What’s in Today’s Article?

• Why in News?
• What to Expect from India-UK FTA?
• Significance of the India-UK FTA
• What has Spurred the India-UK FTA?
• What will India and the UK Gain from the India-UK FTA?
• Challenges in the India-UK FTA

Why in News?

• The External Affairs Minister (EAM) of India discussed the India-UK Free Trade Agreement (FTA) with Britain’s PM and Foreign Secretary.
• This round of talks comes amid the bilateral trade between India and the U.K. increased to $20.36 billion in 2022-23 from $17.5 billion in 2021-22. 

What to Expect from India-UK FTA?

• Merchandise trade: Indian products like petroleum, medicines, diamonds, machine parts, aeroplanes, and wooden furniture worth $6 billion face no tariffs in the UK, even without the FTA. These will not gain from the FTA.
• Services:
  • An area of immediate advantage for India is persuading the UK to issue priority visas to Indian professionals travelling to the UK to perform short-term assignments.
  • However, obtaining a large number of short-duration business visas from the UK may not be easy, as the UK erroneously associates visas with immigration, a sensitive issue since Brexit.
• Rules of origin:
  • This will ensure that products from third countries only receive FTA benefits if they undergo significant transformation in the exporting country.
  • India prefers conservative rules of origin compared to most developed countries, leading to extended discussions and negotiations.
• Government procurement
  • Allowing the UK producers to sell to India’s government procurement sector would bring them on par with Indian firms.
  • On the other hand, Indian firms face a competitive and restricted government procurement market in the UK with little business prospects. India needs to be conservative and careful.
• Labour standards, gender, environment, digital trade, IPRs: India must make domestic rules/standards before taking commitments under the FTAs. Till then, India must avoid taking onerous obligations on non-trade issues.

Significance of the India-UK FTA

• When signed, the India-UK FTA will serve as a template for an agreement with India’s 2nd-largest trade partner, the European Union (EU).
• Breaking from the look east policy for trade deals that saw widening deficits with Japan, South Korea, and ASEAN countries, the government is counting on economic integration with Western and African nations to fuel export growth.

What has Spurred the India-UK FTA?

• The China factor:
  • The disruption of supply chains during the pandemic brought home to Western companies the risks of over-dependence on China, and the need for a ‘China-plus one’ policy.
  • Australia’s tensions with China, along with the complementarities with the Indian economy, presented a case for a trade deal with India; similar factors brought New Delhi and London to the negotiating table.
• India exiting from Regional Comprehensive Economic Partnership (RCEP): India, after exiting the China-dominated RCEP, has been looking at trade deals with the UK, Australia, the EU, to hold off China in the region.
• Spurred by Brexit: A trade deal with India is crucial for the UK as the ruling Conservatives face a tough election in early 2025.

What will India and the UK Gain from the India-UK FTA?

• India:
  • India’s labour-intensive sectors such as apparel and gems and jewellery have seen a steep decline in market share over the last five years.
  • Indian textile exports face tariffs as high as 10% in the UK; a trade deal could put India on par with competition such as Bangladesh, and revive textile exports.
• UK:
  • Notably, the average tariff on goods imported from India into the UK is 4.2% but the average tariff in India on goods imported from the UK is 14.6%
  • British exports to India such as cars, Scotch whisky, and wines, face considerable tariffs of 100-150%.
  • Tariff reductions on these goods will potentially offer UK deeper access into Indian markets.

Challenges in the India-UK FTA

• Elimination of duty does not automatically result in export growth: Past deals with Japan and the ASEAN countries have shown that. Also, many Indian exports to the UK already enjoy low or zero tariffs.
• Warning from the British Parliament: Granting zero-duty access to Indian textiles under the FTA could bring stress on Least Developed Countries such as Bangladesh.
• Non-tariff barriers (NTBs):
  • Modern FTAs go beyond tariff reduction. India could use the negotiations to eliminate NTBs that have historically been a concern for exporters, especially for agri exports.
  • NTBs often come in the form of regulations, standards, testing, certification, or pre shipment inspection that are aimed at protecting human, animal, or plant health and the environment.
• Issue of carbon tax:
  • Like the EU, the UK is looking to impose a levy on metal imports based on carbon emissions.
  • An EU-style carbon border adjustment mechanism (CBAM) will hurt India’s exports to the UK even if India wins significant removal of tariffs.

Q1) What is the Carbon Border Adjustment Mechanism (CBAM)?

The CBAM is a carbon tariff on carbon intensive products, such as cement and some electricity, imported by the European Union. Legislated as part of the European Green Deal, it takes effect in 2026, with reporting starting in 2023.

