Daily Prelims Notes 16 March 2024

March 16, 2024
Posted by: OptimizeIAS Team
Category: DPN

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Daily Prelims Notes

16 March 2024

Table Of Contents

1. Lok Sabha Election Dates 2024: Voting to kick off on April 19, will be held in 7 phases; results on June 4

Subject: Polity

Section: Election

Context:

Setting the stage for a two-month-long electoral battle, the Election Commission Saturday announced that the Lok Sabha elections will be kicking off on April 19 and will be held in seven phases.

More on news:

The term of the 17th Lok Sabha is set to end on June 16, while the terms of the Andhra Pradesh, Arunachal Pradesh, Odisha and Sikkim Assemblies will end on June 11, June 2, June 24 and June 2, respectively.
The general elections will be held in seven phases through the months of April and May.
Four states, Arunachal Pradesh, Andhra Pradesh, Odisha and Sikkim will also be holding simultaneous Assembly elections.
The results will be declared on June 4.
The Model Code of Conduct, which bars the government in power from announcing any new policy decisions, comes into effect immediately after the announcement.

About Election Commission:

The Election Commission of India is an autonomous constitutional authority responsible for administering Union and State election processes in India.
The body administers elections to the Lok Sabha, Rajya Sabha, and State Legislative Assemblies in India, and the offices of the President and Vice President in the country.
Part XV of the Indian constitution deals with elections, and establishes a commission for these matters.
Article 324 to 329 of the constitution deals with powers, function, tenure, eligibility, etc of the commission and the member

Appointment of Election Commissioners:

The CEC and ECs will be appointed by the President upon the recommendation of a Selection Committee.
Appointment of the Commission: The Commission will be appointed by the President, upon the recommendation of the Selection Committee.
The Selection Committee will comprise the Prime Minister, Cabinet Minister, and Leader of Opposition in Lok Sabha (or leader of the single largest opposition party).
A Search Committee headed by the Cabinet Secretary will suggest five names to the Selection Committee.
The Selection Committee may consider any person other than those suggested by the Search Committee.

Term and reappointment:

Members of the Election Commission will hold office for six years, or until they attain the age of 65 years, whichever is earlier.
Members of the Commission cannot be re-appointed.
If an EC is appointed as a CEC, the overall period of the term may not be more than six years.

Salary and pension:

The salary, allowances, and other conditions of service of the CEC and ECs will be equivalent to that of the Cabinet Secretary.
They will have an option to draw pension and other retirement benefits from the service that they belonged to previously.

Removal:

The CEC may be removed in the same manner and on the same grounds as a Supreme Court Judge.
ECs may be removed only upon the recommendation of the CEC.

About Model Code of Conduct:

The MCC is a set of guidelines issued by the Election Commission (EC) to regulate political parties and candidates prior to elections. Basically, the code spells out the do’s and don’ts for elections.
This is in keeping with Article 324 of the Constitution, which mandates EC to conduct free and fair elections to the Parliament and State Legislatures.
It is not statutory but Political Parties, Candidates and Polling Agents are expected to observe the norms, on matters ranging from the content of election manifestos, speeches and processions, to general conduct etc.
The code comes into force on the announcement of the poll schedule and remains operational till the process is concluded.
Certain provisions of the MCC may be enforced through invoking corresponding provisions in other statutes such as the Indian Penal Code, 1860, Code of Criminal Procedure, 1973, and Representation of the People Act, 1951.

2. What the success of Gaganyaan could mean for Indian science

Subject: Science and tech

Section: Space sector

Context:

India earlier this month revealed the names of the four Air Force officers selected for the Gaganyaan Mission, the country’s maiden attempt at sending humans into Space.

More on news:

Scheduled for launch next year, it would have the first Indian astronauts in 40 years and the first ones to go on an Indian spacecraft.
Just three countries – the United States, Russia and China – have executed human spaceflight missions till now.

Why India wants to have a stake in Space technologies

Becoming an active participant in this new-age Space exploration would ensure access to rights, resources and new technologies.
India could then build expertise and opportunities for these technologies’ early adoption.
Space programmes in the past have also resulted in hundreds of important spin-off technologies, including some breakthrough interventions in the health and medicine sector like Magnetic Resonance Imaging (MRI), heart implants, and advanced water filtration.

The need to avoid technology denial

India has suffered in the past because of the technology denial policies of other countries, with access to technology often used as a blackmail measure.
For example, in the 1990s, the US denied India cryogenic technology that is critical for powering rockets.
It slowed down India’s Space programme by almost two decades.
After India conducted its nuclear tests in 1998, even basic parts, like certain kinds of transistors and semiconductors, were denied due to economic sanctions.
The covid-19 pandemic came as another shock when it was realized that even basic items like Personal Protective Equipment (PPE) kits and medicines needed to be procured from abroad.

