GOODS AND SERVICE TAX (GST)
1. Context
The government’s Goods and Services Tax (GST) revenue grew 13.9% to ₹1.95 lakh crore in June compared with the corresponding period in 2025, the highest year-on-year growth rate in 13 months. However, the bulk of this growth came from imports, with the tax collected from domestic transactions growing far slower
2. What is the Goods and Services Tax (GST)?
- The Goods and Services Tax (GST) is a value-added tax levied on the supply of goods and services at each stage of the production and distribution chain. It is a comprehensive indirect tax that aims to replace multiple indirect taxes imposed by the central and state governments in India.
- GST is designed to simplify the tax structure, eliminate the cascading effect of taxes, and create a unified national market. Under the GST system, both goods and services are taxed at multiple rates based on the nature of the product or service. The tax is collected at each stage of the supply chain, and businesses are allowed to claim a credit for the taxes paid on their inputs.
- The GST system in India came into effect on July 1, 2017, replacing a complex tax structure that included central excise duty, service tax, and state-level taxes like VAT (Value Added Tax), among others. The GST Council, consisting of representatives from the central and state governments, is responsible for making decisions on various aspects of GST, including tax rates and rules.
- GST is intended to create a more transparent and efficient tax system, reduce tax evasion, and promote economic growth by fostering a seamless flow of goods and services across the country. It has a significant impact on businesses, as they need to comply with the new tax regulations and maintain detailed records of their transactions for GST filing
3.Goods and Services Tax (GST) and 101st Amendment Act, 2016
The Goods and Services Tax (GST) in India was introduced through the 101st Amendment Act of 2016. This constitutional amendment was a crucial step in the implementation of GST, which aimed to create a unified and comprehensive indirect tax system across the country.
Here are some key points related to the 101st Amendment Act and GST:
- The 101st Amendment Act was enacted to amend the Constitution of India to pave the way for the introduction of the Goods and Services Tax.
- It added a new article, Article 246A, which confers concurrent powers to both the central and state governments to levy and collect GST
- The amendment led to the creation of the GST Council, a constitutional body consisting of representatives from the central and state governments. The council is responsible for making recommendations on GST rates, exemptions, and other related issues
- The amendment introduced a dual GST structure, where both the central government and the state governments have the power to levy and collect GST on the supply of goods and services
- For inter-state transactions, the 101st Amendment Act provides that the central government would levy and collect the Integrated Goods and Services Tax (IGST), which would be a sum total of the central and state GST
- The amendment also included a provision for compensating states for any revenue loss they might incur due to the implementation of GST for a period of five years
The 101st Amendment Act was a critical legislative step that provided the constitutional framework for the implementation of GST in India. It addressed the need for a unified tax system, simplifying the tax structure and promoting a common market across the country. The subsequent establishment of the GST Council has played a pivotal role in the ongoing management and evolution of the GST system in India
4. What are the different types of Goods and Services Tax (GST)?
In India, the Goods and Services Tax (GST) is structured into different tax rates based on the nature of the goods and services. As of my last knowledge update in January 2022, the GST rates are divided into multiple slabs. It's important to note that tax rates may be subject to changes, and new amendments could have been introduced since then. As of my last update, the GST rates are as follows:
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Nil Rate:
- Some goods and services are categorized under the nil rate, meaning they attract a 0% GST. This implies that no tax is levied on the supply of these goods or services.
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5% Rate:
- This is a lower rate, applicable to essential goods such as certain food items, medical supplies, and other basic necessities.
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12% Rate:
- Goods and services falling in this category attract a 12% GST rate. Items such as mobile phones, processed foods, and certain services fall under this slab.
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18% Rate:
- A higher rate of 18% is applicable to goods and services such as electronic items, capital goods, and various services.
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28% Rate:
- The highest GST rate of 28% is applied to luxury items, automobiles, and certain goods and services that are considered non-essential or fall into the luxury category.
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Compensation Cess:
- In addition to the above rates, some specific goods attract a compensation cess, which is levied to compensate the states for any revenue loss during the transition to GST. This is often applied to items like tobacco and luxury cars.
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Zero Rate:
- Certain categories of goods and services may be specified as "zero-rated," which means they are effectively taxed at 0%. This is different from the nil rate, as it allows businesses to claim input tax credit on inputs, capital goods, and input services.
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Exempt Supplies:
- Some goods and services may be exempt from GST altogether. This means that they are not subject to any GST, and businesses cannot claim input tax credit on related inputs
5.Central GST (CGST), State GST (SGST), Union territory GST (UTGST) and Integrated GST (IGST)
| Subject | Central GST (CGST) | State GST (SGST) | Union Territory GST (UTGST) | Integrated GST (IGST) |
|---|---|---|---|---|
| Levied by | Central Government | Respective State Governments | Union Territory Administrations | Central Government (on inter-state transactions) |
| Applicability | On intra-state supplies (within the same state) | On intra-state supplies (within the same state) | On intra-union territory supplies (within the same union territory) | On inter-state supplies (across states or union territories) |
| Rate Determination | Determined by the Central Government | Determined by the Respective State Government | Determined by the Union Territory Administration | IGST rate is a sum of CGST and SGST rates |
| Revenue Collection | Collected by the Central Government | Collected by the Respective State Government | Collected by the Union Territory Administration | Collected by the Central Government (on inter-state transactions) |
| Utilization of Revenue | Shared between Central and State Governments | Retained by the Respective State Government | Retained by the Union Territory Administration | Shared between Central and State Governments |
| Purpose | Part of the dual GST structure, meant to cover central taxes | Part of the dual GST structure, meant to cover state taxes | Applicable in union territories for intra-territory supplies | Applied to regulate and tax inter-state supplies |
| Input Tax Credit (ITC) | ITC available for CGST paid on inputs and services | ITC available for SGST paid on inputs and services | ITC available for UTGST paid on inputs and services | ITC available for both CGST and SGST paid on inputs |
| Tax Jurisdiction | Applies within a particular state | Applies within a particular state | Applies within a particular union territory | Applies to transactions across states and union territories |
| GSTN Portal for Filing Returns | Central GSTN portal | State-specific GSTN portals | UTGSTN portal | Integrated GSTN portal |
6.What are the benefits of Goods and Services Tax (GST) in India?