Q2) What is the Regional Comprehensive Economic Partnership (RCEP)?

The RCEP is a free trade agreement (FTA) between the ten member states of the ASEAN and its five FTA partners (Australia, China, Japan, South Korea and New Zealand).

Source: Proposed India-UK FTA, its politics, and why the UK may benefit more | TH

What’s in today’s article?

• Why in news?
• Background: ongoing fighting in the Rikhawdar area
• The current round of fighting
• How is the current situation different from the protests and fighting of the last two years?
• What does this situation mean for India?

Why in news?

• The Ministry of External Affairs has expressed deep concern over the ongoing fighting in the Rikhawdar area in Myanmar’s Chin State.
  • The area is close to the border with India opposite Zowkhathar in Mizoram.
• This fighting has led to Myanmarese nationals crossing to the Indian side.
• 

Background

• Myanmar has been in flames ever since the military seized power on February 1, 2021.
  • On this day the new parliament elected after the November 2020 elections was to convene.
• Ethnic Armed Organisations (EAOs) have joined armed civilian groups called People’s Defence Forces (PDFs) to take on the military.
  • These groups have allied with the country’s self-declared National Unity Government in exile.
• The resistance forces have captured two towns close to the India-Myanmar border after fierce fighting.
• The fall of the latter, Rikhawdar, has resulted in the influx of some 5,000 refugees into Mizoram.

The current round of fighting

• It began on October 27 with surprise attacks in Shan State in North Myanmar along the border with China, by the Three Brotherhood Alliance.
  • The alliance is a front of three EAOs:
    • the Myanmar National Democratic Alliance Army (MNDAA),
    • the Ta’ang National Liberation Army, and
    • the Arakan Army.
• The offensive was named Operation 1027, after the date on which it was launched.
• The resistance forces are reported to have overrun more than 100 military outposts in Shan State and seized control of crucial border towns and checkpoints.
  • This includes Chinshwehaw, a critical point on the China-Myanmar border trade route, which is an important source of revenue for the junta.
• Fighting has also broken out elsewhere in the country, led by various local resistance forces.

How is the current situation different from the protests and fighting of the last two years?

• Fierce multi-pronged resistance
  • Despite a brutal crackdown, including carrying out airstrikes on rebel gatherings, the junta has not succeeded in establishing control over large parts of the country.
  • The ongoing multi-pronged offensive by the resistance forces is seen as the stiffest challenge to the junta since the coup more than two and a half years ago.
• Members of the Myanmar army and police are surrendering
  • Among those who fled to Mizoram after Rikhawdar was captured by Chin fighters, were 73 members of the Myanmar army and police.
  • Rebel groups have claimed that members of the junta forces have surrendered elsewhere, too.
• Coordination among the various rebel groups
  • What distinguishes the current offensive is:
    • the unprecedented level of coordination among the various rebel groups, and
    • the inability of the military to mount an adequate response.
• Support from China
  • The resistance in Shan State appears to be receiving tacit support from China, Myanmar’s giant neighbour and biggest trade partner.
  • China has been pressing the military government to crack down on the enclaves of scam centres on the Myanmar-China border, which have been targeting Chinese citizens.
• Country might be split into various parts
  • If the government does not effectively manage the incidents happening in the border region.

What does this situation mean for India?

• Creating a balance
  • India has so far walked a fine line between expressing concern at the interruption of democracy in Myanmar, and engaging with the junta to protect its vital interests.
• Immediate concern for India
  • The influx of Myanmarese nationals in the border states of the Northeast.
  • This too at a time when the situation in Manipur remains volatile.
• Capturing of two important towns by rebels
  • The anti-junta forces have captured two important towns close to the only two border crossing points between Myanmar and India. These are:
    • Rikhawdar, close to Zokhawthar in Mizoram, and
    • Khampat in Sagaing region, around 60 km from Moreh in Manipur.
  • The latter (Khampat in Sagaing region) is also part of the proposed India-Myanmar-Thailand trilateral highway project.

Q1) What is Rikhawdar area?

Rikhawdar is a border town in the Falam District of Chin State, Myanmar. It's located opposite Zokhawthar in Mizoram, India. The town is also known as Rih.

Q2) What is India-Myanmar-Thailand trilateral highway project?

The 1,400-kilometer highway begins in Moreh in India's Manipur state, passes through Myanmar, and ends at Mae Sot in Thailand.

Source: The new flare-up in Myanmar | Indian Express

What’s in Today’s Article?

• What is Federalism?
• Features of Centralised Federalism in India
• Federal Frictions between Centre & States
• Economic Consequences of the Federal Frictions
• Interdependence between Centre & States

Why in the News?

