What’s in today’s article?

• Why in News?
• What is Financial Action Task Force (FATF)?
• What is FATF’s Mutual Evaluation Process?
• Key highlights of the FATF’s mutual evaluation report on India

Why in News?

Global anti-money laundering and terror financing body FATF has launched its mutual evaluation report on India. The report commending the country's systems to tackle the menace of money laundering and terror financing. It also urged India to expedite its prosecutions in financial fraud cases.

What is Financial Action Task Force (FATF)?

• About
  • Set up in 1989, FATF is the global money laundering and terrorist financing watchdog.
  • It was established during the G7 Summit in Paris.
  • It currently comprises 38 member jurisdictions and 2 regional organisations.
  • India became an Observer at FATF in 2006. On June 25, 2010 India was taken in as the 34th country member of FATF.
  • The inter-governmental body sets international standards that aim to prevent these illegal activities and the harm they cause to society.
  • The FATF functions as an independent body guiding policy, with its president selected by the plenary for a one-year period.
  • The FATF Secretariat is located at the OECD headquarters in Paris.
• Functions
  • The FATF has developed the FATF Recommendations, or FATF Standards, which ensure a co-ordinated global response to prevent organised crime, corruption and terrorism.
  • It also works to identify national-level vulnerabilities with the aim of protecting the international financial system from misuse.
  • They help authorities go after the money of criminals dealing in illegal drugs, human trafficking and other crimes.
  • It also works to stop funding for weapons of mass destruction.

What is FATF’s Mutual Evaluation Process?

• About
  • Mutual Evaluation Process is a comprehensive and rigorous assessment conducted to evaluate a country's compliance with international standards for combating money laundering (ML) and terrorist financing (TF). 
  • India and FATF’s mutual evaluation report
  • In its previous evaluation in June 2010, India was placed in the “regular follow-up” category, which was removed in June 2013.
  • India's next assessment is set for 2031.

Key highlights of the FATF’s mutual evaluation report on India

• India in the regular follow-up category
  • FATF placed India in the “regular follow-up” category for its compliance with anti-money laundering (AML) and counter-terror financing (CTF) recommendations.
    • This category signifies a high level of compliance in combating ML and TF, though some non-financial sectors require improvement in supervision and preventive measures.
  • This classification is shared by only four other G20 countries [the UK, France, Italy and Russia (now suspended from FATF)]. 
    • Most of the developing countries are in the enhanced follow-up category, which requires submission of reports on an annual basis, as against once in three years in the “regular follow-up” category.
  • India complied/largely complied with 37 of 40 recommendations and all of the “Big-Five”.
• Lauds India’s PMLA, terror financing
  • The report praised India’s systems to tackle the menace of money laundering and terror financing.
  • India is taking steps to address the fast-tracking of trials in terror financing and money laundering cases, which was identified as a priority.
• Areas for Improvement
  • Limited Prosecutions and Convictions: India has seen a limited number of prosecutions and convictions in money laundering and terror financing cases.
    • It flagged delays in the prosecution of terror financing cases due to challenges in the constitutionality of the Prevention of Money Laundering Act (PMLA) between 2014-2022.
    • Though the Enforcement Directorate (ED) increased investigations, the number of prosecutions and concluded trials has not shown a proportionate increase.
  • Risk-Profiling: Customer risk-profiling in financial institutions requires improvement.
  • MCA Registry Monitoring: Accurate ownership information in the Ministry of Corporate Affairs (MCA) registry needs better oversight.
  • Human Trafficking Link: Greater focus is required on the connection between money laundering and human trafficking.
• Jan Dhan-Aadhaar-Mobile Initiative & GST
  • FATF praised India’s Jan Dhan-Aadhaar-Mobile (JAM) initiative for boosting financial inclusion and reducing the cash-based economy.
  • The implementation of GST, requiring e-invoices and e-bills, was recognized for increasing transparency in the supply chain.
• Key Compliance Measures
  • India's Cybercrime Coordination Centre, beneficial ownership registry by the Ministry of Corporate Affairs, and Central KYC Records Registry (CKYCR) were highlighted as positive steps.
  • The establishment of task forces and high-level committees to combat corruption, black money, drug trafficking, and fake currency was commended.
• Enforcement Achievements
  • The ED was recognized for confiscating assets worth ₹16,537 crore and securing restitution of ₹141.3 billion in the Vijay Mallya case.
  • ED's success in pursuing complex, large-scale, cross-border money laundering cases and “hawala” operations was noted.
• Shell Companies Task Force
  • The report highlighted the removal of 3,82,875 shell companies and the disqualification of over 3 lakh directors who failed to file financial statements.
• International Cooperation and Asset Recovery
  • India’s strong coordination on illicit financial flows, financial intelligence, and international cooperation was appreciated. 
  • The FATF also noted India’s ability to implement targeted financial sanctions.
• Terrorism Threats in India
  • India faces a “disparate range” of terrorism threats, including regional insurgencies in the Northeast and North, Left-Wing Extremist groups, and Islamic State or al-Qaeda-linked threats in Jammu and Kashmir.
  • The largest money laundering risks stem from fraud, corruption, and drug trafficking.
• Non-Profit Sector Oversight
  • India needs to ensure that non-profit organizations (NPOs) are safeguarded against misuse for terror financing. 
  • The FATF recommended more focused, coordinated outreach to help NPOs understand these risks better.
• Targeted Financial Sanctions
  • The FATF urged India to improve the framework for implementing targeted financial sanctions to ensure the prompt freezing of funds and assets. 
  • The current process needs streamlining for better communication.
• Definition of Domestic Politically Exposed Persons (PEPs)
  • The report highlighted the absence of a definition for domestic PEPs under anti-money laundering laws. 
  • Foreign PEPs have already been defined, but domestic PEPs require proper identification and risk-based enhanced measures.

