• The Quadrilateral Security Dialogue (QUAD) is an informal strategic partnership comprising India, the United States, Japan, and Australia.
• It is not a formal international organization or a military alliance but rather a consultative forum through which the four countries coordinate their policies and collaborate on issues of mutual interest in the Indo-Pacific region.
• The central objective of the QUAD is to promote a free, open, inclusive, prosperous, and rules-based Indo-Pacific, where international law is respected, freedom of navigation and overflight are protected, and the sovereignty and territorial integrity of all nations are upheld.
• The origins of the QUAD can be traced back to the humanitarian cooperation that followed the devastating 2004 Indian Ocean tsunami. India, the United States, Japan, and Australia worked together to provide disaster relief and humanitarian assistance to the affected countries.
• The success of this coordinated response demonstrated the potential for closer strategic cooperation among the four democracies. Building upon this experience, the idea of a quadrilateral dialogue was proposed by former Japanese Prime Minister Shinzo Abe in 2007.
• The four countries held their first official meeting that year. However, due to political and diplomatic concerns among some member countries, the dialogue became inactive shortly thereafter.
• It was formally revived in 2017, reflecting the increasing strategic importance of the Indo-Pacific and the need for greater cooperation to address emerging regional and global challenges.
• Unlike formal military alliances such as North Atlantic Treaty Organization, the QUAD does not have a legally binding treaty, a permanent headquarters, or a secretariat. Its members are not obligated to provide military assistance to one another in the event of a conflict.
• Instead, the QUAD operates through regular meetings of leaders, foreign ministers, senior officials, and working groups.
• Decisions are reached through consensus, allowing each member to retain its strategic autonomy while cooperating on common objectives.
• Over the years, the scope of the QUAD has expanded significantly beyond traditional security concerns.
• Although maritime security remains an important pillar of the partnership, the dialogue now encompasses cooperation in a wide range of sectors.

The Quadrilateral Security Dialogue (QUAD) consists of four democratic countries that share a common interest in ensuring peace, stability, prosperity, and a rules-based order in the Indo-Pacific region. These four member nations are India, the United States, Japan, and Australia.

India

• India is a founding member of the QUAD and plays a central role due to its strategic location in the Indian Ocean. India's participation aligns with its vision of SAGAR (Security and Growth for All in the Region) and the Indo-Pacific Oceans Initiative, both of which emphasize maritime security, regional cooperation, and sustainable development. Through the QUAD, India seeks to strengthen maritime security, enhance defense cooperation, diversify critical supply chains, and collaborate on emerging technologies while maintaining its policy of strategic autonomy.

United States

• United States is one of the principal architects of the Indo-Pacific strategy and a key member of the QUAD. The United States views the Indo-Pacific as vital to global trade, economic growth, and international security.
• Through the QUAD, it works closely with partner countries to promote freedom of navigation, strengthen maritime security, advance critical technologies, improve cybersecurity, and build resilient infrastructure across the region.

Japan

• Japan played a pivotal role in conceptualizing the QUAD. The idea of the grouping was first proposed by former Japanese Prime Minister Shinzo Abe in 2007.
• Japan views the QUAD as an important mechanism to support its vision of a Free and Open Indo-Pacific (FOIP). It actively promotes cooperation in infrastructure development, maritime security, disaster management, digital technologies, and economic resilience.

Australia

• Australia is another founding participant in the QUAD and contributes significantly to regional maritime security and strategic cooperation.
• Australia works with the other members to ensure that the Indo-Pacific remains open, stable, and governed by international law.
• It is actively involved in joint naval exercises, humanitarian assistance, climate initiatives, cybersecurity, and strengthening resilient supply chains.