• Disputes between the Centre and States regarding economic policies have a long history in India.
• However, in recent years the frequency and intensity of such disputes have increased and assumed the character of ‘persistent frictions’ in the federal system.

What is Federalism?

• Federalism is a system of government in which the power is divided between a central authority (Central governments) and various constituent units (State governments) of the country.
• The Constitution makers adopted a unique model of a federal structure for independent India which is often called ‘centralised federalism’.
• This is because unlike classical federalism like the United States (US) or Canada, the Constitution is mandatory for a structurally more powerful Union government in many key areas.
• The decision of the founding fathers to create a stronger Centre is attributed to their fear of growing secessionist tendencies in a country which had suffered from the legacy of partition during independence.

Features of Centralised Federalism in India

• The Union government enjoys superior powers vis-à-vis the states in crucial matters such as the discretion to reconstruct the boundaries of the states.
• The Union list contains more subjects than the State list and its law prevails over states even on the subjects in the Concurrent list.
• Also, the Parliament can legislate on any state subject under extraordinary circumstances, importantly, the Centre enjoys massive control over economic resources.
• Also, the Centre has the power to appoint governors in the states and can dissolve state governments by proclaiming the president’s rule if the Centre deems fit.

Federal Frictions between Centre & States

• The current context of economic relations between the Centre and States is very different from the 1980s and 1990s.
• Continuing economic reforms since 1991 has led to the relaxation of many controls on investments, giving some room to States.
• However, the autonomy regarding public expenditure policies is not absolute as State governments depend on the Centre for their revenue receipts.
• Several States have recently pushed back as a result of which the ‘give and take’ equation between the Centre and the States has given way to a more hardened stand by both, leaving little room to negotiate.
• The increasingly fractious Centre-State ties have chipped away at the edifice of cooperative federalism.
  • Cooperative federalism means a combination of cooperation and interdependence between the Centre and the States to ensure smooth governance of the country.

Economic Consequences of the Federal Frictions

• Centre starts crowding out the States in terms of investments:
  • An interesting case is that of infrastructure development in recent years.
  • The Centre launched the PM Gati Shakti, a digital platform, to incorporate schemes of various Ministries and State governments to achieve integrated planning and coordinated implementation of infrastructure connectivity projects.
  • All States and UTs had to prepare and operationalise a State master plan in line with the national master plan for seamless implementation.
  • However, the flexibility of States in formulating their master plan is curtailed by the centralisation of planning and implementation of the national master plan.
• Fiscal competition between the Centre and States:
  • In a federal system, fiscal competition manifests between different regions/States.
  • However, in a scenario of frictions with the Centre, State governments will engage in competition with other States and with the Centre. Welfare provisioning is one such area.
  • The Centre with enhanced fiscal space has more spending power, while States’ revenues, especially non-tax revenues, remain flat as possibilities of raising non-taxes are confined to a smaller sphere due to the direct provisioning of many utilities and services by the Centre.
• Inefficiencies associated with ‘parallel policies’:
  • Federal abrasions lead to either the Centre or the States duplicating the other’s policies.
  • The case of pension reforms is one such example of parallel policies developed by the States.
  • The National Pension System (NPS) changed the architecture of the pension system in India from a defined benefit scheme to a defined contribution scheme.
  • The scheme, mandatory for all central government employees, enlarged its scope and coverage with most of the States joining at different points of time.
  • Though States joined the NPS initially, some States have started to roll back to the old pension scheme as the fiscal cost of reverting would be visible only after 2034 when most of the newly joined employees retire.
  • The emergence of such parallel schemes is mainly due to the trust deficit prevailing in the federal system, the fiscal costs of which have long run consequences on the economy.

Interdependence between Centre & States

• For securing the implementation of many of its laws and policies, the Centre depends on the States, particularly in the concurrent spheres.
• The States also entrust their executive functions, with the consent of the Centre, to the government or agencies of the Centre (Article 258A).
  • Article 258A provides for the power of the States to entrust functions to the Union. It was inserted by the Constitution (Seventh Amendment) Act, 1956.
• Such interdependence is inevitable, especially in a large, diverse, developing society and needs to be preserved.

Q1) What is Competitive Federalism?

It encourages healthy competition among states through transparent rankings, in various sectors, along with a hand-holding approach.

Q2) What is the Parliamentary form of Government? 

Parliamentary system, democratic form of government in which the party (or a coalition of parties) with the greatest representation in the parliament (legislature) forms the government, its leader becoming prime minister or chancellor.

Source: The price of persistent federal frictions | ORF

What’s in today’s article?