The Goods and Services Tax (GST) in India was implemented with the aim of bringing about significant reforms in the indirect tax structure. Several benefits have been associated with the introduction of GST.
Here are some key advantages:
- GST replaced multiple indirect taxes levied by the central and state governments, simplifying the tax structure. This streamlined system reduces the complexity of compliance for businesses
- GST eliminates the cascading effect of taxes, where taxes are levied on top of other taxes. With a seamless credit mechanism, businesses can claim input tax credit on the taxes paid on their purchases, leading to a more transparent and efficient system
- GST has facilitated the creation of a common national market by harmonizing tax rates and regulations across states. This has reduced trade barriers and promoted the free flow of goods and services throughout the country
- The GST system has incorporated technology-driven processes, including electronic filing and real-time reporting, making it harder for businesses to evade taxes. This has contributed to increased tax compliance
- The input tax credit mechanism under GST benefits manufacturers, as they can claim credits for taxes paid on raw materials and input services. This has a positive impact on the cost of production and enhances the competitiveness of Indian goods in the international market
- GST brings transparency to the taxation system. The online filing of returns and the availability of transaction-level data make it easier for tax authorities to monitor and track transactions, reducing the scope for corruption
- GST has replaced a complex system of filing multiple tax returns with a more straightforward mechanism. Businesses now need to file fewer returns, reducing the compliance burden
- The implementation of GST has contributed to an improvement in the ease of doing business in India. The unified tax system has made it simpler for businesses to operate across states and has reduced the paperwork and bureaucratic hurdles associated with tax compliance
- GST has led to the harmonization of tax rates across states and union territories, minimizing the tax rate disparities that existed earlier. This creates a more predictable tax environment for businesses
7.Goods and Services Tax (GST)-Issues and Challenge
- Despite the intention to simplify the tax structure, the multi-tiered rate system (0%, 5%, 12%, 18%, and 28%) and the inclusion of cess on certain goods have introduced complexity. The classification of goods and services under different tax slabs can be challenging, leading to disputes and confusion
- The successful implementation of GST relies heavily on technology. Issues such as technical glitches on the GSTN (Goods and Services Tax Network) portal, especially during the initial phases, have caused difficulties for businesses in filing returns and complying with regulations
- The compliance requirements for businesses under GST, including multiple returns filing, have been perceived as burdensome. Smaller businesses, in particular, may find it challenging to adapt to the new system and comply with the various provisions
- The transition from the previous tax regime to GST posed challenges, especially for businesses in terms of understanding the new tax structure, reconfiguring accounting systems, and ensuring a smooth transition of credits from the old tax system to the GST system
- The classification of certain goods and services into specific tax slabs has been a source of contention. Ambiguities in classification have led to disputes and litigations, with businesses seeking clarity on the applicable tax rates
- The implementation of GST has increased compliance costs for businesses due to the need for sophisticated IT infrastructure, the hiring of tax professionals, and efforts to ensure accurate reporting and filing
- Challenges related to availing and matching input tax credits have been reported. Timely matching of credits and resolving discrepancies can be cumbersome, leading to concerns about the seamless flow of credit across the supply chain
- The anti-profiteering provisions were introduced to ensure that businesses pass on the benefits of reduced tax rates to consumers. However, the implementation of anti-profiteering measures has been criticized for its complexity and potential for disputes
- The periodic changes in the GST return filing system have created challenges for businesses in adapting their processes. Delays and complexities in return filing can affect working capital management
8.Goods and Services Tax Council (GST Council)
The Goods and Services Tax Council (GST Council) is a constitutional body in India that makes recommendations on the Goods and Services Tax (GST). It was established under the Constitution (122nd Amendment) Act, 2016, which introduced the GST in India
The GST Council consists of the following members:
- The Union Finance Minister, who is the Chairperson of the Council.
- The Union Minister of State in charge of revenue or any other Minister of State nominated by the Union Government.
- One Minister from each state, nominated by the Governor of that state.
- The Chief Secretary of each state, ex-officio.
- If the President, on the recommendation of the Council, so directs, one representative of each Union territory which has a legislature, to be nominated by the Lieutenant Governor of that Union territory.