Q.1. What did FATF highlight in its 2024 report on India?

The FATF praised India’s robust anti-money laundering systems, recognizing achievements in financial inclusion through the JAM initiative and the enforcement actions taken by the ED.

Q.2. What areas did FATF suggest India should improve?

FATF urged improvements in customer risk profiling, better prosecution of financial crimes, and enhanced oversight of shell companies and the non-profit sector.

Source: FATF on India: Effective anti-money laundering system, low prosecution | FATF | The Hindu | Economic Times

What’s in today’s article?

• Why in News?
• What is Adjusted Gross Revenue (AGR)?
• Recent SC Judgement in Telecom AGR dues case
• Key highlights of the judgement

Why in News?

Recently, the Supreme Court of India dismissed curative petitions filed by major telecom companies, including Vodafone Idea and Bharti Airtel, regarding their Adjusted Gross Revenue (AGR) dues. 

These companies sought a review of the Court's October 2019 judgment (Vodafone Idea Limited v. Union of India), which held them liable to pay AGR dues.

What is Adjusted Gross Revenue (AGR)?

• About
  • Telecom operators are required to pay licence fee and spectrum charges in the form of revenue share to the Centre. 
  • The revenue amount used to calculate this revenue share is termed as the AGR.
  •  Calculation of AGR and Controversy
  • As per Dept of Telecom, the revenue calculations should incorporate all revenues earned by a telecom company.
    • This also includes revenues from non-telecom sources such as deposit interests and sale of assets.
  • The companies, however, are of the view that AGR should comprise the revenues generated from telecom services only.
    • Non-telecom revenues should be kept out of it.
• Legal battle over definition of AGR
  • The telcos and the government were involved in the legal battle over the definition of AGR to include the source of revenues. 
  • In October 2019, the top court widened the definition of AGR to include the government's view.
  • The court ordered to include all revenues, except for termination fee and roaming charges, as a part of the AGR.
• Final Ruling on AGR issue
  • On September 1, 2020, the Supreme Court gave its final ruling on the AGR issue.
  • It had directed telecom companies to pay AGR, interest and penalty on non-payment on AGR dues.
  • Telecom service providers were asked by the SC to make payments in yearly instalments between April 1, 2021 and March 31, 2031.
    • In case of default on payment, interest and penalty on interest would automatically be payable, and that non-payment would be punishable for contempt of court.
• Steps taken by Government after SC Judgement of 2020
  • In September 2021, the Union Cabinet had cleared the telecom reforms package aimed at improving liquidity and ease of doing business.
  • Telecom companies were provided with the option of four-year moratorium on spectrum and AGR dues. 
    • In other words, telecom companies could opt to pay the principal, the interest, and all other penalties, after four years, instead of paying it then.
  • The government had also given all the telcos a one-time opportunity to convert the interest on this deferred payment into equity at the end of the four-year period.