New science and technology projects announced by India:

The government has announced separate missions on green hydrogen, quantum computing, and the latest one last week on artificial intelligence.
India has joined some of the biggest international scientific projects like the Laser Interferometer Gravitational-Wave Observatory (LIGO) and the Square Kilometer Array, which would involve building several facilities within the country.

About Gaganyaan:

Gaganyaan is an ISRO mission aiming to send Indian astronauts to low-Earth orbit using an Indian launch vehicle.
It is a demonstration mission to test technologies essential for human spaceflight, showcasing India’s capability in producing, qualifying, and utilizing these technologies.
Future goals for ISRO include establishing an indigenous space station by 2035 and landing an Indian on the moon by 2040.
ISRO plans to integrate these ambitious projects with future lunar explorations, starting with a joint mission with Japan for lunar rover landing and a mission to return lunar soil samples to Earth.
The Indian government has expanded spaceflight and services responsibilities beyond ISRO to New Space India Ltd. (NSIL) for commercialization and the Indian National Space Promotion and Authorization Centre (IN-SPACe) for authorizing space activities.
Additionally, ISRO has established the Human Space Flight Centre (HSFC) to coordinate the Gaganyaan mission.

It also promised to launch a new scheme for promoting deep-tech capabilities in the defense sector.

3. Why has India developed an atmospheric testbed near Bhopal?

Subject: Science and tech

Section: Space sector

Context:

On March 12, the first phase of India’s Atmospheric Research Testbed in Central India (ART-CI) was inaugurated at Silkheda in Sehore district, located about 50 km northwest of Bhopal in Madhya Pradesh.

More on news:

Funded by the Ministry of Earth Sciences (MoES), the facility will house 25 high-end meteorological instruments for studying vital cloud processes associated with the monsoons over central India’s Monsoon Core Zone (MCZ).

What is the Atmospheric Research Testbed (ART)?

The ART is an open-field, focused observational and analytical research programme at Silkheda.
The facility aims to conduct ground-based observations of weather parameters like temperature, wind speeds, etc. and in-situ (on-site) observations of the transient synoptic systems – like low-pressure areas and depressions that form in the Bay of Bengal – during the southwest monsoon season from June to September.
The setup at ART will also be used for calibrating and validating various satellite-based observations, part of weather predictions and forecasting.
Spread over 100 acres, the ART has been developed by the Ministry of Earth Sciences for Rs 125 crore.
The Indian Institute of Tropical Meteorology (IITM), Pune, is in charge of the operations.
Under the first phase, remote sensing-based and in-situ measurements using 25 meteorological instruments have commenced.
In the second phase, ART will deploy instruments such as a radar wind profiler and balloon-bound radiosonde, and soil moisture and temperature measuring equipment.

Why is having an Atmospheric Research Testbed important?

At present, 45% of India’s labor force is employed in the agriculture sector.
Much of Indian agriculture is rainfed, as is cultivation along the Monsoon Core Zone (MCZ), which spans the central India region from Gujarat to West Bengal.
The southwest monsoon season accounts for 70 percent of the country’s annual average rainfall (880mm).
Throughout India, the majority of Kharif cultivation is undertaken between July and August, which see an average monthly rainfall of 280.4mm and 254.9mm (1971–2020 average), respectively.
During this four-month-long season, several rain-bearing synoptic systems, namely the low pressures or depressions, develop in the Bay of Bengal.
Inherently, these systems move westwards/northwestwards over to the Indian mainland and pass through the MCZ, causing bountiful rainfall.

Why is it important to have data about monsoons over central India?

Studies have correlated the all-India rainfall performance to the rainfall received over the central India region, highlighting its importance.
The India Meteorological Department (IMD) issues rainfall forecasts for the country’s four homogeneous regions – north, west, east and south peninsular India.
It issued a special rainfall forecast for the MCZ, which is considered India’s food bowl.
Central India, therefore, acts as a natural laboratory for scientists and meteorologists to perform a hands-on study of the Indian monsoons.
They can record data and make observations about the allied systems, clouds, and other associated physical and atmospheric parameters.
Additionally, climate change is driving erratic rainfall patterns in the tropical regions, like India.
It has also strengthened the low-pressure systems, which are aided by high temperatures.
This results in very heavy rainfall recorded along their trajectory during the monsoons.
Now, with ART, scientists will be able to generate and obtain long-term observations on cloud microphysics, precipitation, convection, and land-surface properties, among a host of other parameters.
This information will be assimilated and fed into the numerical weather models to enhance forecast output, especially the rainfall forecasts.
More accurate forecasts will ultimately help the farming community plan their activities better.

Why Madhya Pradesh?

The ART has been established at Silkheda, a location that falls directly in line with the path of major rain-bearing synoptic systems.
This will facilitate direct monitoring and tracking.
Besides, the locality is pristine and free of anthropogenic and other pollutants, making it the best site in central India for setting up sensitive, high-end meteorological instruments and observatories for recording data.