- Three to seven members (other than Ministers) to be nominated by the Union Government, of whom at least one member shall be from the field of economics and another from the field of chartered accountancy, legal affairs or public finance
9. Way forward
It's important to note that the composition and structure of the GST Council may evolve over time, and there might have been changes since my last update in January 2022. To obtain the latest and most accurate information about the GST Council and its members, it is recommended to refer to official government sources or recent announcements by the relevant authorities
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For Prelims: Economic and Social Development and Indian Polity and Governance
For Mains: General Studies II: Functions and responsibilities of the Union and the States, issues and challenges pertaining to the federal structure, devolution of powers and finances up to local levels and challenges therein
General Studies III: Inclusive growth and issues arising from it |
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Previous Year Questions
1.Which of the following are true of the Goods and Services Tax (GST) introduced in India in recent times? (UGC Paper II 2020)
A. It is a destination tax
B. It benefits producing states more
C. It benefits consuming states more
D. It is a progressive taxation
E. It is an umbrella tax to improve ease of doing business
Choose the most appropriate answer from the options given below:
A.B, D and E only
B.A, C and D only
C.A, D and E only
D.A, C and E only
Answer (D)
2.What is/are the most likely advantages of implementing ‘Goods and Services Tax (GST)’? (UPSC CSE 2017)
1. It will replace multiple taxes collected by multiple authorities and will thus create a single market in India. 2. It will drastically reduce the ‘Current Account Deficit’ of India and will enable it to increase its foreign exchange reserves. 3. It will enormously increase the growth and size of the economy of India and will enable it to overtake China in the near future. Select the correct answer using the code given below: (a) 1 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3 Answer (a)
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Source: Indianexpress
UNLAWFUL ACTIVITIES (PREVENTION) ACT (UAPA)
1. Context
Observing that “clandestine funding of extremism is among today’s gravest national security threats”, the High Court of Karnataka on Wednesday refused to interfere with a criminal case against six persons linked to U.S.-based Christian missionary organisation ‘The Timothy Initiative’ (TTI), under the Unlawful Activities (Prevention) Act (UAPA), 1967
2. About Unlawful Activities (Prevention) Act (UAPA)
The Unlawful Activities (Prevention) Act (UAPA) is an Indian law that was enacted in 1967 to effectively prevent unlawful activities that pose a threat to the sovereignty and integrity of India.
Key highlights of the UAPA
- Objective: The primary objective of the UAPA is to provide law enforcement agencies with effective tools to combat terrorism and other activities that threaten the security of the nation.
- Definition of Unlawful Activities: The act defines unlawful activities to include actions that intend to or support the cession of a part of the territory of India or disrupt the sovereignty and integrity of the country.
- Powers of Designation: The government has the authority to designate an organization as a terrorist organization if it believes that such an organization is involved in terrorism. This designation has significant legal consequences, including the freezing of assets.
- Powers of Arrest and Detention: The UAPA provides law enforcement agencies with powers of arrest and detention to prevent individuals from engaging in unlawful activities. The act allows for preventive detention to curb potential threats before they materialise.
- Banning of Terrorist Organizations: The government can proscribe organizations as terrorist organizations, making their activities illegal. This includes banning these organisations, freezing their assets, and taking other measures to curb their operations.
- Admissibility of Confessions: The UAPA allows for confessions made to police officers to be admissible in court, subject to certain safeguards. This provision has been a point of contention, with concerns about potential misuse and coercion.
- Designation of Individuals as Terrorists: In addition to organizations, the UAPA allows the government to designate individuals as terrorists. This designation carries legal consequences, including restrictions on travel and freezing of assets.
- Amendments and Stringency: Over the years, the UAPA has undergone several amendments to strengthen its provisions and make it more effective in dealing with emerging threats. However, these amendments have also been criticized for potential violations of civil liberties.
- International Cooperation: The UAPA allows for cooperation with foreign countries in matters related to the prevention of unlawful activities. This includes extradition of individuals involved in such activities.
3. Unlawful Activities (Prevention) Act (UAPA) and Human Rights
The Unlawful Activities (Prevention) Act (UAPA) and human rights lie in the impact the act can have on various fundamental rights guaranteed by the Constitution of India and international human rights standards.
The key points connecting the UAPA and human rights:
- The UAPA allows for preventive detention, which means individuals can be detained without formal charges based on suspicions of involvement in unlawful activities. This raises concerns about the right to liberty, as individuals may be deprived of their freedom without the presumption of innocence until proven guilty.
- The admissibility of confessions made to police officers under the UAPA raises issues related to the right against self-incrimination. There is a risk that such confessions might be obtained under duress or coercion, compromising the fairness of legal proceedings.
- Designating individuals as terrorists and proscribing organizations without due process may impinge on the right to a fair trial. This includes the right to be informed of charges, the right to legal representation, and the right to present a defense.
- The UAPA provides authorities with the power to proscribe organizations as terrorist organizations, limiting their activities. Critics argue that this may infringe upon the right to freedom of association, particularly when such designations are made without sufficient evidence or proper legal procedures.
- The potential for misuse of the UAPA to target individuals or organizations critical of the government raises concerns about freedom of expression. If the act is used to suppress dissent or stifle legitimate political or social activities, it can undermine this fundamental right.
- The UAPA grants authorities the power to intercept communications and conduct surveillance on individuals suspected of engaging in unlawful activities. This raises concerns about the right to privacy, as individuals may be subjected to intrusive surveillance without adequate safeguards.
- Human rights standards require that any restrictions on rights, such as those imposed by the UAPA, must be proportionate and necessary for achieving a legitimate aim. Critics argue that the broad scope of the UAPA may lead to disproportionate measures that unduly restrict individual rights.
- The UAPA's compatibility with international human rights standards, including the International Covenant on Civil and Political Rights (ICCPR), is a critical point of consideration. Ensuring that the act aligns with these standards is essential to upholding human rights principles.
