their applicability to both industrial applications and education as part of the course curriculum, with a focus on items used in daily life.
- The lesson plans will be sent to the students for an interactive learning experience that will also be hosted on the BIS website by BIS administrators and resource employees.
Purpose of the initiative:
- The lesson plans will provide students in schools and colleges a way to understand the value of standards and quality.
- That will give them the confidence they need to take on real-world challenges in all of their future endeavours.
- A wide spectrum of pupils, including those attending schools, universities, and technical institutions, are anticipated to gain from the programme.
Challenges of ensuring standards in India:
- Lack of Awareness: Failure to comply with standards and a lack of demand for high-quality goods are caused by producers, customers, and legislators not comprehending them.
- Poor Enforcement: Despite the presence of standards and rules, it is difficult to enforce them, which causes producers and importers to fail to comply.
- Lack of Infrastructure: The absence of appropriate testing, certification, and quality control infrastructure, such as adequate laboratory facilities, a staffing shortfall, and insufficient accreditation processes.
- India has a fragmented economy with many small and medium-sized businesses (SMEs) that lack the funding necessary to meet standards and certification criteria.
- Cost: Standards and certification requirements compliance may be costly, which is a major barrier for SMBs and startups.
- Technological Obsolescence: The rapid speed of technology change makes it difficult to define and enforce standards since they must be modified often to stay up with new developments.
- International Harmonization: Because of the need to harmonise standards across nations for international trade, India has the problem of doing so while yet upholding its national goals.
Importance of ensuring standards:
- Consumer Protection: By ensuring that goods and services adhere to a set of quality and safety requirements, standards help safeguard the health, safety, and general wellbeing of customers.
- Quality Assurance: Standards support quality assurance and aid in the suppression of the sale of subpar or fake goods.
- Standards are essential for promoting innovation and assisting in the creation of new goods and technology.
- Trade & Commerce: By guaranteeing that goods and services adhere to strict quality and safety requirements, standards contribute to the facilitation of both local and international trade and commerce.
- Environment: By promoting the adoption of environmentally friendly technology and practises, standards serve to promote environmental protection and sustainability.
- Competitivity: Standards may help Indian firms become more competitive by ensuring that their goods and services adhere to international standards, making them more appealing to customers.
- Public Health: By ensuring the efficacy and safety of medications, medical equipment, and therapies, standards in healthcare can assist protect the general populace’s health.
- The planned project is anticipated to help students develop the skills they need to participate successfully in a range of economic sectors across the nation.
- To assure intended results, it is necessary to use a multifaceted strategy that includes raising awareness, developing capacity, creating infrastructure, streamlining processes, and working more closely with stakeholders.
- The “Learning Science through Standards” programme is an effort to close the gap between scientific education theory and practical application.
- It will help students connect scientific ideas to their practical applications and advance the nation’s culture of quality and standards.
Source: Indian Express
Facts for Prelims
Bureau of Indian Standards (BIS):
- It was formed in 1947 as India’s national standards authority in accordance with the Indian Standards Institution (ISI) Act of 1946.
- It is in charge of standardisation, product certification, testing, and quality assurance in India.
- It runs through its New Delhi headquarters and five regional offices in Chandigarh, Kolkata, Mumbai, Chennai, and Delhi.
- In order to guarantee the security,calibre, and dependability of goods and services, it creates and disseminates standards for goods, systems, services, and procedures.
- BIS runs a product certification programme that offers third-party confirmation of a product’s compliance with Indian Standards.
- Across a variety of industries, including engineering, food, agriculture, textile, consumer products, and services, it has created more than 24,000 standards.
- BIS is also a member of the International Organization for Standardization (ISO), International Electrotechnical Commission (IEC), and the Pacific Area Standards Congress (PASC).
Smart Cities Mission:
- The Union Housing and Urban Affairs Ministry’s Smart Cities Mission was introduced by the PM on June 25, 2015.
- Cities around the nation were encouraged to submit ideas for initiatives that would enhance municipal services and make their areas more livable.
- The Ministry chose 100 cities for the Mission across five rounds between January 2016 and June 2018 (Shillong was the final city chosen).
- When the city was chosen, the projects had to be finished within five years.
- The Government altered the deadline for all cities to June 2023 in 2021, whereas the previous date only applied to Shillong.
- The proposed projects varied from less expensive ones like installing water pipes and building sewage treatment facilities to more expensive ones like widening and making pedestrian-friendly particular sections of highways.
- Integrated Command and Control Centers have been built in each of the 100 cities.
- These facilities keep an eye on all emergency, security, and government services.
- Many of these centres were transformed into emergency response units by the cities during the height of the Covid-19 outbreak.
- The June deadline is unlikely to be met by more than 20 cities. The other tasks will take more time.
- Among the 18 initiatives Shillong has suggested, just one has been completed.
Bar Council of India (BCI):
- The Advocates Act of 1961’s Section 4 established the BCI as a statutory organisation to oversee legal education and practise in India.
- The Indian bar is represented by its members, who are chosen from among Indian attorneys.
- It establishes etiquette and professional behaviour guidelines and has disciplinary authority over the bar.
- Moreover, it establishes requirements for legal education and recognises colleges whose degrees in law would allow graduates to register as attorneys once they graduate.
- The “All India Bar Committee,” led by S. R. Das, published a report in March 1953 that suggested the establishment of bar councils for each state as well as an all-India bar council as the supreme authority.
- It was proposed that the all-India bar council would oversee legal education standards and govern the legal profession.
- The task of compiling a report on judicial administration changes was given to the Law Commission of India, which assists India in reforming justice and equality for the entire nation.
- To put into practise the suggestions provided by the “All India Bar Committee” and “Law Commission,” the Advocates Act was adopted in 1961.
The functions of the Bar Council are to:
- Lay down standards of professional conduct and etiquette for advocates.
- Lay down procedure to be followed by disciplinary committees.
- Safeguard the rights, privileges and interests of advocates.
- Promote and support law reform.
- Deal with and dispose of any matter which may be referred by a State Bar Council.
- Promote legal education and lay down standards of legal education.
- Determine universities whose degree in law shall be a qualification for enrollment as an advocate.
- Conduct seminars on legal topics by eminent jurists and publish journals and papers of legal interest.
- Organise and provide legal aid to the poor.
- Recognise foreign qualifications in law obtained outside India for admission as an advocate.
- Manage and invest funds of the Bar Council.
- Provide for the election of its members who shall run the Bar Councils.