Recent SC Judgement in Telecom AGR dues case

• About the news
  • The Supreme Court has dismissed curative petitions filed by telecom service providers against the court’s October 2019 judgment.
    • 2019 Judgement upheld the Department of Telecom’s (DoT) move to recover AGR of about ₹92,000 crore from them.
• Background of the present case
  • The apex Court in October 2019 allowed the Centre's plea to recover AGR of about Rs. 92,000 crores from them. 
    • A three-judge bench upheld the definition of AGR formulated by the Department of Telecom (DoT).
  • In January, 2020, the Court rejected the pleas by Vodafone Idea, Bharti Airtel and Tata Teleservices seeking review of the 2019 verdict that widened the definition of AGR.
  • In September 2020, the SC passed an order requiring telecom companies to pay their AGR dues over a period of 10 years. 
    • This was after the DoT moved to the SC proposing staggered payment over 20 years for telecom firms to discharge their AGR dues.
  • In 2021, the apex court dismissed the pleas by telecom companies seeking correction of errors in calculation of AGR dues payable by them as per the October 2019 judgment.
  • In 2023, telecom companies filed curative petitions against the Court's January 2020 decision (dismissing the review petitions).
  • Thereafter, the curative petitions were considered by three senior-most judges of the Court and dismissed recently.

Key highlights of the judgement

• No ground to exercise curative jurisdiction
  • The SC Held that no ground was made out to exercise curative jurisdiction in terms of the Court's decision in Rupa Ashok Hurra v. Ashok Hurra.
    • The Supreme Court had evolved the idea of curative petitions in the landmark judgment of Rupa Ashok Hurra vs. Ashok Hurra.
    • The five-judge bench observed that Article 142 of the Constitution empowers the Supreme Court to act in whatever manner they may deem fit to establish complete justice.
    • Therefore, to protect the substantive rights of the litigant, the Constitution Bench came up with the theory of a curative petition.
    • Curative petition will be entertained on strong grounds only e.g.
      • Violation of principles of natural justice.
      • Where the judge has a bias
• This sector has benefitted immensely
  • The apex court observed that this sector has benefited immensely under the scheme as apparent from the gross revenue trend from 2004 to 2015.
    • The telecom sector had long reaped the fruits of the Centre’s liberalised mode of payment by revenue sharing regime with the government.
  • The telecom service providers in spite of the financial benefits of the package started to ensure that they do not pay the licence fee to the public exchequer based on an agreed AGR.

Q.1. Why did telecom companies file curative petitions?

Telecom companies, including Vodafone Idea, filed curative petitions to challenge the Supreme Court’s 2019 ruling that widened the scope of AGR dues, seeking to reduce their liabilities.

Q.2. What was the outcome of the telecom curative petitions?

The Supreme Court dismissed the curative petitions, reaffirming its decision that telecom companies must pay AGR dues as per the Department of Telecom’s expanded definition.

Source: Telecom AGR dues: Supreme Court dismisses curative pleas on computation ‘errors’ | Live Law | Indian Kanoon | PIB | The Hindu

What’s in today’s article?

• Why in News?
• What is World Food India (WFI)?
• Food Processing Sector in India
• Steps Taken by the Government to Boost Food Processing Sector in India
• Challenges and Road Ahead for Food Processing Sector in India

Why in News?

• While addressing the 3rd edition of World Food India 2024, the Indian PM said the government has undertaken many reforms in the past 10 years for the growth of the food processing sector.
• The PM also said that the Global Food Regulators Summit by the FSSAI will bring together global regulators (WHO, FAO) and domestic institutes to issues such as food safety, quality standards, and best practices.

What is World Food India (WFI)?

• The 1st edition of the WFI was launched by the Ministry of Food Processing Industries (MoFPI) in 2017, with the objective of
  • Introducing the world to rich Indian food culture.
  • As well as promoting investments in the diverse food processing sector of the country.
  • In view of celebrating 2023 as the International Year of Millets and to bring the global food processing industry together, the MoFPI organised the 2nd edition WFI in 2023.
  • The 3rd edition of the WFI 2024 will be organised from 19th to 22nd September 2024.