• One of the most significant benefits of the QUAD for India is the enhancement of maritime security. India is strategically located in the Indian Ocean, through which a substantial portion of global trade and energy supplies passes.
• Protecting these Sea Lines of Communication (SLOCs) is essential for India's economic growth and national security.
• Through the QUAD, India participates in joint naval exercises, maritime domain awareness initiatives, intelligence sharing, and humanitarian assistance operations.
• These efforts improve India's ability to monitor maritime activities, combat piracy, respond to natural disasters, and safeguard its maritime interests.
• India's participation in the Malabar Naval Exercise alongside the other QUAD members has further strengthened the operational capabilities and interoperability of the Indian Navy.
• The QUAD also reinforces India's Indo-Pacific vision. India has consistently advocated the concept of a Free, Open, Inclusive, and Rules-Based Indo-Pacific, where all nations enjoy equal rights under international law.
• This vision aligns closely with India's SAGAR (Security and Growth for All in the Region) doctrine and the Indo-Pacific Oceans Initiative (IPOI).
• Through the QUAD, India contributes to preserving freedom of navigation, peaceful resolution of disputes, and respect for international law, including the principles reflected in the United Nations Convention on the Law of the Sea (UNCLOS).
• Another major area of significance is strategic balancing in the Indo-Pacific. While the QUAD is not directed against any particular country, its growing cooperation has become increasingly important amid changing regional security dynamics.
• For India, the partnership provides strategic support in maintaining a stable balance of power in the Indo-Pacific and enhances its ability to respond to evolving security challenges, including concerns arising from increasing military activities and strategic competition in the region.
• At the same time, India continues to uphold its policy of strategic autonomy, ensuring that participation in the QUAD does not compromise its independent foreign policy.

• China's relationship with the four members of the Quadrilateral Security Dialogue (QUAD)—India, the United States, Japan, and Australia—is one of the defining features of contemporary international relations.
• Although the nature of these bilateral relationships differs in terms of history, economic engagement, and security concerns, all four countries have witnessed increasing strategic competition with China in recent years.
• At the same time, each of them continues to maintain significant economic ties with China, making these relationships a complex mix of cooperation, competition, and rivalry.

China–India Relations

• China and India share one of the world's longest disputed land borders, stretching over 3,400 kilometres along the Line of Actual Control (LAC). The boundary dispute remains unresolved despite several rounds of diplomatic and military negotiations.
• Relations deteriorated significantly after the 2020 Galwan Valley clash, which resulted in casualties on both sides and marked the first deadly confrontation along the border in decades.
• The border dispute continues to influence bilateral relations, leading to increased military deployments, infrastructure development, and periodic tensions in eastern Ladakh and other sectors of the LAC.
• India is also concerned about China's growing strategic presence in the Indian Ocean through ports and infrastructure projects associated with the Belt and Road Initiative (BRI), particularly the China–Pakistan Economic Corridor (CPEC), parts of which pass through territory claimed by India.

The Quad holds significant importance for India due to several strategic, economic, and geopolitical reasons:

Countering Regional Challenges:

• The Quad provides India with a platform to collaborate with like-minded countries, such as the United States, Japan, and Australia, to address common regional challenges. These challenges include maritime security, territorial disputes, and economic concerns in the Indo-Pacific.

Strengthening Regional Security:

• As a member of the Quad, India gains access to enhanced security cooperation, intelligence sharing, and joint exercises. This bolsters its ability to protect its interests and contribute to regional stability in the face of security threats.

Balancing China's Influence:

• India views the Quad as a mechanism to balance China's growing influence in the Indo-Pacific. It helps deter aggressive actions and assertive behavior by China, particularly in areas like the South China Sea and the Indian Ocean region.

Economic Opportunities:

• The Quad promotes economic connectivity and infrastructure development in the Indo-Pacific. India can leverage these initiatives to enhance its trade, investment, and connectivity in the region, which is vital for its economic growth.

Strengthening Ties with Key Allies:

• The Quad allows India to deepen its strategic partnerships with key allies, such as the United States and Japan. These relationships have resulted in increased defense cooperation, technology sharing, and economic collaboration.

