Daily Prelims Notes 8 November 2024

Daily Prelims Notes

8 November 2024

Table Of Contents

1. India should be part of RCEP and CPTPP: NITI Aayog CEO B.V.R Subrahmanyam
2. Philippines ‘retakes’ an island in disputed sea in mock combat
3. Natalist policies the way to address the ageing population problem?
4. Dramatically increase climate adaptation efforts, starting with a commitment to act on finance at COP29: Adaptation Gap Report 2024
5. Project to monitor animal health launched: its objectives, funding
6. Taking stock of the International Solar Alliance
7. Enhancing Agricultural Sustainability through Corporate Social Responsibility (CSR) Contributions
8. The Impact of De-branning on Millets: Nutritional Losses and Health Implications
9. Semaglutide: Revolutionizing Diabetes and Obesity Treatment Amidst Challenges in India
10. 4th Round of Regional Rural Bank (RRB) Consolidation Initiated by Government
11. ED Conducts Searches on Premises Linked to Key Vendors of Amazon and Flipkart
12. Prolonged Chinese Steel Imports May Impact Indian Steel Industry Investments

1. India should be part of RCEP and CPTPP: NITI Aayog CEO B.V.R Subrahmanyam

Sub: IR

Sec: Int groupings

Context:

• V.R. Subrahmanyam, the CEO of NITI Aayog said that India should reconsider its stance and join both RCEP and CPTPP to boost its economic growth, particularly benefiting its Micro, Small, and Medium Enterprises (MSMEs) sector.
• Subrahmanyam also highlighted that India has not fully capitalized on the China Plus One

Rationale behind the statement:

• MSMEs contribute significantly to India’s economy, accounting for 40% of the country’s exports.
• According to Subrahmanyam, these smaller businesses could gain far more from expanded trade opportunities provided by such agreements than larger corporates, which are not typically high exporters.
• He argues that India’s continued exclusion from these large regional trade agreements places the country at a disadvantage as it limits its access to growing global markets.

About RCEP:

• The Regional Comprehensive Economic Partnership (RCEP) is a free trade agreement (FTA) involving 10 ASEAN member countries (Brunei, Cambodia, Indonesia, Malaysia, Myanmar, Singapore, Thailand, the Philippines, Laos, and Vietnam) along with six FTA partners: China, Japan, South Korea, Australia, and New Zealand.
• India was initially part of the negotiations but decided to pull out in 2019.

India’s Withdrawal from RCEP:

• Despite entering negotiations in 2013, India raised concerns regarding the lack of sufficient safeguards to protect its farmers and industries, particularly MSMEs, from the negative impacts of trade liberalization.
• India’s withdrawal from the RCEP in 2019 was primarily due to concerns over trade imbalances and the potential influx of cheaper Chinese goods that could undermine Indian industries.

About CPTPP:

• The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is another significant trade agreement involving 11 countries spanning five continents.
• These countries include Canada, Mexico, Peru, Chile, New Zealand, Australia, Brunei, Singapore, Malaysia, Vietnam, and Japan.
• The CPTPP aims to foster economic integration across the Pacific Rim by reducing trade barriers and increasing market access among the member nations.

China Plus One Strategy:

• The China Plus One strategy refers to a business and investment approach where companies diversify their supply chains by maintaining a primary manufacturing base in China, while also establishing an additional production or sourcing location in a second country.
• India, with its large labour force, expanding manufacturing base, and the potential to tap into new markets, has been positioned as a significant beneficiary in this strategy.

2. Philippines ‘retakes’ an island in disputed sea in mock combat

Sub: IR

Sec: Places in news

Context:

• The Philippines conducted its first-ever combat exercises in the disputed South China Sea

Details:

• This military exercise involved simulation of retaking of an island in the region, highlighting the Philippines’ determination to assert its sovereignty over territories in the face of ongoing territorial disputes, particularly with China.
• The exercises took place near Loaita Island, which the Philippines refers to as Kota Island.

China’s opposition:

• While there were no immediate comments from Chinese officials regarding the drills, China has historically opposed military exercises by foreign forces in the South China Sea, asserting that such activities infringe upon its territorial claims.
• China’s maintains military presence in the area, including frequent patrols and the construction of artificial islands.