• Why in news?
• Global South
• What constitutes the Global South?
• India Emerged As The Voice Of Global South
• News Summary: Second Voice of Global South Summit
• Key highlights of the summit

Why in news?

• The second Voice of Global South summit took place in virtual mode. This was the second time that India hosted the summit since January 2023.
  • The first summit was themed as "Energy Security and development: Roadmap to Prosperity".
  • It brought together 125 countries of the Global South to share their perspectives and priorities on a common platform in the run up to G20 Leaders Summit that was held in September 2023 in New Delhi.

What constitutes the Global South?

• Not a geographical line
  • Despite how it sounds, it is not really a geographical term.
  • Many countries included in the Global South are in the northern hemisphere, such as India, China and all of those in the northern half of Africa.
  • Australia and New Zealand, both in the southern hemisphere, are not in the Global South.
• Brandt Line as the border
  • Many people refer to the Brandt Line as the border.
    • The line was proposed by former German Chancellor Willy Brandt in the 1980s as a visual depiction of the north-south divide based upon per-capita GDP.
  • It starts in the north of Mexico, goes across the top of Africa and the Middle East, makes a loop around India and China, and then goes down to include most of East Asia. It doesn't include Japan, Australia, or New Zealand.
  • 
• Global South as a concept
  • The Global South is a geographical, geopolitical, historical and developmental concept, all at the same time — with exceptions.

India Emerged As The Voice Of Global South

• One of the various visions of G20 presidency
  • When India assumed the G20 presidency on December 1, 2022, it set out various visions for the nation's year-long presidency and the Global South was one of them.
  • India organized eight ministerial-level thematic segments to address the most pressing concerns of the developing world.
• Raised the issues concerning Global South
  • On the international forums and at UN meetings and conferences.
• During Covid-19 pandemic
  • Made-in-India vaccines were sent to about 100 countries. And about 150 nations imported medicines during this period from the Pharmacy of the World.
• Hosted the Voice of Global South Summit
  • India hosted the Voice of Global South Summit virtually in January 2023 with representatives from 125 countries.
  • India even ensured that the region remained centre stage at the G7 Summit in Hiroshima in May this year.
• African Union as a full member of the G20 under India’s presidency.
• The 15th BRICS Summit in South Africa
  • During this summit, PM Modi said that the Global South is not just a diplomatic term but represents the shared history of these countries against colonialism and apartheid based on which modern relations are being reshaped.
• Two-day event on international taxation
  • In an attempt to voice the views of the Global South on important international issues, India held a two-day event on International Taxation at the National Academy of Direct Taxes (NADT).
  • This event was an initiative of the Indian Presidency to bolster capacity building for Indian tax officials in the area of International Taxation, with a global south perspective.
• India-UN Capacity Building Initiative
  • In September 2023, the “India-UN Capacity Building Initiative” was announced at the event India-UN for the Global South-Delivering for Development.
  • The initiative aims to share the country's best practices with partner countries in the Global South.

News Summary: Second Voice of Global South Summit

• India hosted the second Voice of Global South Summit (VOGSS) in virtual mode.
• The theme of the inaugural leaders’ session was ‘Together, for Everyone’s Growth, with Everyone’s Trust’ and that of the concluding leaders’ session was ‘Global South: Together for One Future’.
• Summit would focus on sharing with countries of the Global South the key outcomes achieved in various G20 meetings over the course of India's Presidency.

Key highlights of the summit

• Inauguration of DAKSHIN
  • PM Modi inaugurated a global centre for excellence for the Global South countries called DAKSHIN.
  • PM had proposed setting up the centre during the first Voice of Global South Summit in January.
• Proposal to launch a satellite
  • During the G20 Summit, India proposed to launch a satellite for monitoring weather and climate monitoring for Global South.
  • During this summit, PM assured that India is working on it at a fast pace.
• PM coined 5 ‘Cs’ for the Global South
  • 5 ‘Cs’: consultation, cooperation, communication, creativity & capacity building.
• On Israel-Palestine conflict
  • PM noted that India has condemned the terrorist attack on Israel on October 7.
    • India also sent humanitarian aid to the people of Palestine.
  • At the same time, India also strongly condemned the deaths of civilians in the conflict between Israel and Hamas.

Q1) What is G20 Summit?

The Group of 20 (G20) is an intergovernmental forum that meets annually to discuss global economic and political issues. The G20 includes 19 sovereign countries, the European Union (EU), and the African Union (AU). 

Q2) What is a Global Centre for Excellence?

The Global Centre for Excellence (GCE) provides strategic consulting and project management services. GCE collaborates with regional and international experts to deliver professional advisory services.

Source: PM Narendra Modi inaugurates Global South Centre of Excellence | PIB | Indian Express