Regional Leadership Role:

• Participation in the Quad elevates India's status as a regional leader in the Indo-Pacific. It aligns with India's "Act East" policy, reinforcing its commitment to the stability and prosperity of the broader region.

7. Challenges

• China's Territorial Claims: China claims that it has historical ownership over nearly the entire region of the South China Sea, which gives it the right to manufacture islands. However, the International Court of Arbitration rejected the claim in 2016.
• China's Closeness to ASEAN: The ASEAN countries also have a well-knit relationship with China. The Regional Cooperation Economic Partnership (RCEP) is a recent example of China's increasing influence over ASEAN nations.
• Economic Power of China: Considering the economic might of China and the dependence of QUAD nations like Japan and Australia on China, the QUAD nations can not afford to have strained relations with it.
• Convergence among Quad Nations: The nations in the Quad grouping have different aspirations, and aims at balancing their own interest. Therefore, coherence in the vision of the Quad nation as a grouping is absent.

8. Way forward

For Prelims: Quadrilateral Security Dialogue (QUAD), South China Sea, Belt and Road Initiative (BRI), Indo-Pacific region, ASEAN, and Regional Cooperation Economic Partnership (RCEP). For Mains: 1. Discuss the evolution, objectives, and geopolitical significance of the Quad (Quadrilateral Security Dialogue) in the context of the Indo-Pacific region. Analyze the challenges and opportunities it presents for the member countries, particularly India. (250 words).

Source: The Indian Express

 

 

 

ANTIMICROBIAL RESISTANCE

 

1. Context

India may be using too many powerful ‘watch’ antibiotics — medicines that should be reserved for specific infections when simpler antibiotics are unlikely to work

2. What is Anti Microbial Resistance?

Antimicrobial Resistance (AMR) occurs when bacteria, viruses, fungi, and parasites change over time and no longer respond to medicine making infections harder to treat and increasing the risk of disease spread severe illness, and death.

3. Emergence and spread of AMR

• AMR occurs naturally over time, usually through genetic changes.
• Antimicrobial-resistant organisms are found in people, animals, food, plants, and the environment (in water, soil, and air).
• They can spread from person to person or between people and animals, including from food of animal origin.
• The main drivers of antimicrobial resistance include the misuse and overuse of antimicrobials, lack of access to clean water, sanitation, and hygiene (WASH) for both humans and animals, and poor infection and disease prevention and control in healthcare facilities and farms. Poor access to quality, affordable medicines, vaccines, and diagnostics, lack of awareness and knowledge, and lack of enforcement of legislation.

4. Factors causing AMR in India

Inappropriate consumption of board-spectrum (last resort) antibiotics is high because of changing prescription practices in the healthcare system due to the non-availability of a narrow spectrum of antibiotics.

Inappropriate antibiotics use among the general public like self-medication to avoid the financial burden.

A large proportion of sewage is disposed of untreated into receiving water bodies, leading to gross contamination of rivers with antibiotic residues, and antibiotic-resistant organisms.

 

5. Reasons for the recent increase in the use of antibiotics in India

• The high disease burden
• The rising income
• The easy and cheap availability of these medicines to the public.
• The uncontrolled sales of antibiotics
• Poor Public health infrastructure
• Lack of awareness regarding the misuse of antibiotics.

6. Government Initiatives that help to curb Antimicrobial Resistance In India

The Union Health Minister of India in the International Conference on Anti-Microbial Resistance stated that the first step in addressing the problem of AMR is to avoid the need for antibiotics at all in the first place. Improved water, vaccination, and sanitation may control inappropriate antibiotic use indirectly. The main government policies that help in this process are:

• Through the Swacch Bharat Program, the government has taken active steps to improve hygiene and sanitation and reduce the environmental spread of pathogens.
• Vaccination is an equally important public health measure, and through Mission Indradhaniush, India has set itself an ambitious goal of increasing routine immunization coverage to 90% within just a few years.

6.1 Red Line Campaign

The Union health ministry's Anti-Microbial Resistance awareness campaign urges people not to use medicines marked with a red vertical line, including antibiotics, without a doctor's prescription.