4. Unlawful Activities (Prevention) Act (UAPA) and Article 22 of the Constitution
The Unlawful Activities (Prevention) Act (UAPA) and Article 22 of the Indian Constitution lie in how the UAPA's provisions for arrest and detention intersect with the constitutional safeguards provided under Article 22.
- Article 22 provides certain protections to individuals who are arrested or detained. It outlines the rights of arrested individuals, emphasizing safeguards to prevent arbitrary or unlawful detention.
- Article 22(1) states that every person who is arrested and detained shall be informed, as soon as may be, of the grounds for such arrest. This provision ensures that individuals are aware of the reasons behind their arrest, preventing arbitrary or secret detentions.
- Article 22(1) also guarantees the right of an arrested person to consult and be defended by a legal practitioner of their choice. This ensures that individuals have access to legal assistance during the legal process, contributing to a fair and just legal system.
- The UAPA includes provisions for preventive detention, allowing authorities to detain individuals to prevent them from committing certain offences. However, Article 22(4) allows preventive detention only under specific circumstances, and certain safeguards must be followed, such as providing the detenu with the grounds for detention and an opportunity to make a representation against the detention.
- Article 22(4) further mandates that a person detained under a law providing for preventive detention must be afforded the earliest opportunity to make a representation against the detention. Additionally, the case of every person detained is required to be placed before an advisory board within three months.
- The UAPA allows for confessions made to police officers to be admissible in court, subject to certain safeguards. However, this provision has been a point of concern concerning Article 22, as confessions obtained under duress or coercion may violate the right against self-incrimination.
- Article 22(2) ensures the right to be brought before the nearest magistrate within 24 hours of arrest, excluding the time necessary for the journey. This provision aims to prevent prolonged detention without judicial oversight and contributes to the right to a speedy trial.
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For Prelims: Unlawful Activities (Prevention) Act, Article 22, Terrorism
For Mains:
1. Discuss the key provisions of the Unlawful Activities (Prevention) Act (UAPA) and analyze how they may impact fundamental human rights. Elaborate on the balance between national security concerns and the protection of individual rights. (250 Words)
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Previous Year Questions 1. Under Article 22 of the Constitution of India, with the exception of certain provisions stated there in, what is the maximum period for detention of a person under preventive detention? (MPSC 2014) A. 2 months B. 3 months C. 4 months D. 6 months
2. Article 22 of the Constitution ensures (CTET 2016) A. Right not to be ill-treated during arrest or while in custody B. Right to Constitutional Remedies C. Right against Exploitation D. Right to Education Answers: 1-B, 2-A Mains 1. Indian government has recently strengthed the anti-terrorism laws by amending the Unlawful Activities(Prevention) Act, (UAPA), 1967 and the NIA Act. Analyze the changes in the context of prevailing security environment while discussing scope and reasons for opposing the UAPA by human rights organizations. (UPSC 2019) |
Source: The Indian Express
MICRO SMALL MEDIUM ENTERPRISES (MSME)
1. Context
For exporters in the micro, small and medium enterprises (MSME) segment, the rise in freight costs due to the West Asia conflict continues to be a burden
2. Definition of 'MSME'
Micro, Small, and Medium Enterprises (MSMEs) are businesses that are characterized by their relatively small size in terms of employees, assets, and revenue. These enterprises play a crucial role in economies around the world, contributing to employment generation, economic growth, and innovation. The definitions of MSMEs can vary from country to country, but there are general guidelines provided by international organizations like the World Bank and the United Nations.
The definition of MSME varies from country to country. In India, an MSME is defined as a business with:
- Micro enterprise: Up to 10 employees and an investment of up to INR 1 crore (approximately USD 130,000)
- Small enterprise: Up to 50 employees and an investment of up to INR 10 crore (approximately USD 1.3 million)
- Medium enterprise: Up to 200 employees and an investment of up to INR 50 crore (approximately USD 6.5 million)
3. Importance of MSME's
The importance of MSMEs in an economy includes:
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Employment Generation: MSMEs are significant contributors to employment, especially in economies with limited opportunities for large-scale industrial employment.
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Local Economic Development: MSMEs often operate at a local level, contributing to the development of local communities and economies.
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Innovation and Entrepreneurship: Many innovative ideas and entrepreneurial ventures start as MSMEs. They have the flexibility to adapt quickly to changing market demands and experiment with new business models.
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Diversity and Resilience: A diverse ecosystem of MSMEs can contribute to a more resilient economy by reducing dependence on a few large corporations.
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Contributions to GDP: The combined contributions of MSMEs to a country's Gross Domestic Product (GDP) can be significant, even if individual businesses are relatively small.
4. New Criteria for MSME's
The new criteria for the classification of micro, small and medium enterprises (MSMEs) in India was notified by the Ministry of Micro, Small and Medium Enterprises (MSME) on June 1, 2020. The new criteria are based on the investment in plant and machinery or equipment and the annual turnover of the enterprise.