Geopolitical ramifications:

• The South China Sea has become a delicate fault line in the broader US-China rivalry.
• The US has consistently opposed China’s expansive territorial claims, advocating for freedom of navigation and international law.
• The Philippines, a key ally of the US in the region, has conducted joint military exercises with American forces in the past, a factor that further complicates the situation.

South China sea dispute:

• The South China Sea is one of the most hotly contested maritime regions in the world, with China claiming nearly the entire area.
• Other countries, including the Philippines, Vietnam, Malaysia, and Brunei, also lay claim to parts of the sea, particularly its islands, reefs, and waters.
• The disputes have led to rising tensions in the region, with frequent standoffs between military forces and growing concerns about freedom of navigation and security in one of the world’s most vital shipping lanes.

3. Natalist policies the way to address the ageing population problem?

Sub: Geo 

Sec: Human Geo

Context:

• Andhra Pradesh CM N. Chandrababu Naidu raised concerns about the ageing population and suggested increasing birth rates.
• Tamil Nadu CM M.K. Stalin mentioned that upcoming Census and delimitation processes might influence family planning decisions, potentially discouraging small families.

1. Population Growth and Fertility Trends

• India’s Total Fertility Rate (TFR):
  • Dropped to 1.9 in 2021, below the replacement level of 2.1, indicating population stabilization.
  • However, there are sharp regional variations.
• Clarifications on Population Growth:
  • Despite lower fertility rates, India’s population will continue to grow until around 2070 due to population momentum (large number of women entering reproductive age).
  • Population growth will stop earlier in India compared to the world average (which may grow till 2080).
• Birth and Death Rate Transition:
  • By 2060-2070, India’s death rate is expected to surpass its birth rate.
  • Regional Divide: Northern states have higher population growth, while southern states experience slower growth.
• Key Concerns:
  • Sustaining the Population: Balancing the working-age and non-working-age population.
  • Federal Representation: Issues with how population counts affect state representation and resources.

2. Ageing Population Trends

• Data on Ageing:
  • In 2021, the elderly population:
    • Bihar: 7.7% (below the national average of 10.1%).
    • Kerala: 16.5% and Tamil Nadu: 13.7% (both above national average).
  • Projected for 2036:
    • Kerala: Elderly population expected to rise to 22.8%.
    • Tamil Nadu: Expected to reach 20.8%.
    • Bihar: Increase from 7.7% to 11%.
• Factors Contributing to Ageing:
  • Reduction in fertility rates.
  • Increasing life expectancy in southern states.

3. Is Ageing a Problem?

• Ageing is part of natural demographic progression.
• Concerns should focus on:
  • Health challenges (non-communicable diseases like heart issues, cancers).
  • Employment opportunities for older individuals in an evolving economy.
  • Migration and gender inequality.
• Dynamic View of Ageing:
  • Life expectancy is increasing.
  • Future elderly populations will differ in characteristics from the current elderly, making it wrong to label them all as unproductive.

4. Pro-Natalist Policies: Are They the Solution?

• Concerns with Increasing Birth Rates:
  • India once worried about a ‘population bomb’ and enforced policies like forced sterilization.
  • Now, there is a shift towards encouraging larger families (e.g., Naidu’s suggestion to require more children for election eligibility).
• Young Couples’ Reluctance to Have Children:
  • Worldwide Trends: Countries like Hungary, Poland, Greece, Finland, and Sweden have adopted pro-natalist measures (increased maternity/paternity leave, child support, tax benefits).
  • Why These Don’t Work:
    • High cost of living.
    • Expensive childcare and education.
    • Opportunity costs for women, who bear the brunt of unpaid childcare and may face career setbacks.

Key demographics of India:

Source: TH

4. Dramatically increase climate adaptation efforts, starting with a commitment to act on finance at COP29: Adaptation Gap Report 2024

Sub: Env

Sec: Climate Change

Context:

• The UNEP released its Adaptation Gap Report 2024 titled “Come hell and high water” on November 7, 2024, just before the start of the 29th Conference of Parties (COP29) on November 11, 2024. The report urges nations to significantly increase efforts in climate adaptation, focusing particularly on securing finance.

Impact of Climate Change on Developing Countries:

• Weather-related disasters in 2024:
  • Nepal Floods (September): Claimed 224 lives.
  • Summer Floods in Africa: Affected Sudan, Nigeria, Niger, Cameroon, and Chad, causing hundreds of deaths and displacing millions.
• These events have been linked to global warming by the World Weather Attribution collaboration.
• Disparity in Emissions:
  • The warming is attributed to greenhouse gas (GHG) emissions mainly from developed countries (e.g., the United States).
  • The countries suffering from floods historically have the lowest GHG emissions.