These medicines are called the 'Medicines with the Red Line.

To check the irrational use of antibiotics, the 'red line' will help the users to differentiate them from the drugs.

This campaign is aimed at discouraging unnecessary prescription and the counter sale of antibiotics causing drug resistance for several critical diseases including TB, malaria, urinary tract infection, and even HIV. 

7. WHO's Global plan on Anti-Microbial Resistance?

• To improve awareness and understanding of antimicrobial resistance through effective communication, education, and training.
• To Strengthen the knowledge and evidence base through surveillance and research.
• To reduce the incidence of infection through effective sanitation, hygiene, and infection prevention measures.
• To Optimize the use of antimicrobial medicines in human and animal health.
• To develop the economic case for sustainable investment that takes account of the needs of all countries and to increase investment in new medicines, diagnostic tools, vaccines, and other interventions.

8. Global efforts

8.1 Global Action Plan on Antimicrobial Resistance (GAP): Globally, countries committed to the framework set out in the Global Action Plan1 (GAP) 2015 on AMR during the 2015 World Health Assembly and committed to the development and implementation of multisectoral national action plans.

8.2 Tripartite Joint Secretariat on Antimicrobial Resistance: Tripartite joint secretariat (FAO, OIE, and WHO) has been established and is hosted by WHO to drive multi-stakeholder engagement in AMR.

8.3 World Antimicrobial Awareness Week (WAAW): WAAW was previously called World Antibiotic Awareness Week. From 2020, it will be called world Anti-Microbial Awareness Week. It is a global campaign that aims to raise awareness of antimicrobial resistance worldwide.

8.4 Global Antimicrobial Resistance and use surveillance system (GLASS): WHO launched it in 2015 to continue filling knowledge gaps and to inform strategies at all levels. GLASS has been conceived to progressively incorporate data from surveillance of AMR in humans, surveillance of the use of Antimicrobial medicines, and AMR in the food chain and the environment.

 

For Prelims & Mains

 

For Prelims: Food and Agriculture Organization (FAO), UN Environment Programme, the World Health Organization (WHO), World Organisation for Animal Health, Mission Indradhaniush, Red Line Campaign. For Mains: 1.Antimicrobial resistance (AMR) is considered one of the most significant challenges the world faces today. Discuss.

 

 

Previous Year Questions 1.Which of the following are the reasons for the occurrence of multi-drug resistance in microbial pathogens in India? ( UPSC CSE 2019) Genetic predisposition of some people Taking incorrect doses of antibiotics to cure diseases Using antibiotics in livestock farming Multiple chronic diseases in some people Select the correct answer using the code given below. (a) 1 and 2 (b) 2 and 3 only (c) 1, 3 and 4 (d) 2, 3 and 4 Answer: (b)

 Source: Down to Earth

 

 

FOREIGN DIRECT INVESTMENT (FDI)

 

 

1. Context

 

The recovery in foreign investment in recent months reflects renewed confidence in the economy, despite the ongoing conflict in West Asia and elevated crude oil prices, said a study by the Reserve Bank of India (RBI). Foreign portfolio outflows have tapered off and the markets saw inflows in the recent past.

 

2. FDI in India

• India's net foreign direct investment (FDI) inflows experienced a decline, decreasing by nearly 31% to $25.5 billion during the first 10 months of the 2023-24 fiscal year. The Finance Ministry attributed this decline to a broader trend of slowing investments in developing countries, while expressing optimism for a potential increase in investments in the current calendar year.
• Although global FDI flows overall saw a 3% rise to approximately $1.4 trillion in 2023, economic uncertainty and elevated interest rates impacted global investment, resulting in a 9% decrease in FDI flows to developing nations, as outlined in the Ministry's February assessment of economic performance.
• Reflecting the global trend of reduced FDI flows to developing countries, gross FDI inflows to India also experienced a slight decline, from $61.7 billion to $59.5 billion during the period from April 2023 to January 2024. In terms of net inflows, the corresponding figures were $25.5 billion versus $36.8 billion. The decrease in net inflows was primarily attributed to an increase in repatriation, while the decline in gross inflows was minimal.
• While a modest uptick in global FDI flows is anticipated for the current calendar year, attributed to a decrease in inflation and borrowing costs in major markets that could stabilize financing conditions for international investment, significant risks persist, according to the Ministry. These risks include geopolitical tensions, elevated debt levels in numerous countries, and concerns regarding further fragmentation of the global economy