The following are the new criteria for the classification of MSMEs:
- Micro enterprise: An enterprise with:
- Investment in plant and machinery or equipment not more than Rs.1 crore (approximately USD 130,000)
- Annual turnover not more than Rs. 5 crore (approximately USD 650,000)
- Small enterprise: An enterprise with:
- Investment in plant and machinery or equipment not more than Rs.10 crore (approximately USD 1.3 million)
- Annual turnover not more than Rs. 50 crore (approximately USD 6.5 million)
- Medium enterprise: An enterprise with:
- Investment in plant and machinery or equipment not more than Rs.50 crore (approximately USD 6.5 million)
- Annual turnover not more than Rs. 250 crore (approximately USD 3.25 million)
5. Challenges faced by MSME's
Micro, small, and medium enterprises (MSMEs) play a vital role in the Indian economy, accounting for over 90% of all enterprises and employing over 40% of the workforce. However, MSMEs face a number of challenges, including:
- Access to finance: MSMEs often find it difficult to obtain loans from banks and other financial institutions due to their lack of collateral and track record. This can make it difficult for them to expand their businesses or invest in new technologies.
- Lack of skills: MSMEs often lack the skills and knowledge needed to compete in the global market. This can make it difficult for them to develop new products and services, or to adopt new technologies.
- Competition from large businesses: MSMEs often face competition from large businesses, which have more resources and economies of scale. This can make it difficult for MSMEs to compete on price or quality.
- Bureaucracy: MSMEs often face a number of bureaucratic hurdles, such as obtaining licenses and permits. This can be time-consuming and costly, and can discourage entrepreneurs from starting or expanding their businesses.
- Infrastructure constraints: MSMEs often face infrastructure constraints, such as poor roads and electricity supply. This can make it difficult for them to transport their goods and services, or to operate their businesses efficiently.
- Unstable government policies: MSMEs are often affected by unstable government policies, such as changes in tax rates or import duties. This can make it difficult for them to plan for the future and make investment decisions.
6. Government Schmes for MSME's
Here are some of the prominent schemes and programs for MSMEs by the Union Government of India:
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Micro Units Development and Refinance Agency (MUDRA) Yojana:
- MUDRA Yojana aims to provide financial support to small and micro enterprises by offering loans through various financial institutions. It consists of three categories: Shishu, Kishor, and Tarun, based on the loan amount.
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Pradhan Mantri Mudra Yojana (PMMY):
- PMMY is a scheme to provide financial assistance for the establishment, expansion, and modernization of MSMEs. It offers loans without collateral security up to a certain limit.
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Credit Linked Capital Subsidy Scheme (CLCSS):
- CLCSS provides capital subsidy to MSMEs for technology upgradation, modernization, and replacement of their plant and machinery to improve competitiveness.
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Zero Defect Zero Effect (ZED) Certification Scheme:
- ZED certification encourages MSMEs to adopt best practices and quality standards to enhance product quality while minimizing environmental impact.
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Make in India Initiative:
- The Make in India campaign encourages domestic and foreign companies to manufacture products in India, fostering the growth of the manufacturing sector and MSMEs.
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Stand Up India Scheme:
- This scheme aims to promote entrepreneurship among women and Scheduled Caste/Scheduled Tribe communities by providing loans for starting new enterprises.
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Technology Upgradation Support for MSMEs (TEQUP):
- TEQUP focuses on supporting MSMEs in adopting modern technology and upgrading their production processes to improve quality and competitiveness.
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National Manufacturing Competitiveness Programme (NMCP):
- NMCP includes various components such as Lean Manufacturing Competitiveness Scheme, Design Clinic Scheme, and more, aimed at enhancing the competitiveness of the manufacturing sector, including MSMEs.
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Entrepreneurial and Managerial Development of SMEs (EMD-SME):
- EMD-SME focuses on providing training, capacity-building, and skill development to entrepreneurs and managers of MSMEs.
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Skill India Initiative:
- While not exclusively for MSMEs, the Skill India program aims to provide skill training to individuals, including those in the MSME sector, to improve employability and entrepreneurship.
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Export Promotion Capital Goods (EPCG) Scheme:
- The EPCG scheme allows MSMEs to import capital goods for the purpose of upgrading technology and enhancing export competitiveness with certain duty benefits.
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Udyog Aadhaar Registration:
- The Udyog Aadhaar registration process simplifies the process of registering and obtaining various benefits for MSMEs, such as easier access to credit and government schemes.
7. Way forward
Addressing these challenges often requires a combination of government support, industry initiatives, access to finance, skill development programs, technology adoption, networking opportunities, and tailored solutions that take into account the unique needs of MSMEs.
Previous year Questions1. Consider the following statements with reference to India: (UPSC 2023)
1. According to the 'Micro, Small and Medium Enterprises Development (MSMED) Act, 2006', the 'medium enterprises' are those with investments in plant and machinery between Rs. 15 crore and Rs. 25 crore.
2. All bank loans to the Micro, Small, and Medium Enterprises qualify under the priority sector.
Which of the statements given above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. Neither 1 nor 2
Answer: B
2. Which of the following can aid in furthering the Government's objective of inclusive growth? (UPSC 2011)
1. Promoting Self-Help Groups
2. Promoting Micro, Small and Medium Enterprises
3. Implementing the Right to Education Act
Select the correct answer using the codes given below:
A. 1 only
B. 1 and 2 only
C. 2 and 3 only
D. 1, 2 and 3
Answer: D
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Source: The Hindu
ANTI DUMPING DUTY
1. Context
An anti-dumping probe initiated by the Commerce and Industry Ministry on Cold Rolled Grain Oriented (CRGO) steel, a specialised type of steel, has sparked outrage among MSME transformer manufacturers, and also raised fears of a hike in electricity cost for consumers.
2.What is anti dumping duty?
An anti-dumping duty (ADD) is a protectionist tariff imposed by a government on imported goods that are sold below their fair market value, a practice known as "dumping." Dumping occurs when a foreign company exports a product at a price lower than what it charges in its domestic market or below its production cost, potentially harming the importing country’s domestic industries. The duty aims to level the playing field by offsetting this price difference, protecting local businesses from unfair competition.