Financial Challenges and Adaptation Needs:

• Loss and Damage: The disasters have led to increased debt burdens in affected countries, amplifying their need for adaptation measures.
• Adaptation Finance Trends:
  • 2022 Increase: Adaptation finance to developing countries rose from $22 billion in 2021 to $28 billion in 2022.
  • Despite progress, the actual adaptation financing needs are estimated at $387 billion per year until 2030.

Finance Gaps and Glasgow Climate Pact Goals:

• The Glasgow Climate Pact aimed to double adaptation finance from $19 billion (2019 levels) to $38 billion by 2025.
• However, even meeting this target would only reduce the adaptation finance gap of $187-359 billion by about 5%.
• The need for non-debt increasing finance (e.g., grants, concessional loans) is emphasized, as most current financing involves high-interest loans that increase the debt burden on developing countries.

Challenges in National Adaptation Planning and Implementation:

• Planning Progress:
  • 171 countries have developed at least one national adaptation planning instrument (policy/strategy).
  • 26 countries lack such instruments, with 10 showing no inclination to develop one. Many of these are conflict-affected states needing tailored support.
• Implementation Issues:
  • Evaluations show that about 50% of projects funded by UNFCCC financing entities are either unsatisfactory or unsustainable without continued funding.
  • The UAE Framework for Global Climate Resilience (UAE-FGCR) targets several key areas, including:
    • Impact, vulnerability, and risk assessment.
    • Thematic areas: Agriculture, ecosystems, water, infrastructure, health, poverty, and cultural heritage.

Major reports released by the United Nations Environment Program (UNEP):

5. Project to monitor animal health launched: its objectives, funding

Sub : Schemes

Sec: Agriculture

Context:

• The Animal Health Security Strengthening in India for Pandemic Preparedness and Response initiative was recently launched by the Union Minister of Fisheries, Animal Husbandry, and Dairying.
• The project will work with the help of three implementing agencies: Asian Development Bank (ADB), the World Bank, and the Food and Agriculture Organisation (FAO).

Objective:

• The project aims to enhance India’s ability to prevent, detect, and respond to animal health threats, with a focus on zoonotic diseases (diseases that can be transmitted from animals to humans).
• Around two-thirds of infectious diseases affecting humans originate from animals. India, with its 536 million livestock and large wildlife population, is particularly vulnerable to animal-borne diseases.
• The project is expected to be completed by August 2026.

Funding:

• The project was approved by the Pandemic Fund, established by the G20 countries under Indonesia’s presidency in 2022. The fund was created to help low- and middle-income countries strengthen their capacity to handle pandemics. The first round of funding raised $2 billion.
• India’s proposal, submitted by the Department of Animal Husbandry, was approved, and India received a grant of $25 million.

Major interventions under the project:

• Strengthening and integrating disease surveillance and early warning systems
• Upgrading and expanding the laboratory network
• Improving the interoperable data systems
• Building capacity for data analytics and risk communication
• Regional cooperation through cross-border collaboration.

6. Taking stock of the International Solar Alliance

Sub: IR

Sec: Int groupings

Background:

• The International Solar Alliance (ISA) was launched in 2015 during the Paris Climate Conference (COP21) by India in collaboration with several other countries, including the host nation, France.

Role of ISA:

• The ISA was conceived to promote the use of solar energy globally, with a primary focus on accelerating solar energy deployment in developing countries.
• The ISA was envisioned as a facilitator to support the large-scale deployment of solar energy.
• Its role was to help countries overcome barriers like financial constraints, lack of technology, regulatory issues, and other challenges.
• ISA has been targeting deployment of 1,000 GW of solar energy, and unlocking a trillion dollars in solar investment by 2030.

Evolution:

• The ISA started as a coalition of nations but has now evolved into an intergovernmental organization, with more than 110 countries as members.
• However, despite its promising beginning, its impact on the global solar energy transition has been modest.

Lack of Progress:

• Despite significant investments and effort, ISA-facilitated projects have yet to start operations. The first solar project under ISA facilitation is expected in Cuba, where a 60 MW solar plant is being developed.