 

3. Foreign Direct Investment (FDI)

Foreign Direct Investment (FDI) refers to the investment made by individuals, businesses, or governments from one country (the home country) into another country (the host country) with the objective of establishing a lasting interest or significant degree of influence in the foreign business or enterprise

Key Aspects:

• FDI involves the transfer of funds and resources from one country to another. This capital inflow can help stimulate economic growth in the host country by providing funds for investment in infrastructure, technology, and other areas.
• FDI often leads to the creation of jobs in the host country. When foreign companies establish subsidiaries or invest in existing businesses, they typically hire local employees, which can help reduce unemployment and improve living standards
• Foreign investors often bring advanced technologies, processes, and management practices to the host country. This technology transfer can enhance the host country's productivity, competitiveness, and industrial capabilities
• FDI can provide access to new markets for both the host country and the investing company. Foreign investors can tap into the host country's consumer base, while the host country gains access to the investing company's global distribution networks.
• FDI can contribute to overall economic development in the host country by promoting industrialization, improving infrastructure, and fostering innovation and entrepreneurship.

4.FDI Routes in India

India has several routes through which Foreign Direct Investment (FDI) can enter the country. These routes are regulated by the Reserve Bank of India (RBI) and the Department for Promotion of Industry and Internal Trade (DPIIT), and they define the conditions, limits, and sectors in which FDI is allowed

1. Automatic Route: Under the automatic route, FDI is allowed without the need for prior approval from the RBI or the government. Investors only need to notify the RBI within a specified time frame after the investment is made. This route is available for most sectors, except those that are prohibited or require government approval.

2. Government Route: In sectors or activities that are not covered under the automatic route, FDI requires government approval. Investors must apply for approval through the Foreign Investment Facilitation Portal (FIFP) or the Foreign Investment Promotion Board (FIPB), depending on the sector.

4.1. Examples

• Under the automatic route, FDI of up to 100% is allowed for manufacturing of automobiles and components.
• For the manufacturing of electric vehicles (EVs), 100% FDI is allowed under the automatic route.
• In single-brand retail trading, 100% FDI is allowed, with up to 49% allowed under the automatic route. Beyond 49%, government approval is required.
• Multi-brand retail trading (supermarkets and department stores) with FDI is permitted in some states, subject to certain conditions and restrictions. The FDI limit is typically capped at 51%.
• FDI in the insurance sector is allowed up to 74%, with up to 49% under the automatic route. Beyond 49%, government approval is needed
• In the telecom sector, 100% FDI is allowed, with up to 49% under the automatic route. Beyond 49%, government approval is required
• In the defense sector, FDI up to 74% is allowed under the automatic route, with government approval required for investments beyond 49%
• In most segments of the media and broadcasting sector, including print and digital media, 100% FDI is allowed, with up to 49% under the automatic route

4.2.Sectors where FDI Prohibited

• FDI is prohibited in the atomic energy sector, which includes activities related to the production of atomic energy and nuclear power generation.
• FDI is generally prohibited in the gambling and betting industry, which includes casinos and online betting platforms
• FDI is not allowed in the lottery business, except for state-run lotteries
• FDI is prohibited in chit funds, which are traditional Indian savings and credit schemes.
•  Nidhi companies are non-banking finance companies (NBFCs) that facilitate mutual benefit funds. FDI is typically not permitted in these entities
• While FDI is allowed in single-brand retail trading, it is generally prohibited in multi-brand retail trading of agricultural products. Some states have allowed it under specific conditions, but this remains a highly regulated area.
• FDI is not allowed in the trading of transferable development rights (TDRs) pertaining to the construction of real estate