What instruments are ART equipped with?

To obtain continuous observations of convection, clouds, and precipitation, and monitor the major modes of variabilities, the ART is equipped with over two dozen high-end instruments, radars and more.
At 72 meters, ART will house India’s tallest meteorological tower.
Some of the instruments deployed are an aethalometer for performing aerosol studies, a cloud condensation nuclei counter, a laser ceilometer to measure cloud sizes, a micro rain radar to calculate raindrop size and its distribution, and a Ka-band cloud radar and a C-band doppler weather radar to help track the movement of rain-bearing systems over this zone.

4. Why self-censorship of political speech could be the future normal for AI platforms

Subject: Science and tech

Section: Awareness in IT and computer

Context:

As India heads to Lok Sabha elections, Google has said it will restrict the types of election-related questions users can ask its artificial intelligence (AI) chatbot Gemini in the country.

More on news:

Earlier, Krutrim, the chatbot developed by an Indian AI startup founded by Bhavish Aggarwal of Ola, had been found to self-censor on certain keywords.
Ola had seemingly applied algorithmic filters to ensure that Krutrim beta did not produce results for queries that included keywords such as Narendra Modi, BJP, and Rahul Gandhi.
AI platforms such as India’s own Krutrim while answering political questions, the government chose to instead advise the companies to fine-tune their systems.

What is “code-level censorship”?

Basically these companies have written a code that whenever a user asks a question that contains certain keywords, the platform will not ping the underlying foundational model, which has the potential answer to that question, but return with a predetermined response that it is not able to respond to that particular question.

What is the specific background of Google’s decision?

Google’s AI platform has been under fire in recent weeks over the various responses it has generated.
The company apologized for what it said were “inaccuracies in some historical image generation depictions” after Gemini depicted white figures (such as the founding fathers of the United States) or groups like Nazi-era German soldiers as people of color.

5. Burkina Faso, Mali & Niger hint at a new west African currency: what it’ll take for it to succeed

Subject: IR

Section: Places in news

Context:

On 11 February 2024, General Abdourahmane Tiani, leader of Niger’s military junta, proposed a new common currency for Niger, Burkina Faso, and Mali during a national TV address.

Details:

This initiative is a step towards emancipation from colonial legacies, specifically from the CFA franc, a currency rooted in French colonization.
These three nations, all former French colonies recently overtaken by military regimes, have also established the Alliance of Sahel States (AES) for defense purposes.
Following military coups, the Economic Community of West African States (Ecowas) has sanctioned them, leading to their withdrawal from Ecowas, though they remain part of the West African Economic and Monetary Union (Uemoa) that uses the CFA franc.
This currency is backed by the Banque de France under specific agreements with the BCEAO.

For a multilateral currency to function effectively, several conditions are essential:

Coordination of Macroeconomic and Budgetary Policies: There must be a strict alignment of economic and budgetary policies among the participating countries. This alignment ensures currency stability and prevents trade imbalances, fostering confidence in the economy and supporting regional growth.
Establishment of Strong Monetary Management Institutions: It’s crucial to have robust institutions, such as a common central bank, with sufficient authority to conduct an independent and stable monetary policy. This ensures the currency’s value is preserved and helps manage economic fluctuations.
Creation of an Integrated Common Market: The free movement of goods, services, capital, and labor is fundamental to stimulate economic growth and enhance regional cooperation. Existing frameworks like the West African Economic and Monetary Union are beneficial in this context.
Implementation of Crisis Monitoring and Resolution Mechanisms: There should be systems in place to deal with economic shocks, including common reserve funds and currency swap arrangements. Currency swaps allow for the exchange of currency amounts between two parties under agreed terms, helping to manage exchange rate risks and support cross-border financing.

Are these conditions met in Burkina Faso, Niger and Mali?

It’s difficult to say whether these conditions have been fully met in the three countries. It would mean having a firm understanding of whether these, among other, conditions have been met:
- harmonisation of government policies
- macroeconomic stability through inflation control
- limit on public debt
- maintenance of a balanced current account.

Potential Gains:

A larger monetary zone could lead to improved trade integration and more efficient allocation of resources.
The countries might gain more flexibility in dealings with external partners, fostering independence.
The monetary union could reduce transaction costs and make the region more attractive to investors due to increased trade integration and independence.

Risks:

The creation of a new currency might be perceived as a threat by the West African Economic and Monetary Union and Ecowas, potentially leading to regional tensions and the fragmentation of existing economic blocs.
The departure of these countries could diminish the economic and political influence of West African Economic and Monetary Union and Ecowas.
There’s a risk that the new currency could depreciate against the CFA franc, negatively affecting exporters to other union countries.
Without strong formal frameworks for controlling and managing the new currency, speculation and uncertainty about its value could arise, highlighting the need for robust institutions for its management and supervision.