- Legal Basis: Governed internationally by the World Trade Organization (WTO) under the Agreement on Implementation of Article VI of GATT 1994 (Anti-Dumping Agreement). It allows countries to impose ADD if dumping causes or threatens "material injury" to domestic industries.
- Process:
- A domestic industry files a complaint.
- An investigation assesses dumping margins (export price vs. normal value), injury, and causality.
- If confirmed, the government imposes a duty, typically calculated as the difference between the export price and the "normal value" (domestic price or cost-plus-profit in the exporting country)
3. Countervailing duties
Countervailing duties (CVDs) are tariffs imposed by a government on imported goods to counteract subsidies provided by the exporting country’s government to its producers or exporters. These subsidies—such as tax breaks, grants, or low-interest loans—can artificially lower the price of exported goods, giving them an unfair advantage in the importing country’s market. CVDs aim to neutralize this advantage, protecting domestic industries from subsidized foreign competition.
- Legal Basis: Governed by the World Trade Organization (WTO) under the Agreement on Subsidies and Countervailing Measures (SCM Agreement), part of GATT 1994. Countries can impose CVDs if subsidies cause or threaten "material injury" to their domestic industries.
- Process:
- A domestic industry files a complaint with evidence of subsidies and injury.
- An investigation confirms the subsidy’s existence, calculates its value (subsidy margin), and assesses harm.
- If proven, a duty is levied, typically equal to the subsidy amount, to raise the import price to a fair level.
4. Differences between Anti Dumping and Countervailing duties
| Aspect | Countervailing Duties (CVDs) | Anti-Dumping Duties (ADDs) |
|---|---|---|
| Purpose | Counteract foreign government subsidies | Counteract dumping by foreign companies |
| Target | Government subsidies | Private companies selling below fair value |
| Legal Basis | WTO SCM Agreement | WTO Anti-Dumping Agreement |
| Investigation Focus | Subsidies and their impact | Dumping and its impact |
| Calculation | Based on subsidy amount | Based on price difference |
| Example | Solar panels subsidized by a foreign government | Steel sold below home market price |
5.Which Act in India governs the imposition of anti-dumping duties on foreign imports?
6. World Trade Organisation (WTO)
The World Trade Organization (WTO) is an international body that regulates and facilitates global trade among its member nations. Established on January 1, 1995, under the Marrakesh Agreement, it succeeded the General Agreement on Tariffs and Trade (GATT), which began in 1948. Headquartered in Geneva, Switzerland, the WTO provides a framework for negotiating trade agreements, resolving disputes, and promoting free and fair trade. As of March 2025, it has 164 member countries, representing over 98% of global trade, with India as a founding member since 1995.
Key Functions of the WTO
- The WTO oversees the implementation and operation of multilateral trade agreements negotiated by its member countries. These agreements cover goods, services, and intellectual property
- The WTO serves as a platform for member countries to negotiate trade liberalization and resolve trade-related issues. Notable negotiations include the Doha Round, which focuses on development and reducing trade barriers
- The WTO provides a structured process for resolving trade disputes between member countries. Its dispute settlement mechanism is binding and aims to ensure that trade rules are followed
- The WTO conducts regular reviews of member countries' trade policies and practices to ensure transparency and adherence to global trade rules
- The WTO provides support to developing and least-developed countries to help them integrate into the global trading system and comply with WTO rules
- The WTO collaborates with organizations like the International Monetary Fund (IMF) and the World Bank to ensure coherence in global economic policy-making
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For Prelims: World Trade Organisation (WTO), Anti Dumping duty
For Mains: GS III - Economy
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Source: The Hindu
FUNDAMENTAL RIGHTS
1. Context
Supreme Court recognised walking on demarcated footpaths as a fundamental right and urged the government to introduce a law that declares this right. The two-judge bench’s ruling came in a case involving the death of a schoolboy in a road accident.
2. What are the Fundamental Rights?
- Fundamental Rights are the basic human rights guaranteed by the Constitution of India to all citizens (and, in some cases, to all persons). They are contained in Part III (Articles 12–35) of the Constitution.
- These rights protect the dignity, liberty, equality, and freedom of individuals against arbitrary actions of the State. They also ensure the establishment of a democratic and welfare-oriented society.
- Fundamental Rights form the cornerstone of the Indian Constitution by balancing individual liberty with societal interests. They guarantee equality, freedom, justice, and human dignity while ensuring that governmental power remains subject to constitutional limitations.
- Through judicial interpretation, particularly under Article 21, these rights have evolved into dynamic instruments for protecting civil liberties and promoting constitutional morality, making them indispensable to India's democratic framework
3. What are the constitutional articles related to it?
- Right to Equality (Articles 14–18)
- Equality before the law
- Prohibition of discrimination
- Equality of opportunity in public employment
- Abolition of untouchability
- Abolition of titles
- Right to Freedom (Articles 19–22)
- Freedom of speech and expression
- Freedom of assembly
- Freedom to form associations
- Freedom of movement
- Freedom to reside anywhere in India
- Freedom to practice any profession
- Protection in respect of conviction for offences
- Protection of life and personal liberty
- Protection against arbitrary arrest and detention
- Right against Exploitation (Articles 23–24)
- Prohibition of human trafficking and forced labour
- Prohibition of child labour in hazardous occupations
- Right to Freedom of Religion (Articles 25–28)
- Freedom of conscience and religion
- Freedom to manage religious affairs
- Freedom from certain religious taxes
- Freedom from religious instruction in certain educational institutions
- Cultural and Educational Rights (Articles 29–30)
- Protection of the interests of minorities
- Right of minorities to establish and administer educational institutions
- Right to Constitutional Remedies (Article 32)
- Right to approach the courts for enforcement of Fundamental Rights. B. R. Ambedkar called this the "heart and soul" of the Constitution.
