Context:

• The Union Budget 2024-25 proposes revamping the 2015 Model BIT to attract more foreign investment.
• Experts suggest a dual-model BIT strategy tailored to India's varying relationships with capital-exporting and capital-importing countries.

The 2015 Model BIT - A Decade of Defensiveness:

• India’s 2015 Model BIT emphasized sovereignty and regulatory autonomy.
• Included clauses such as:
  • Mandatory exhaustion of local remedies (for at least 5 years) before invoking international arbitration.
  • Narrow definition of investment.
• Result: Failed to gain traction globally and deterred potential investors.

Dual BIT Models - “Horses for Courses” Approach:

• Proposal:
  • Defensive BIT for capital-importing relationships (e.g., with African nations).
  • Investor-friendly BIT for capital-exporting ties (e.g., with countries where Indian companies invest heavily).
• Objective: Maximize benefits by aligning treaty terms with economic roles.

Flaws in the Dual BIT Approach:

• Dynamic economic relations:
  • Countries’ capital relationships evolve—India was a capital importer in 1994 with the UK, but now is a capital exporter.
  • Challenge: Difficult to permanently categorize countries as capital importers/exporters.
• Legal inconsistency:
  • Different BIT models imply divergent stances on legal norms (e.g., investor-state dispute settlement [ISDS] mechanism).
  • Undermines India’s credibility in international negotiations and multilateral forums such as the UN Commission on International Trade Law (UNCITRAL), currently discussing ISDS reforms.

Most Favoured Nation (MFN) Clause - Misunderstood Origins and Role:

• Clarifying MFN history:
  • Experts claim: MFN is rooted in multilateral treaties.
  • Historical fact: MFN clauses existed in bilateral commercial treaties since the 17th century.
• Importance in BITs:
  • The MFN clause ensures non-discriminatory treatment among treaty partners.
  • Contrary to claims, MFN clauses enhance treaty fairness and uphold the principle of equality.

Towards a Balanced BIT Framework:

• One model, better design: The key lies not in multiple models, but in creating a single, balanced BIT that:
  • Ensures investment protection.
  • Retains sovereign regulatory space.
  • Projects a principled and predictable stance in international law.

Conclusion:

• India must craft a BIT model that adapts to changing global investment patterns while maintaining consistency and legal credibility.
• A strategic, balanced, and investor-conscious model is vital for securing both foreign investments and the interests of Indian investors abroad.

Q1. What are the key features of India’s 2015 Model Bilateral Investment Treaty (BIT)?

Ans. India’s 2015 Model BIT emphasizes state sovereignty and includes provisions such as mandatory exhaustion of local remedies before invoking international arbitration.

Q2. Critically examine the proposal to adopt dual-model BITs based on India’s capital relationship with other countries.

Ans. While dual BITs aim to align with India’s capital flow dynamics, they risk inconsistency in legal commitments and weaken India’s credibility in global treaty negotiations.

Q3. How does the Most Favoured Nation (MFN) clause function in bilateral investment treaties?

Ans. The MFN clause ensures non-discriminatory treatment by extending any favorable terms given to one country to all other treaty partners.

Q4. Why is the investor-state dispute settlement (ISDS) mechanism controversial in the context of BITs?

Ans. ISDS allows foreign investors to bypass domestic courts, raising concerns over national sovereignty and uneven power dynamics in international arbitration.

Q5. Why is it important for India to adopt a consistent and balanced BIT model in the current global investment climate?

Ans. A consistent and balanced BIT model promotes legal predictability, protects Indian and foreign investors, and strengthens India’s position in multilateral economic negotiations. 

Source:IE

Context

• The Supreme Court of India’s recent judgment in The State of Tamil Nadu vs Governor of Tamil Nadu marks a watershed moment in the country’s constitutional jurisprudence.
• Not only did it assert judicial authority over the executive’s inaction, but it also sought to restore the sanctity of democratic legislative processes in the federal structure of India.
• By invoking Article 142 of the Constitution, the Court undertook the unprecedented step of fixing time limits for gubernatorial and presidential assent to State Bills.
• This move, while historic, has stirred significant debate regarding the separation of powers and the evolving scope of constitutional interpretation.