Source: DTE

6. The flaring conflict in eastern Congo

Subject: IR

Section: Places in news

Context:

Recent escalations in conflict in the eastern Democratic Republic of Congo (DRC) have intensified the humanitarian crisis there, with numerous fatalities and hundreds of thousands displaced due to clashes between the Congolese army and the Rwandan-supported M23 group near Goma in North Kivu province.

Details:

The situation has escalated further with the seizure of Nyanzale by rebels, resulting in significant casualties and displacement. Accusations of Rwanda‘s support for the rebels have heightened tensions between Congo and Rwanda, increasing the risk of broader conflict and threatening food security for millions.
This surge in violence coincides with the UN beginning to withdraw its peacekeepers from South Kivu province and comes after floods that left over two million people needing humanitarian assistance.

What is the conflict?

The conflict in the eastern Democratic Republic of the Congo (DRC) traces back to the 1990s civil wars and the 1994 Rwandan genocide, where extremist Hutus killed around 800,000 ethnic Tutsis and moderate Hutus.
Post-genocide, approximately two million people fled to the DRC, forming militias that reignited conflicts.
These tensions led to the First Congo War, with Rwanda and Uganda supporting the Alliance of Democratic Forces for the Liberation of Congo (AFDL) to overthrow Zaire’s government, renaming the country the DRC.
The Second Congo War followed in 1998 due to fears of Rwandan annexation, involving multiple foreign armies and resulting in immense casualties and a humanitarian crisis.
Despite numerous peace agreements, ongoing conflicts involving various groups have caused nearly six million deaths and displaced millions in the region, marking it as one of the world’s deadliest conflicts since World War II.

Who are the M23 rebels, and what do they want?

The M23 rebels, also known as the March 23 Movement, are one of over a hundred insurgent groups active in eastern Congo, primarily fighting to defend Tutsi interests against Hutu militias.
Originating in 2012, M23 is named after a 2009 ceasefire deal where the Tutsi-led National Congress for the Defence of the People (CNDP) was to integrate into the Congolese army, a promise M23 accuses the government of failing to keep.
This led them to seize Goma and other towns in 2012, though they were briefly pacified by a 2013 peace deal.
Reactivating in 2022, M23 resumed attacks in North Kivu province, citing aggression from the Hutu-led Democratic Forces for the Liberation of Rwanda (DFLR), allegedly in collusion with the Congolese army.
Their recent offensives, aimed at Goma and causing mass displacement, have intensified the region’s humanitarian crisis and spurred protests demanding an end to Rwandan support for the rebels.

Tensions between Rwanda and Congo:

The violence in eastern Congo has heightened tensions between the DRC and Rwanda, with the former accusing Rwanda of supporting the M23 rebels through funds, troops, and arms, a claim backed by a United Nations report but denied by Rwanda.
Rwanda attributes the escalation to Congo’s repatriation of regional peacekeepers and defends its military activities near the border as measures for national security.
International pressure on Rwanda has increased, notably from the U.S., which condemned Rwanda’s support for M23 and called for the withdrawal of its defense forces and missile systems from the DRC.
France also urged Rwanda to cease its support for the rebels.
This surge in conflict risks regional destabilization and augments the humanitarian crisis, with NGOs reporting artillery strikes on civilian areas and the consequent retreat of health and aid workers.
The situation’s severity is compounded by global attention being diverted to other international crises, raising concerns that the escalating humanitarian disaster in Congo might be overlooked.

Places in news:

Town of Sake and Goma– in North Kivu province of Democratic Republic of Congo (DRC).
Nyanzale- A town and a camp for Internally Displaced People (IDPs) in the Rutshuru territory of North Kivu province, Democratic Republic of the Congo.

Source: TH

7. Gut microbes that digest cellulose are declining, especially in industrialised nations

Subject: Science and tech

Section: Health

Context:

A recent study, published in the journal Science, highlights the link between the increasing consumption of processed food and the decline in gut bacteria capable of digesting plant cellulose, particularly in industrialized countries.
The research revealed three new species of cellulose-digesting bacteria in the human gut, previously abundant in rural populations, ancient human societies, and great apes, but now diminished due to dietary changes.

Key Findings:

The study identified three new gut bacteria species – Candidatus Ruminococcus primaciens, Ruminococcus hominiciens, and Ruminococcus ruminiciens – which can digest cellulose, a crucial component of plant fibre.
The decline of these bacteria affects energy balance and various health aspects since these microbes transform indigestible plant compounds into short-chain fatty acids, supplying energy to the host.
Previously thought absent in humans, cellulose-digesting microbes were first confirmed in 2003. The newly discovered species are less common in industrialized nations compared to their prevalence in ancient and rural populations.
Researchers analyzed samples from 75 animal species, including wild and domesticated animals and various human cohorts, using known strains Ruminococcus champanellensis and Ruminococcus flavefaciens as references to identify related species.
The study found significant differences in the prevalence of cellulose-degrading bacteria across populations, correlating these differences with dietary fiber intake. Rural and ancient populations, with higher fiber diets, showed greater prevalence compared to those in industrialized countries, where processed food consumption is higher.