4. Fundamental Rights Available Only to Citizens
- The Constitution of India guarantees several Fundamental Rights under Part III (Articles 12–35). While many of these rights are available to all persons, including foreigners, certain rights are reserved exclusively for Indian citizens.
- These rights recognize the special legal and political relationship between the State and its citizens.
- They primarily relate to equality, freedom, participation in public affairs, and the protection of India's cultural and educational heritage.
- The Fundamental Rights available only to citizens are contained in Articles 15, 16, 19, 29, and 30.
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5. Fundamental Rights and Duties Difference
- The Fundamental Rights and Fundamental Duties are two essential features of the Constitution of India.
- While Fundamental Rights guarantee certain freedoms and protections to individuals against arbitrary State action, Fundamental Duties remind citizens of their moral and civic obligations towards the nation. Together, they seek to establish a balance between individual liberty and social responsibility, thereby strengthening Indian democracy.
- Fundamental Rights are contained in Part III (Articles 12–35) of the Constitution, whereas Fundamental Duties are contained in Part IVA (Article 51A).
- The Fundamental Duties were inserted by the Forty-second Amendment of the Constitution of India on the recommendation of the Swaran Singh Committee.
- Later, the Eighty-sixth Amendment of the Constitution of India added the eleventh Fundamental Duty, requiring parents or guardians to provide educational opportunities to children between the ages of six and fourteen years.
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Fundamental Rights and Fundamental Duties are complementary rather than contradictory. Rights enable citizens to enjoy freedom and dignity, while duties ensure that these freedoms are exercised responsibly without harming society or the nation. For example:
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6. Way Forward
The Supreme Court on 19th June held that the right to walk on secured footpaths is a fundamental right and urged the government to bring a law that declares this right and recognises the duty of municipal authorities and local bodies to build, demarcate, and maintain necessary pedestrian infrastructure
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For Premins: Indian Polity and Governance, Fundamental rights, Fundamental Duties
For Mains: General Studies II: Indian Constitution—historical underpinnings, evolution, features, amendments, significant provisions and basic structure.
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Source: Indianexpress
LOGISTICS SUPPORT AGREEMENT (LSA)
1. Context
The India-Russia bilateral Logistics Support Agreement (LSA), termed the Reciprocal Exchange of Logistics Agreement (RELOS), which had been dragging on for several years, was operationalised in January this year. There was a flutter on social media recently with claims that it allows the stationing of 3,000 Russian troops on Indian soil or vice versa, painting it as a military alliance. However, it is like any LSA, the likes of which India has signed with other countries.
2. What are Logistics Support Agreements?
- Logistics Support Agreements (LSAs) are basic defence cooperation arrangements between countries that facilitate the mutual use of military facilities such as bases and ports for refuelling, repairs, replenishment, and other logistical requirements.
- These agreements are primarily administrative in nature and specify the circumstances under which such support may be extended, including joint military exercises, training activities, naval port visits, humanitarian assistance, and disaster relief operations.
- With growing military-to-military engagement and strategic partnerships, LSAs help streamline procedures and minimise bureaucratic hurdles.
- For example, India and the United States signed the Logistics Exchange Memorandum of Agreement (LEMOA) in 2016, which was India’s first logistics support pact of this kind.
- The agreement establishes a framework for reciprocal access to logistics, supplies, and services during activities such as joint exercises, training programmes, and humanitarian or disaster relief missions.
- Clarifying the scope of the agreement, then Minister of State for Defence Subhash Bhamre informed Parliament in February 2017 that LEMOA does not permit the establishment of military bases or any permanent basing arrangements.
- Some exaggerated interpretations suggest that logistics agreements allow countries to station troops on each other’s territory.
- Applying this logic, it is sometimes argued that if India and Russia could deploy forces on each other’s soil, India and the United States could do the same under LEMOA. However, such claims are incorrect.
- As clarified by the Defence Ministry, logistics support agreements merely facilitate logistical cooperation and do not authorise the permanent deployment or stationing of troops, a principle that applies to all LSA
3. What is the Agreement with Russia?
- Similar to other logistics support arrangements, the Reciprocal Exchange of Logistics Support (RELOS) agreement lays down the framework for providing assistance to military units, facilitating port visits by naval vessels, enabling the use of airspace and airfield infrastructure by military aircraft, and organising logistical and technical support for warships, aircraft, and other military equipment of both countries.
- The agreement was concluded in Moscow on February 18, 2025, and was formally ratified after Russian President Vladimir Putin approved the corresponding federal law on December 15, 2025.
- According to the Kremlin, the pact establishes procedures governing the deployment of military contingents, naval port calls, and the use of aviation infrastructure and airspace by the armed forces of India and Russia.
- In broad terms, RELOS encompasses cooperation during joint exercises, training programmes, humanitarian assistance and disaster relief (HADR) operations, repair and maintenance facilities, medical assistance, supply of food and technical materials, and reciprocal access to military installations, including ports and airbases, to support personnel operating ships and aircraft.