Global Solar Energy capacity:

• Over the last few years, the global solar energy capacity has been growing rapidly, increasing at over 20% annually. In 2023, solar capacity grew by more than 30%, with China contributing 62% of the global increase, according to World Solar Market Report 2024, a publication of the ISA.
• About 43 per cent of global solar PV capacity is installed in China alone. The top 10 markets account for more than 95 per cent of installed capacity.
• Solar energy installed capacity is projected to grow between 3 and 15 times in different scenarios for achieving global net zero by 2050.

Barriers to Solar Energy Adoption in Developing Countries:

• Lack of experience in executing large solar projects.
• No local developers for solar projects, requiring foreign investment.
• Foreign investors look for policy stability and sound regulatory environment, which is hard to find in developing countries.

India and ISA:

• ISA is a crucial element of India’s diplomatic outreach, especially to African countries. It enhances India’s leadership in the Global South and strengthens its position as a key player in the global energy transition.
• Despite being an inter-governmental multilateral organisation, ISA is still largely viewed as an Indian initiative as ISA is headquartered in New Delhi, and India funds and presides over the organization, with its general assembly under India’s leadership until 2026.

7. Enhancing Agricultural Sustainability through Corporate Social Responsibility (CSR) Contributions

Sub : Eco

Sec: National Income and Indian economy

Why in News

India was the first country to mandate Corporate Social Responsibility (CSR) legally under the Companies Act, 2013. With increasing CSR contributions, there is a growing interest in how effectively these funds are directed toward agriculture, which is vital for India’s economy and employs nearly half of the population.

What is Corporate Social Responsibility (CSR)?

Corporate Social Responsibility (CSR) refers to the ethical responsibility of companies to contribute positively to society and the environment. It goes beyond profit-making and includes efforts to improve social, environmental, and economic conditions.

Legal Framework for CSR in India

India became the first country to legally mandate CSR through the Companies Act, 2013, primarily outlined under Section 135.

Since the Act’s implementation, CSR disbursements have reached approximately ₹1.84 lakh crore between 2014 and 2023.

Eligibility for CSR under Section 135: Companies meeting any of the following criteria must comply with CSR obligations:

• Net worth of ₹500 crore or more
• Annual turnover of ₹1,000 crore or more
• Net profit of ₹5 crore or more

CSR Spending Requirement: Companies meeting the eligibility criteria must spend at least 2% of their average net profits from the last three financial years on CSR activities.

If companies fail to utilize the specified CSR funds, they must transfer the unspent amount to a government-approved fund (e.g., PM National Relief Fund) or a designated CSR fund within a stipulated period.

Companies subject to CSR requirements must form a CSR Committee consisting of at least three directors, including an independent director.

Companies that fail to meet CSR requirements may face financial penalties, including fines imposed on the company and its officers.

CSR’s Contribution to Agricultural Development:

Companies increasingly show interest in using CSR funds for climate action and sustainability in agriculture. According to a recent CSR platform report, 23% of surveyed companies prioritized “environment and sustainability” as key CSR focus areas.

Capital and Infrastructure Needs: Addressing core needs in agriculture, CSR contributions have focused on:

• Grain banks
• Farmer training schools
• Livelihood projects linked to agriculture and allied activities
• Water conservation initiatives
• Energy-efficient irrigation systems

Sustainability Focus: As agriculture shifts toward sustainable practices, CSR funding from the private sector could significantly support these initiatives, promoting long-term environmental and economic benefits.

Challenges in Tracking Agricultural CSR Contributions:

The existing CSR reporting mechanisms lack a framework to distinctly identify and track agriculture-specific contributions. This limits transparency and prevents accurate impact assessments.

CSR activities in agriculture can fall under 11 of the 29 sectors specified in Schedule VII of the Companies Act. Since many of these sectors encompass diverse activities unrelated to agriculture, accurately tracking agriculture-specific contributions is challenging.

Given agriculture’s crucial role in the Indian economy and sustainability goals, defining it as a distinct sector in CSR contributions is essential. This would:

• Enable precise tracking of CSR funds for agricultural sustainability
• Enhance transparency
• Improve the targeting of funds for maximum impact

Recommendations for a More Effective CSR Framework in Agriculture:

Shifting to a sector-based reporting system would streamline CSR allocations, enabling better identification of areas needing support and improving fund utilization.

Identifying specific sustainability issues within agroecosystems and channelling CSR funds accordingly could result in measurable improvements and promote resilient agricultural practices.