Significance of the study findings:

This research underscores the profound impact of dietary choices on gut microbiota and, consequently, on human health.
The decline of cellulose-digesting bacteria in people from industrialized countries, due to lower dietary fiber intake, suggests a shift away from diets that support a diverse and healthy gut microbiome.

Source: DTE

8. Railways plans to develop multi-modal transport hubs

Subject: Schemes

Section: Infra

Context:

The Indian Railways is embarking on a project to develop mega railway terminals with multi-modal connectivity in cities with populations exceeding 10 lakh, as part of the ‘Viksit Bharat’ initiative led by Prime Minister Narendra Modi.

Details:

This ambitious project aims to enhance infrastructure in aspirational cities and may also extend to emerging cities expected to see significant population growth.
The Ministry of Railways is focusing on improving passenger experiences, emphasizing the importance of cleanliness and maintenance of railway premises and trains, particularly in the wake of expanding the Vande Bharat Expresses network.
These efforts are part of a broader mission to elevate the quality of travel and ensure a high standard of service, with a stern warning against any negligence from senior officers.
Furthermore, the Railway Board has addressed the need for thorough investigations and remedial actions in response to incidents affecting the operation of passenger and freight trains, such as brake binding and train parting.

“Viksit Bharat”@2047:

The ‘Viksit Bharat 2047’ agenda is a comprehensive vision plan by the Government of India, aiming to transform India into a developed nation by the year 2047, marking the 100th anniversary of its independence.
The vision encompasses various aspects of development, including economic growth, social progress, environmental sustainability, and good governance.
The soul of Indian Version of notion of development is emphasised through Hon’ble PM’s Sankalp of Panch Pran, with Viksit Bharat being one of them and of utmost importance.
The four pillars of Viksit Bharat are Yuva (Youth), Garib (Poor), Mahila (Women) and Kisan (Framers).
Other aspects like happiness ought to be the central pursuit in this journey. Without achieving happiness, development has no meaning. Ironically, the nations have developed, but people are not happy.

Current status:

Presently, India is a lower-middle income category.
To become a high-income economy, it needs to cross the barrier of per capita GNI of $13,846 by 2047.
To achieve the target, there is need to focus and work upon the three major indicators of prosperity:
- Incremental increases in overall GDP and per capita incomes over specified long periods.
- Changes in inequality of incomes in that country.
- The rate of overall inflation and exchange rate changes in the currency of that country.

Source: TH

9. Competition Commission of India (CCI) Orders Probe Against Google

Subject: Economy

Section: Msc

The Competition Commission of India (CCI) has initiated a probe against Google regarding its User Choice Billing (UCB) system, finding it to be prima facie anticompetitive.

Background:

The CCI order comes after four entities approached the CCI, alleging that Google’s UCB system is discriminatory, unfair, and disrupts competition in the app markets to favor Google’s own apps.
Google introduced the UCB system in September 2022, allowing app developers offering digital content to provide alternative billing systems (ABS) alongside the Google Play Billing System (GPBS).
Under this system, Google alternative billing systems (ABS) alongside the Google Play Billing System (GPBS).

Probe Initiation:

The CCI’s investigative wing will conduct the probe and submit a report within 60 days.
The CCI noted that homegrown app developers are aggrieved by Google’s updated payment policies related to its Google Play Store.

Service Fee Concerns:

According to the CCI order, Google’s service fee for both GPBS and ABS substantially exceeds its cost of providing the services.
The order suggests that Google is charging app developers 4 to 5 times its cost, which appears disproportionate to the economic value of the services rendered.
This is viewed as an abuse of dominant position by Google, as per the CCI order.

Recent Actions:

In early March, Google started delisting various Indian apps from its Play Store for failing to comply with UCB.
These apps were ‘temporarily’ reinstated after government intervention, pending an appeal by homegrown app developers in the Supreme Court.
The appeal by local app developers is related to the commission charged by Google for in-app purchases.
Internet apps approached CCI and alleged that UCB was GPBS in a newer avatar and was in violation of the antitrust body’s earlier order.

Previous CCI Ruling:

In October 2022, the CCI ruled against Google’s anti-competitive practices concerning its Play Store policies and imposed a penalty of over ₹936 crore.
Following this ruling, Google allowed third-party billing for in-app purchases.

The CCI’s probe into Google’s UCB system aims to investigate allegations of anticompetitive behavior and unfair practices, particularly concerning the fees charged to app developers. This investigation adds to the ongoing scrutiny of tech giants’ market practices in India.