Food Processing Sector in India:

• Scenario:
  • Food processing in India - 'A Sunrise sector' - has an essential role in linking Indian farmers to consumers in the domestic and international markets.
  • Major sectors constituting the food processing industry in India are processed fruits and vegetables, ready-to-eat/cook (RTE/RTC), mozzarella cheese, processed marine products, edible oils, beverages, and dairy products.
  • The sector has grown substantially, averaging an annual growth rate of around 7.3%, during 2015-2022.
  • The industry has a share of 12.22% in the employment generated in all Registered Factory sectors engaging approximately 2.03 million people.
  • Unregistered food processing sector supports employment to 5.1 million workers, constituting 14.18% of employment in the unregistered manufacturing sector.
• Growth drivers:
  • Agri-commodity hub:
    • Due to its diverse agro-climatic conditions, it has a wide-ranging and large raw material base suitable for food processing industries.
    • India has access to several natural resources that provides it with a competitive advantage in the food processing sector.
    • India is the largest producer of milk and spices and one of the leading producers of fruits and vegetables, poultry, and meat.
  • Huge consumer base; strong economy; conducive policies; One District, One Product (ODOP); etc.
  • Future prospects: The market size of the food processing sector in India is estimated to reach US$ 1,274 billion in 2027 from US$ 866 billion in 2022, backed by changing lifestyle and food habits due to rising disposable income and urbanisation.

Steps Taken by the Government (MoFPI) to Boost Food Processing Sector in India:

• PM Kisan SAMPADA Yojana (PMKSY): It has been envisaged as a comprehensive package which will result in creation of modern infrastructure with efficient supply chain management from farm gate to retail outlet.
• PM Formalisation of Micro food processing Enterprises (PMFME) Scheme: It aims to enhance existing individual micro-enterprises in the unorganised segment of the food processing industry.
• Production Linked Incentive Scheme for Food Processing Industry (PLISFPI): It aims to -
  • Boost domestic manufacturing, increase exports, while supporting food manufacturing entities with stipulated sales.
  • Make investment for expansion of processing capacity. For example, 100% FDI is permitted in the food processing sector
  • Incentivise emergence of strong Indian brands. Food processing units qualify for complete profit exemption in the first five years.
• The One District One Product (ODOP) scheme:
  • It was launched under the PMFME to provide the framework for value chain development and alignment of support infrastructure.
    • ODOP approved for 713 districts in 35 States/UTs with 137 unique products.
• The Mega Food Park (MFP) scheme:
  • The scheme follows a cluster approach, establishing modern food processing units within well-defined agri/horticultural zones.
  • Under the MFP scheme 41 projects were approved, of which 24 are operational as of December 2023.
• Operation Greens:
  • It was launched to boost Farmer Producers Organisations (FPOs), agri-logistics, processing facilities, and professional management, focusing initially on Tomato, Onion, and Potato (TOP) value chains from 2018.
  • As part of the "Aatmanirbhar Bharat Package", the scheme was extended from TOP crops to all fruits and vegetables (TOTAL).

Challenges and Road Ahead for Food Processing Sector in India:

• Challenges:
  • Lack of cutting-edge infrastructure: Many food processing businesses operate in the small and medium enterprises (SMEs) sector, which often lacks the resources needed to upgrade their facilities and machinery to the latest technology.
  • The industry is also plagued by:
    • Inefficient supply chains,
    • Inadequate storage and transport facilities, and
    • A lack of access to credit and financing.
• Impact of these issues: These issues make it difficult for SMEs to enter the market and compete with larger, more established companies.
• Road ahead:
  • The ever-increasing demand for processed food products in domestic and international markets, as well as supportive government policies, are providing the impetus for the sector.
  • Therefore, the sector can become an even more important component of India’s GDP and economic growth, if all stakeholders - from the government and private players - come together and realise this goal.

Q.1. What is the Global Food Regulators Summit by the FSSAI?

The Global Food Regulators Summit aims to foster international collaborations and knowledge-sharing on food safety and regulatory issues. It also seeks to promote dialogue on critical aspects such as food safety, risk assessment, analytical competence and capacity building initiatives.

Q.2. What is the significance of the International Year of Millets?

The International Year of Millets in 2023 was a year-long celebration to raise awareness of the many benefits of millets, including their nutritional value, environmental impact, and economic potential.

Source: World Food India 2024 | PM Modi: Wide-ranging reforms undertaken in food-processing sector in last 10 years | HT | ToI