- The agreement specifies an upper ceiling of 3,000 personnel, which serves as a broad limit considering the size of military contingents and the number of ships or aircraft involved in mutually agreed engagements.
- It remains in force for five years and allows for modifications in the future to accommodate evolving requirements. The duration for the deployment of personnel and equipment would depend on the nature and schedule of visits agreed upon by both countries.
- In practice, India’s defence engagements with several countries are much more extensive. For example, Indian armed forces regularly participate in exercises with the United States and other partners.
- Officials have clarified that RELOS does not provide for the permanent deployment of troops or military assets.
- Its provisions are intended to be implemented only during agreed activities such as joint exercises, port visits, or other mutually approved engagements. No arrangement for permanent or long-term stationing forms part of the agreement.
- A notable feature of RELOS is that it grants India access to Russian military facilities in the Arctic region.
- This assumes greater significance as both countries seek to deepen cooperation in the Arctic, particularly in view of emerging navigation routes made increasingly accessible by climate change and global warming
4. Logistics Exchange Memorandum of Agreement (LEMOA)
- The Logistics Exchange Memorandum of Agreement (LEMOA) is a bilateral logistics support arrangement signed between India and the United States in 2016.
- It establishes a framework that enables the armed forces of both countries to access each other’s military facilities for refuelling, replenishment, repairs, and other logistical requirements on a reciprocal basis.
- The agreement is intended to facilitate cooperation during joint military exercises, training activities, port visits, and humanitarian assistance and disaster relief (HADR) operations.
- LEMOA simplifies administrative procedures and enhances interoperability between the two militaries by providing access to logistics supplies and services when required.
- However, the agreement does not permit the establishment of military bases or permanent basing arrangements on each other’s territory.
- This clarification was provided by the Government of India, which emphasized that the pact is purely logistical in nature and does not involve the stationing of troops or military assets.
- As one of the key foundational defence agreements between India and the United States, LEMOA has strengthened strategic cooperation and improved the ability of both countries to undertake coordinated operations and respond effectively to regional and humanitarian contingencies
5. Logistics Support Agreements (LSAs) Signed by India with Various Countries
India has entered into several Logistics Support Agreements (LSAs) with strategic partners such as the United States, France, Australia, Japan, Singapore, and South Korea. These arrangements facilitate reciprocal access to military facilities and enhance defence cooperation, interoperability, and maritime security.
- India–United States
As part of efforts to deepen defence relations, India and the United States have concluded three key foundational agreements:
- Logistics Exchange Memorandum of Agreement (LEMOA), signed in 2016, enables the armed forces of both countries to access each other’s logistics infrastructure for refuelling, replenishment, maintenance, and other support services. The agreement significantly expands the operational reach of the Indian Navy. For instance, access to American facilities such as Guam enhances India's ability to sustain operations across distant waters.
- Communications Compatibility and Security Agreement (COMCASA) was concluded in 2018. It facilitates the use of secure and encrypted communication systems, thereby enabling the effective deployment of advanced military platforms, including the P-8I maritime surveillance aircraft operated by the Indian Navy.
- Basic Exchange and Cooperation Agreement (BECA), signed in November 2020, provides India with access to U.S. geospatial intelligence and satellite data. This improves the precision and targeting capability of long-range weapons and strengthens situational awareness.
- India–France
- The logistics agreement between India and France seeks to enhance strategic cooperation and contribute to peace and stability in the Indian and Pacific Oceans. It also enables closer collaboration between the two navies, including the exchange of maritime intelligence and improved operational coordination.
- India–Australia
- India and Australia signed the Mutual Logistics Support Agreement (MLSA) on June 4, 2020. Notably, it was the first bilateral agreement concluded through a virtual summit. The pact reflects the shared commitment of both countries to strengthening maritime cooperation and maintaining a free, open, and inclusive Indo-Pacific region.
- India–Japan
- In September 2020, India and Japan signed the Acquisition and Cross-Servicing Agreement (ACSA). The agreement facilitates reciprocal logistical support between the armed forces of the two nations and promotes closer defence cooperation in the Indo-Pacific.
- India–Singapore
- India and Singapore concluded a logistics support agreement on June 1, 2020. The arrangement covers a broad spectrum of military assets, including warships, submarines, aircraft, and shipborne helicopters, thereby enhancing naval cooperation between the two countries.
- India–South Korea
- India signed a Mutual Logistics Support Agreement with South Korea in September 2019. The agreement has expanded the operational footprint of the Indian Navy, extending its access and presence towards the northern reaches of the South China Sea and strengthening maritime engagement in East Asia.
7. Way Forward
Overall, these logistics agreements have enhanced India's military interoperability with partner countries, expanded the operational reach of its armed forces, and reinforced its strategic presence across the Indo-Pacific region.
Although the partner countries differ, the underlying framework and objectives of these arrangements remain largely identical. They are intended to facilitate joint exercises, training activities, port visits, and other forms of military cooperation by simplifying access to logistical resources and support services.
In addition, India has a logistics support arrangement with Oman, which operates within the broader framework of the bilateral defence cooperation agreement between the two countries. Together, these agreements have enhanced the operational reach of the Indian armed forces and strengthened India's strategic partnerships across different regions.
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For Prelims: Logistics Exchange Memorandum of Agreement (LEMOA), Logistics Support Agreement (LSA), India and Russia
For Mains: GS II - International relations
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Source: The Hindu