The Significance of the Judgment

• This landmark verdict centres around the interpretation of Articles 200 and 201 of the Indian Constitution, which define the roles of Governors and the President concerning State legislation.
• The Court emphasised that Governors are not autonomous veto-wielders but constitutional functionaries expected to uphold the legislative will of the people.
• By ruling that neither the Governor nor the President can indefinitely delay their response to Bills, the Court set in motion a profound recalibration of executive-legislative relations at the State level.
• The judgment explicitly refuted the notion that Governors possess the authority to obstruct the legislative process.
• It underscored that the power to return a Bill for reconsideration must be exercised within a reasonable timeframe, and once the legislature reiterates its decision, the Governor is constitutionally obligated to provide assent.
• Similarly, Article 201 obligates the President to either grant or withhold assent or seek further reconsideration, again within defined limits.
• The Court, therefore, sought to address the procedural ambiguity that had previously allowed for executive stalling.

Judicial Innovation, Constitutional Interpretation, Accountability, and the Need for Reasoned Orders

• Judicial Innovation and Constitutional Interpretation
  • A core feature of this judgment is its progressive interpretation of constitutional provisions.
  • Indian constitutional law has long favoured a dynamic and purposive reading of the Constitution, and this verdict continues in that tradition.
  • The Court rejected the idea of reading the Constitution in a rigid or mechanical fashion, opting instead for an organic approach that aligns with evolving democratic ideals.
  • The precedent cited from A.K. Gopalan (1950) to K.S. Puttaswamy (2017) illustrates the judiciary’s evolving understanding of rights and governance.
  • Similarly, this case required a panoramic view that moved beyond textualism to safeguard the democratic will of State legislatures.
  • Drawing upon recommendations from the Sarkaria Commission and foundational judgments such as Shamsher Singh vs State of Punjab (1974), the Court reaffirmed the principle that Governors must act on the advice of the elected State government, and cannot exercise personal discretion to stall laws.
• Accountability and the Need for Reasoned Orders
  • One of the most notable contributions of the judgment is the insistence on reasoned orders when withholding assent.
  • The Court categorically rejected the idea of ‘simpliciter withholding’ of Bills, calling instead for transparent and accountable decision-making by constitutional functionaries.
  • The ruling not only removes the perceived immunity of the Governor and the President in legislative processes but also reinforces the principle that all constitutional actors are subject to judicial review.
  • In doing so, the Court has affirmed that ‘complete justice’ under Article 142 includes the power to ensure that democracy is not subverted by procedural delay or executive indifference.
  • The concept of ‘deemed assent,’ though not explicitly mentioned in the Constitution, was creatively constructed by the Court to fill the lacuna created by such inaction.

Critical Reflections and Suggestions

• Despite its merits, the judgment has not escaped criticism.
• The Governor of Kerala, among others, has accused the Court of overreach, arguing that the judiciary has intruded into the domain of the executive and Parliament.
• However, such criticisms appear misplaced when viewed through the lens of constitutional pragmatism and necessity.
• The Court did not legislate but rather interpreted existing provisions in light of democratic imperatives.
• Nevertheless, the judgment prompts a few constructive suggestion First, the sheer length of the verdict, 414 pages, raises concerns about accessibility and efficiency.
• In crucial constitutional matters, the Court could adopt the practice of issuing shorter, more focused judgments, as seen in the UK Supreme Court's Miller decision on Brexit, which spanned just 24 pages.
• Clarity and promptness are vital in moments of political and constitutional uncertainty.
• Second, the Court must enhance its internal procedural mechanisms to handle similar cases more efficiently.
• The post-verdict request by the State of Kerala for a similar ruling underscores the need for better case management.
• Grouping related matters before a single Bench would ensure consistency, reduce redundancy, and enhance judicial coherence.