Clear tracking mechanisms can add value to CSR efforts by ensuring funds are utilized effectively, making a tangible impact in line with India’s broader development goals.

8. The Impact of De-branning on Millets: Nutritional Losses and Health Implications

Sub : Sci

Sec : Health

Why in News

The recent recognition of 2023 as the International Year of Millets by the Food and Agriculture Organization (FAO) has brought global attention to the nutritional value of millets. A study published in the peer-reviewed journal Nature Springer has highlighted the negative effects of de-branning (removal of bran) on millets, stressing the importance of consuming them as whole grains for maximizing health benefits.

Nutrient Loss Due to De-branning:

The study found that de-branning millets significantly reduces protein, dietary fiber, fat, mineral, and phytate content, while increasing carbohydrates and amylose levels. This nutrient reduction diminishes the health benefits associated with consuming millets.

De-branned millets may increase the glycemic load in diets, potentially making them less suitable for people with diabetes.

About Millets:

Millets are a highly varied group of small-seeded grasses, widely grown around the world as cereal crops or grains for fodder and human food.

The key varieties of millets include Sorghum, Pearl Millet, Ragi, Small Millet, Foxtail Millet, Barnyard Millet, Kodo Millet and others.

Major producers include Rajasthan, Andhra Pradesh, Telangana, Karnataka, Tamil Nadu, Maharashtra, Gujarat and Haryana.

Millets are a powerhouse of nutrients, which score over rice and wheat in terms of minerals, vitamins, and dietary fiber content, as well as amino acid profile.

In India, millets are primarily a kharif crop, requiring less water and agricultural inputs than other similar staples.

Health Benefits of Whole Grain Millets:

Millets are naturally high in calcium, iron, phosphorus, and potassium.

Compared to staple grains like rice, wheat, and maize, millets offer higher levels of Phyto-chemicals, such as phenolic compounds, which provide various health benefits.

The antioxidants and bioactive compounds in millets have been linked to anti-aging, anti-carcinogenic, antibacterial, and antioxidant properties, making them a valuable addition to a balanced diet.

What is the Status of millets in India:

India, Nigeria and China are the largest producers of millets in the world, accounting for more than 55% of the global production.

 In India, pearl millet is the fourth-most widely cultivated food crop after rice, wheat and maize.

Major producers of millets include Rajasthan, Andhra Pradesh, Telangana, Karnataka, Tamil Nadu, Maharashtra, Gujarat and Haryana. 

9. Semaglutide: Revolutionizing Diabetes and Obesity Treatment Amidst Challenges in India

Sub : Sci

Sec :Health

Why in News

The drug Semaglutide, specifically under brand names like Ozempic and Wegovy, has garnered widespread attention globally due to its dual efficacy in managing type 2 diabetes and obesity. Although its injectable form has made headlines internationally, the oral version is now available in India, enabling significant advancements in diabetes care and weight management. However, its high cost, limited access, and side effects pose challenges in a country where diabetes and obesity rates are on the rise.

About Semaglutide:

Semaglutide belongs to the Glucagon-like Peptide-1 (GLP-1) receptor agonists. It mimics the GLP-1 hormone produced by the small intestine post-eating, aiding digestion, insulin release, and appetite suppression.

It aids in type 2 diabetes management by increasing insulin production, lowering glucagon secretion, and slowing gastric emptying to help control blood glucose levels

Ozempic (injectable for diabetes), Wegovy (injectable for chronic weight management), and Rybelsus (oral tablet).

The U.S. FDA approved Ozempic in 2017 for diabetes and Wegovy in 2021 for weight management.

What is GLP-1?

GLP-1 (Glucagon-Like Peptide-1) is a hormone that regulates blood sugar by stimulating insulin production, reducing appetite, and slowing gastric emptying. GLP-1 receptor agonists like semaglutide are designed to enhance these effects, helping control blood sugar and manage body weight​

Advantages of Semaglutide:

Blood Sugar Control: Effective in lowering HbA1c, which is crucial in managing diabetes.

Weight Loss: Helps reduce appetite, leading to significant weight loss in patients with obesity and diabetes.

Anti-inflammatory Effects: May offer additional health benefits, such as potentially aiding asthma treatment due to its anti-inflammatory properties​

Concerns and Risks:

Side Effects: Common side effects include nausea, vomiting, and digestive issues. Some users may experience more severe gastrointestinal problems.