Google Play Billing System (GPBS):

The Google Play Billing System (GPBS) is the default billing system provided by Google for app developers on the Google Play Store.

When users make purchases within apps (such as for premium features, subscriptions, or digital content), the GPBS handles the transaction process. With GPBS, Google typically charges a service fee to developers for processing these transactions. The fee can range from 10% to 30%, depending on various factors such as the type of transaction and the region.

Alternative Billing Systems (ABS) / User Choice Billing System:

In contrast to the GPBS, alternative billing systems (ABS) offer app developers the option to integrate their own payment systems or third-party payment gateways within their apps. This allows developers to manage transactions directly, bypassing Google’s default billing system, however, under which apps could offer other payment methods such as UPI, credit cards and net banking but this method also attracted a commission rate of 11-26%.

Competition Commission of India

The Competition Commission of India (CCI) is a regulatory body established by the Government of India to enforce the Competition Act, 2002.

Overview:

Establishment: The CCI was constituted in March 2009 as a statutory body responsible for promoting and sustaining competition in markets, preventing anti-competitive practices, and protecting the interests of consumers.
Repeal of MRTP Act: It replaced the Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act), following the recommendations of the Raghavan Committee.

Composition:

The Commission is composed of:
- One Chairperson
- Six Members
These members are appointed by the Central Government.
The Chairperson and Members are whole-time members of the Commission.

Competition Act, 2002:

Purpose: The Competition Act, 2002, was enacted to promote competition, prevent anti-competitive practices, and ensure fair trade practices in India.
Prohibitions:
- Anti-Competitive Agreements: The Act prohibits agreements that significantly affect competition.
- Abuse of Dominant Position: It regulates entities that hold a dominant position in a market to prevent abuse of such position.
- Combinations: The Act regulates mergers, acquisitions, and combinations that may have an adverse impact on competition.
Establishment of CCI and Competition Appellate Tribunal:
- The Act led to the establishment of the Competition Commission of India (CCI) as the primary regulatory authority.
- It also established the Competition Appellate Tribunal (COMPAT) for hearing appeals against the decisions of the CCI.
Amendments:
- The Act was amended in 2007 by the Competition (Amendment) Act to further strengthen competition regulations.
Replacement of COMPAT with NCLAT:
- In 2017, the Government replaced the Competition Appellate Tribunal (COMPAT) with the National Company Law Appellate Tribunal (NCLAT).

The Competition Commission of India plays a crucial role in promoting fair competition, protecting consumer interests, and ensuring a level playing field for businesses operating in India’s markets.

10. SEBI relaxes FPI disclosure norms

Subject: Economy

Section: Capital market and money market

Exemption for Foreign Portfolio Investors (FPIs):

Sebi has exempted certain Foreign Portfolio Investors (FPIs) from the additional disclosure framework.
This relief applies to FPIs that have more than 50% of their Indian assets under management (AUM) within a single corporate group.
The exemption is provided for FPIs with concentrated holdings in a listed company with no identified promoter, subject to certain conditions.

Relaxation of Timelines for Disclosure:

Sebi has approved a proposal to relax the timelines for the disclosure of material changes by FPIs.
Currently, FPIs are required to disclose material changes within seven working days.
The new provision allows a minimum period of 180 days or the end of the registration block, whichever is later, for the disposal of securities in case of adverse changes in compliance status or non-submission of documents for reclassification.

Disposal of Securities:

If securities held by an FPI are not disposed of after the specified 180-day period, an additional 180 days will be provided.
However, a financial disincentive of 5% of the sale proceeds will be credited by the custodian to Sebi’s Investor Protection and Education Fund.
Securities remaining unsold after the additional period will be deemed to have been compulsorily written off by the FPI.

Launch of Beta Version of T+0 Settlement:

Sebi has approved the launch of a beta version of the optional T+0 settlement for a limited set of 25 scrips and with a limited set of brokers.

Changes in Public/Rights Issue of Equity Shares:

Sebi has decided to eliminate the requirement of a 1% security deposit in public/rights issues of equity shares.
Additionally, flexibility will be provided to extend the offer closing date due to force majeure events.

Foreign Portfolio Investors (FPIs): An Overview

Foreign Portfolio Investment (FPI) refers to investments made by foreign entities in financial assets such as stocks, bonds, mutual funds, and other securities of a country’s financial markets.

Unlike Foreign Direct Investment (FDI), FPI does not involve acquiring a substantial ownership stake or control in the invested entity. Instead, it represents a passive investment approach to earn returns from capital appreciation and dividends.