Conclusion

• The Supreme Court’s verdict in the Tamil Nadu vs Governor case stands as a monumental affirmation of democratic values and judicial courage.
• It corrects long-standing structural imbalances in the Indian federal setup, asserting the principle that elected legislatures must not be held hostage by constitutional functionaries.
• By embracing purposive interpretation and asserting judicial oversight over executive inaction, the Court has paved the way for a more accountable and people-centred constitutional order.
• As India’s democratic framework continues to evolve, such bold and thoughtful adjudication will remain essential to maintaining the delicate balance between power and accountability.

Q1. What was the main issue in The State of Tamil Nadu vs Governor of Tamil Nadu case?

Ans. The indefinite delay by the Governor in giving assent to State Bills.

Q2. Which constitutional article did the Supreme Court invoke to ensure “complete justice”?

Ans. The Supreme Court invoked Article 142 of the Constitution. 

Q3. What key principle did the Court assert regarding Governors?

Ans. Governors must not obstruct laws passed by elected legislatures.

Q4. What did the judgment say about “withholding” assent without explanation?

Ans. It rejected “simpliciter withholding” and demanded reasoned orders.

Q5. Why was the verdict seen as a step toward stronger democracy?

Ans. It upheld the legislative will of the people and increased accountability of constitutional authorities. 

Source:The Hindu

Context

• Achieving a net-zero economy is one of the most pressing challenges of the 21st century.
• As nations around the world transition toward sustainable energy systems, electrification of energy end-uses emerges as a foundational pillar in this shift.
• However, this transformation extends beyond simply replacing fossil fuels with renewable electricity.
• It requires a comprehensive reimagining of industrial processes, energy generation, and storage, placing nuclear power and hydrogen at the forefront of the strategy.

The Necessity of Electrification and Hydrogen Integration

• The bulk of current fossil fuel usage is for purposes beyond electricity generation, notably in providing heat and essential molecules in industrial processes.
• For instance, carbon from coal is a critical component in steel production, while hydrogen derived from natural gas is vital in manufacturing ammonia, a key input in fertiliser production.
• Transitioning to a net-zero economy mandates replacing these fossil-derived molecules with cleaner alternatives.
• In this context, hydrogen becomes indispensable, not just as an energy carrier but also as a feedstock substitute in industrial operations.
• In steel manufacturing, for example, hydrogen can substitute carbon, enabling a cleaner reduction of iron ore.
• Similarly, widespread electrification must be complemented by strategic deployment of hydrogen, especially where direct electrification is impractical or inefficient.

Rising Power Demand and the Role of Nuclear Energy

• Forecasts by energy researchers indicate a significant increase in power demand as India progresses toward a developed, net-zero economy.
• While solar, wind, and hydroelectric power are critical components of the energy mix, they alone cannot meet the growing electricity requirements.
• Nuclear energy, with its capability to provide stable and continuous power, becomes an essential complement.
• Recognising this, the Indian government has set an ambitious goal of achieving 100 GW of installed nuclear capacity by 2047.
• The Nuclear Power Corporation of India Limited (NPCIL) is actively working to realise this vision through the deployment of Pressurised Heavy Water Reactors (PHWRs).
• Several projects are already underway across Gujarat, Rajasthan, and Haryana, with a planned fleet of 26 PHWRs rated at 700 MW.
• Furthermore, NPCIL is promoting the development of 220 MW Bharat Small Reactors (BSRs) for captive industrial use, leveraging indigenous capabilities and manufacturing infrastructure.