Long-term Safety: Limited long-term data is available on its extended use, especially at high doses for weight management.

Cost and Accessibility: High cost and limited insurance coverage can restrict access to this medication​

About Diabetes:

Diabetes is a chronic condition characterized by elevated blood glucose levels due to insulin dysfunction. There are three primary types: Type 1, Type 2, and Gestational Diabetes (GDM), each with distinct causes, symptoms, and management needs.

Type 1 Diabetes: Autoimmune disorder where the immune system destroys insulin-producing beta cells in the pancreas.

Leads to little or no insulin production, requiring daily insulin injections for glucose management.

Typically diagnosed in children or young adults; previously known as “juvenile diabetes.”

Type 2 Diabetes: Body’s ineffective use of insulin; linked to obesity and physical inactivity. Accounts for over 95% of diabetes cases globally.

Gestational Diabetes (GDM): High blood glucose levels during pregnancy, leading to health risks for both mother and child.

Generally, resolves post-pregnancy but increases the risk of Type 2 diabetes in the mother and child later in life.

10. 4th Round of Regional Rural Bank (RRB) Consolidation Initiated by Government

Sub : Eco

Sec: Monetary Policy

• Objective of Consolidation:
  • The Finance Ministry has proposed to reduce the number of RRBs from 43 to 28 across India, aiming for ‘One State-One RRB’ to enhance cost efficiency and operational effectiveness.
  • The purpose is to ensure that each state has only one consolidated RRB to cater to the rural population with improved cost efficiency and larger operational scale.
• Guiding Principles of Amalgamation:
  • In each state, the RRB with the largest business among the merging RRBs will be the transferee RRB.
  • The sponsor bank of the transferee RRB will continue as the sponsor bank of the new, amalgamated RRB.
  • The name of the newly amalgamated RRB may include the state’s name and “Gramin” in the local language.
  • The head office of the merged RRB will preferably be located at the existing head office of the transferee RRB or at the state capital.
• Background and Historical Consolidation:
  • RRBs have been consolidated in a phased manner based on recommendations of Dr. Vyas Committee (2001).
  • The first consolidation of RRBs began in 2004-05, resulting in a reduction from 196 RRBs to 43 by 2020-21 across three phases.
  • The current fourth round of consolidation is motivated by the need to minimize overhead expenses, optimize technology, expand capital, and strengthen rural outreach.
• Significance of RRBs in Rural Economy:
  • RRBs play a vital role in supporting the rural economy, especially through agriculture loans.
• As of March 31, 2024:
  • RRBs’ deposits totaled ₹6.6 lakh crore, comprising 3.2% of all bank deposits in India.
  • RRBs’ advances reached ₹4.7 lakh crore, accounting for 2.9% of all bank advances.
  • About 70% of RRBs’ credit supports the agriculture sector, and 64% targets weaker sections, including small and marginal farmers.
• Recent Financial Performance:
  • RRBs collectively posted a record net profit of ₹7,571 crore in FY 2023-24.
  • The Gross Non-Performing Assets (GNPA) ratio for RRBs was 6.1%, the lowest in the last 10 years.

About Regional Rural Banks (RRBs)

• Genesis: Established in 1975 on the recommendations of the Narsimhan Working Group (1975), after promulgation of an ordinance, which was later replaced by the Regional Rural Banks Act, 1976.
• Shareholding Pattern: Centre holds a 50% stake, Sponsor Banks hold 35%, and State Governments hold 15% in RRBs.
• They are Scheduled Commercial Banks (Government Banks) regulated by RBI and supervised by National Bank for Agriculture and Rural Development (NABARD).

11. ED Conducts Searches on Premises Linked to Key Vendors of Amazon and Flipkart

Sub : Eco

Sec: External sector

• Investigation Under FEMA:
  • The Enforcement Directorate (ED) conducted searches at 19 premises across Delhi, Bengaluru, Mumbai, Hyderabad, and Panchkula, targeting main vendors linked to Amazon and Flipkart.
  • These searches are part of an investigation under the Foreign Exchange Management Act (FEMA) due to alleged FDI rule violations by Amazon and Flipkart.
• Allegations of FDI Rule Violations:
  • Complaints have been filed against the e-commerce giants for directly or indirectly influencing the sale prices of goods and services.
  • It is alleged that they are not providing a level-playing field for all vendors, which disadvantages smaller vendors and businesses on these platforms.
• Concerns Raised by Trade Bodies:
  • CAIT and other trade organizations have been highlighting these issues for several years, arguing that the anti-competitive practices of Amazon and Flipkart negatively impact small traders and kirana stores.
• Competition Commission of India’s Action:
  • Previously, the Competition Commission of India (CCI) issued penalty notices to Amazon, Flipkart, and their preferred sellers for engaging in anti-competitive practices.
  • These practices are believed to have harmed small traders, limiting their ability to compete in the marketplace.