Characteristics of FPI:

Passive Ownership: FPI involves holding financial assets without seeking to actively control or influence the management of the invested companies. Investors rely on the performance of the assets for their returns.
Liquidity and Volatility: FPI investments are relatively liquid, meaning they can be easily bought or sold in the financial markets. However, this liquidity also makes FPIs more susceptible to market volatility and changes in investor sentiment.
Diversification: FPI allows investors to diversify their portfolios across different countries, industries, and asset classes. This diversification helps spread risk and potentially improve returns.
Financial Instruments: FPIs can invest in a variety of financial instruments, including but not limited to:
- Stocks: Ownership shares of publicly traded companies.
- Bonds: Debt securities issued by governments or corporations.
- Mutual Funds: Pooled investment funds managed by professionals, investing in a diversified portfolio of assets.
- Exchange-Traded Funds (ETFs): Funds that are traded on stock exchanges and represent a basket of securities.
- American Depositary Receipts (ADRs) and Global Depositary Receipts (GDRs): Certificates representing ownership of shares in foreign companies traded on stock exchanges outside their home country.

Role in the Economy:

FPIs play a crucial role in providing liquidity to financial markets, helping to facilitate price discovery and efficient allocation of capital.
They contribute to the overall depth and breadth of financial markets, making them more attractive to domestic investors and businesses.
FPIs can bring in foreign currency, which can contribute to a country’s foreign exchange reserves and support the stability of its currency.

“Hot Money” and Risk Considerations:

FPIs are often termed as “hot money” due to their tendency to move swiftly in and out of markets based on economic conditions, interest rates, geopolitical events, and other factors.
This rapid movement can lead to increased market volatility and potential risks for domestic markets, especially during times of economic uncertainty or market stress.

SEBI’s FPI Disclosure Norms:

Additional Disclosures:

Criteria for Disclosure: SEBI requires Foreign Portfolio Investors (FPIs) holding more than 50% of their Indian equity Assets Under Management (AUM) in a single Indian corporate group or having over Rs 25,000 crore of equity AUM in the Indian markets to provide additional details.
Purpose of Disclosure: The aim is to enhance transparency and oversight, particularly for FPIs with concentrated holdings that could potentially impact the market.

Alignment with PN3 Concerns:

Press Note 3 (PN3) Context: While PN3 does not directly apply to FPI investments, SEBI is cautious about potential misuse of the FPI route.
Importance of Additional Disclosures: SEBI views obtaining detailed information from FPIs as crucial to address concerns of market disruption, regulatory circumvention, and ensure the protection of Indian securities markets.

SEBI’s move to require additional disclosures from FPIs reflects a proactive approach to enhance transparency, mitigate market risks, and align foreign portfolio investments with regulatory objectives in India’s securities markets.

Press Note 3 (2020)

Context:

Press Note 3 (2020) was introduced by the Union government during the Covid-19 pandemic as an amendment to the Foreign Direct Investment (FDI) policy.

Objective:

The primary aim was to address concerns related to opportunistic takeovers and acquisitions of stressed Indian companies at potentially undervalued prices.

Key Provisions:

Government Route Mandate:
- Entities from countries sharing a land border with India or where the beneficial owner of an investment is situated or is a citizen of such countries were required to follow the Government Route for investments.
Investment Routes:
- Government Route: This route involves obtaining official approval from regulatory bodies for foreign investments. It is typically used for sensitive sectors or investments of strategic importance.
- Automatic Route: Under this route, investments can be made without prior approval, particularly in sectors where foreign participation is encouraged, and the investment does not pose significant regulatory concerns.
Change in Beneficial Ownership:
- The Press Note also specified that any transfer of ownership, whether existing or future Foreign Direct Investment (FDI), directly or indirectly, resulting in the beneficial ownership falling within the purview of the amended policy, would require government approval.
Enforcement:
- Press Note 3 (2020) was enforced through the Foreign Exchange Management (Non-Debt Instruments) Amendment Rules 2020.
Current Status:
- As of January 2024, Press Note 3 (2020) remains enforceable, indicating that the government’s regulations regarding FDI from border-sharing countries are still in effect.

Implications and Significance:

Safeguarding Indian Interests: The introduction of Press Note 3 aimed to protect Indian companies, particularly those in distress during the pandemic, from potentially unfavorable takeovers.
Enhanced Regulatory Oversight: By mandating the Government Route for investments from specific countries, the government sought to ensure closer scrutiny and approval for investments in critical sectors.
Preventing Undervalued Acquisitions: The requirement for government approval in cases of change in beneficial ownership aimed to prevent acquisitions or transfers at prices considered undervalued or detrimental to Indian interests.

Investor Protection and Education Fund (IEPF)

The Investor Protection and Education Fund (IEPF) is a fund established by the Securities and Exchange Board of India (SEBI) for the protection of the interests of investors in the Indian financial market. It serves as a mechanism to safeguard the rights of investors and educate them about various aspects of investing.