Challenges in Balancing Low-Carbon Energy Sources

• The Challenge of Grid Stability in a Low-Carbon Future
  • As nations transition toward low-carbon energy systems, one of the most pressing operational challenges is balancing electricity supply and demand in real time.
  • In a fossil fuel-dominated system, this balancing act is relatively straightforward, conventional coal or gas-fired plants can be ramped up or down as needed to match demand.
  • However, in a system dominated by low-carbon sources like solar, wind, hydro, and nuclear, maintaining grid stability becomes far more complex.
• Intermittency and Operational Constraints of Renewables
  • Solar and wind energy, while environmentally sustainable, are inherently intermittent and variable.
  • Solar generation peaks during the day and drops to zero at night, while wind patterns are less predictable and can vary by region and season.
  • Hydroelectric power is more consistent but is constrained by geography and seasonality.
  • Nuclear energy, on the other hand, provides a stable and continuous source of power but is typically designed to operate best at a constant, "base load" output rather than being flexed to follow demand fluctuations.
• Limitations of Flexing Nuclear Power for Load Balancing
  • As the share of renewable energy increases and fossil generation is phased out, a new paradigm for grid balancing must emerge, one that does not rely on carbon-intensive methods.
  • While some experts suggest the possibility of flexing nuclear power plants to match grid demand, this approach faces significant limitations.
  • Technically, altering the output of nuclear reactors is challenging due to the complexity of their operation and the long-term planning required for fuel cycles.
  • Economically, it is also inefficient: nuclear plants are capital-intensive assets designed for constant operation to maximize their return on investment.
• Operating them at partial load levels reduces their cost-effectiveness, especially since variable costs do not decrease proportionally with reduced output.

The Way Forward

• Hydrogen Electrolysis as a Grid Balancing Solution
  • Given these constraints, the need for innovative, non-fossil solutions to balance low-carbon electricity becomes paramount.
  • One such promising solution is the integration of hydrogen production through electrolysis.
  • Electrolysers can serve as dynamic and flexible loads on the grid, absorbing excess power when supply exceeds demand, such as during peak solar or wind generation hours.
  • This not only prevents the wastage of renewable electricity but also helps stabilise the grid without compromising the continuous operation of nuclear plants.
• Decoupling Supply and Demand Through Hydrogen Production
  • The use of grid-connected electrolysers introduces an elegant solution: instead of curtailing solar or wind energy or flexing nuclear reactors, surplus electricity can be redirected to produce hydrogen, a versatile energy carrier and industrial feedstock.
  • This approach effectively decouples electricity supply from immediate demand, creating a buffer that supports grid reliability and emissions reductions.

Conclusion

• The road to a net-zero economy is complex and multifaceted, requiring a coordinated transformation of energy generation, industrial practices, and policy frameworks.
• Electrification, coupled with the strategic use of hydrogen, holds the key to decarbonizing end-use sectors.
• Nuclear power, with its base-load stability, must be integrated into the energy mix to meet growing demand.
• Forward-looking policy changes, such as redefining hydrogen categories and promoting integrated energy solutions, can unlock synergies and accelerate the transition. 

Q1. Why is balancing low-carbon energy sources challenging?

Ans. Balancing low-carbon energy sources is challenging because solar and wind are intermittent, and nuclear power plants are designed to operate continuously at a constant output, making it difficult to adjust generation based on fluctuating demand.

Q2. Why isn't flexing nuclear power plants a preferred solution?

Ans. Flexing nuclear power plants is not preferred because it is technically complex and economically inefficient due to their high capital costs and the minimal reduction in variable costs when operating at lower power.

Q3. What current method helps balance solar generation in India?

Ans. In India, coal-fired power plants are currently flexed—meaning their output is adjusted—to balance the electricity supply during periods of high solar generation.

Q4. How can hydrogen help balance the grid?

Ans. Hydrogen can help balance the grid by using surplus electricity to power electrolysers, which produce hydrogen, thereby preventing waste and maintaining grid stability.

Q5. What advantage does hydrogen production offer over battery storage?

Ans. Hydrogen production offers the advantage of serving both as a grid-balancing tool and as a valuable industrial input, often at a lower cost and with greater flexibility than large-scale battery storage. 

Source:The Hindu