Models for E-Commerce Services in India

• Inventory Model: In this model, the e-commerce entity owns the inventory and sells directly to consumers. However, FDI (Foreign Direct Investment) is not allowed in inventory-based e-commerce to protect small, unorganized retailers from being overpowered by large foreign companies.
• Marketplace Model: E-commerce companies act as intermediaries, providing a platform for third-party vendors to sell directly to consumers. 100% FDI is allowed in this model under the automatic route, meaning foreign investment can flow without government approval, encouraging large global companies to enter the market as facilitators rather than retailers.

Restrictions on E-Commerce Operations

• Exclusive Selling Restrictions: E-commerce platforms cannot enforce exclusive selling agreements with sellers, and they must provide “fair and non-discriminatory” access to their services (e.g., logistics, payments, advertising) to all vendors equally.
• Inventory Sourcing Limits: Vendors who purchase 25% or more of their inventory from an e-commerce group company (i.e., owned by the e-commerce entity) are restricted from selling on that entity’s platform. This is to prevent large e-commerce companies from indirectly controlling sellers and influencing prices.

12. Prolonged Chinese Steel Imports May Impact Indian Steel Industry Investments

Sub : Eco

Sec: External sector

• Unfair Pricing of Chinese Steel Imports:
  • India’s steel imports from China have been identified as unfairly priced.
  • Chinese steel producers are reportedly selling at prices below production cost, leading to unfair competition as they can continue to sell even at a loss.
• Impact on Investment Plans:
  • If these low-cost imports continue, it could affect the investment plans of the Indian steel industry, impacting its growth and expansion strategies.
• Rising Demand for Steel in India:
  • India’s steel demand has surged due to rapid economic growth and increased infrastructure spending.
  • Steel demand reached a seven-year high in the April-August period, making India a major market for steel consumption, especially as demand slows down in the U.S. and Europe.
• India as a Net Importer of Finished Steel:
  • Despite being the world’s second-largest producer of crude steel, India remains a net importer of finished steel.
  • Steel imports from China have hit a seven-year high during the April-August period.
• Chinese Steel Imports from Southeast Asia:
  • Apart from direct imports, some Chinese steel is entering India through Southeast Asian countries, increasing competition for domestic producers.
• Government Response and Industry Appeals:
  • The Indian government has initiated an anti-dumping investigation on steel products imported from Vietnam.
  • The industry is seeking higher import tariffs or safeguard measures to counter rising steel imports and stabilize the local market.
• Price Trends for Flat Steel Products:
  • Due to the ongoing influx of Chinese steel, prices for flat steel products in India are expected to remain range-bound, limiting profitability for local producers.

Dumping :

 If a company exports a product at a price lower than the price it normally charges on its own home market, it is said to be “dumping” the product.

Safeguard Measures under WTO:

• Anti-Dumping Duty: Imposed when a foreign company exports a product at a price lower than its home market value, to protect local industries from unfair competition.
• Countervailing Duty: Imposed to counteract subsidies given by foreign governments to their exporters, which distort trade.
• Quotas: Limits the quantity of a particular product that can be imported during a set period.

Tariffs: Taxes on imported goods to protect domestic industries or raise revenue.

• Anti-dumping duties are imposed when it is conclusively proved that a particular item is being exported at a price lower than what is prevailing in the domestic market of the exporter and is leading to disruption in the domestic market, injuring the local producers
  • An anti-dumping duty is a protectionist tariff that a domestic government imposes on foreign imports that it believes are priced below fair market value.
  • The duty is imposed only after a thorough investigation by a quasi-judicial body–the Directorate General of Trade Remedies-in India. It is aimed at ensuring fair trade practices and creating a level-playing field for domestic producers.
    • Post initiation of the probe, the government can levy customs duties..
• The DGTR recommends the duty, and the Department of Revenue takes the final decision to impose it.
• The imposition of anti-dumping duty is permissible under the World Trade Organization (WTO) regime.