Purpose of IEPF:

The primary objectives of the Investor Protection and Education Fund are as follows:

Investor Protection: The fund aims to protect the interests of investors, particularly small investors, in securities markets. It provides a mechanism for compensating investors who have suffered losses due to defaults or fraudulent activities by companies or market intermediaries.
Education and Awareness: Another key objective is to educate investors about their rights and responsibilities. The fund supports initiatives and programs that promote investor education, financial literacy, and awareness about market risks.

Sources of Funding:

The IEPF is funded through various sources, including:

Unclaimed Dividends: One of the primary sources of funding for the IEPF is unclaimed dividends. When dividends declared by companies remain unclaimed by shareholders for a specified period, they are transferred to the IEPF.
Unclaimed Shares: Similarly, shares that are unclaimed by investors for a certain period, such as in cases of demat accounts with no activity, are transferred to the IEPF.
Refunds from SEBI: Any fines, penalties, or disgorgements collected by SEBI from market participants may also contribute to the IEPF.

11. EV policy paves way for Tesla entry

Subject: Economy

Section: Infra

The Union government of India has announced a new Electric Vehicles (EV) policy that includes a significant reduction in import duties for certain electric vehicles.

This move is aimed at encouraging global EV manufacturers, such as Tesla, to invest in setting up manufacturing facilities in India.

Key Points of the New EV Policy:

Reduction in Import Duties:

Under the new policy, completely built-up (CBU) electric cars can be imported at a reduced import duty of 15%.
This is a substantial decrease from the previous import duty rates of 60% or 100% for completely built-up cars.
Tesla, among other global EV manufacturers, had requested import duty reductions ranging from 15% to 40% on fully assembled cars, based on their price.

Criteria for Reduced Import Duty:

The new policy allows EV passenger cars (e-4W) to be imported with a minimum Cost, Insurance, and Freight (CIF) value of $35,000.
This reduced duty rate of 15% will apply for 5 years from the date of issuance of approval by the Ministry of Heavy Industries.
There is a cap of 8,000 on the number of EVs that can be imported at the reduced rate, with the option to carry over unutilized annual import limits.

Minimum Investment Requirement:

In order to avail the duty concessions, manufacturers are required to invest a minimum of ₹4,150 crore in setting up manufacturing facilities in India.
The manufacturing facilities must become operational within 3 years from the date of issuance of approval by the Ministry.
Manufacturers must achieve a minimum Domestic Value Addition (DVA) of 25% within the initial 3-year period, and 50% DVA within 5 years.

Promoting EV Manufacturing in India:

The government emphasized that the scheme aims to promote the manufacturing of electric vehicles in India.
The EV sector is expected to grow significantly within the Indian automotive industry in the coming years.
India is currently the world’s third-largest automobile market and one of the fastest-growing automotive markets.

Opportunity for Global Transition to EVs:

India sees itself as having the opportunity to lead the global transition from conventional internal combustion engine vehicles to more efficient and decarbonized EV technology.
The automotive sector in India contributes over 7.1% to the country’s GDP and is expected to grow substantially, with a projected market size of ₹24.9 lakh crore by 2030.

The new EV policy is part of India’s efforts to promote sustainable and environmentally friendly transportation solutions while also boosting the domestic manufacturing sector and creating employment opportunities.

Key government initiatives in India aimed at promoting the adoption of Electric Vehicles (EVs):

Faster Adoption and Manufacturing of Electric Vehicles (FAME) Scheme II:
- Provides incentives for EV manufacturers and buyers.
- Incentives include subsidies, tax rebates, preferential financing, and exemptions from road tax and registration fees.
National Electric Mobility Mission Plan (NEMMP):
- Sets targets to achieve 6-7 million sales of hybrid and electric vehicles annually from 2020 onwards.
- Provides fiscal incentives to encourage adoption.
National Mission on Transformative Mobility and Battery Storage:
- Aims to create a comprehensive ecosystem for EV adoption.
- Supports the establishment of large-scale battery manufacturing plants in India.
Production Linked Incentive (PLI) Scheme:
- Offers incentives for the manufacturing of electric vehicles and related components.
- Designed to boost domestic production and make EVs more affordable.
Vehicle Scrappage Policy:
- Provides incentives for the scrapping of old vehicles.
- Encourages the purchase of new electric vehicles as replacements.
Go Electric Campaign:
- Aims to raise awareness about the benefits of EVs among the public.
- Focuses on promoting EV adoption and the development of EV charging infrastructure.
Support for Global EV30@30 Campaign:
- India is among the countries supporting the global EV30@30 campaign.
- The goal is to achieve at least 30% new vehicle sales being electric by 2030.
Charging Infrastructure Development:
- The Ministry of Power has issued revised guidelines on charging infrastructure.
- Mandates the presence of at least one charging station within a 3 km grid and every 25 km along highways.
EV Charging Facilities in Buildings:
- The Ministry of Housing and Urban Affairs has amended the Model Building Bye-laws, 2016.
- Requires 20% of parking spaces in residential and commercial buildings to be allocated for EV charging facilities.