5. Foreign Portfolio Investors (FPIs)

Foreign Portfolio Investors (FPIs) refer to foreign individuals, institutions, or funds that invest in financial assets in a country, such as stocks, bonds, mutual funds, and other securities. FPIs are distinct from Foreign Direct Investors (FDIs), who typically make long-term investments in companies and assets to establish a lasting interest

Key Aspects:

• FPIs invest in a country's financial markets, primarily by buying and selling securities traded on stock exchanges and fixed-income instruments like bonds and government securities
• FPIs often seek to diversify their investment portfolios by spreading their investments across different asset classes, sectors, and countries. This diversification helps manage risk and enhance returns
• FPIs have the flexibility to buy and sell securities in the secondary market, providing liquidity to the market and contributing to price discovery
• FPIs typically have a shorter investment horizon compared to Foreign Direct Investors (FDIs). They may engage in short-term trading or hold securities for a few months to a few years.
• FPIs are subject to regulatory frameworks and restrictions in the countries where they invest. These regulations are designed to ensure that foreign investments do not pose undue risks to the local financial markets and economy.

6.Foreign Portfolio vs. Foreign Direct Investment

 

FPI (Foreign Portfolio Investment)	FDI (Foreign Direct Investment)
FPI involves the purchase of financial assets such as stocks, bonds, mutual funds, and other securities in a foreign country. These investments are typically made with the intention of earning returns on capital and do not result in significant control or ownership of the underlying businesses	FDI entails making an investment in a foreign country with the primary objective of establishing a lasting interest and significant control or influence over a business enterprise or physical assets. FDI often involves the acquisition of a substantial ownership stake (typically at least 10%) in a company or the establishment of new business operations.
FPI is generally characterized by a shorter investment horizon. Investors in FPI may engage in trading and portfolio rebalancing activities, and their investments are often more liquid. The focus is on earning capital gains and income from investments.	FDI is characterized by a longer-term commitment. Investors in FDI intend to engage in the day-to-day management or decision-making of the business, contribute to its growth and development, and generate profits over an extended period.
FPI investors typically have little to no influence or control over the companies in which they invest. They are passive investors who participate in the financial markets and rely on market dynamics to drive returns.	FDI investors actively participate in the management and decision-making of the businesses they invest in. They often seek to exercise control over company operations and strategy, which may include appointing board members or key executives.
FPI investments are often made through financial instruments like stocks, bonds, and securities. Investors may use instruments like mutual funds or exchange-traded funds (ETFs) to gain exposure to foreign markets	FDI investments involve a direct equity stake in a company, either through share acquisition or the establishment of a subsidiary or branch in the host country. FDI can also involve the purchase of real assets such as land, factories, or infrastructure
FPI can provide short-term capital inflows, but it may be more susceptible to market volatility and sudden capital outflows. It may not have as direct an impact on job creation and economic development as FDI.	FDI often contributes to long-term economic development by creating jobs, stimulating infrastructure development, transferring technology and expertise, and enhancing the competitiveness of local industries
FPI investments are subject to regulations that vary by country and may include foreign ownership limits, reporting requirements, and tax considerations.	FDI is subject to regulations that can be more stringent and may involve government approval, sector-specific conditions, and investment protection measures

 

 

 

 

For Prelims: Economic and Social Development-Sustainable Development, Poverty, Inclusion, Demographics, Social Sector Initiatives, etc For Mains: General Studies III: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment

 

 

Previous Year Questions   1. Both Foreign Direct Investments (FDI) and Foreign Institutional Investor (FII) are related to investment in a country. (UPSC CSE 2011)   Which one of the following statements best represents an important difference between the two? A.FII helps bring better management skills and technology, while FDI only brings in capital B.FII helps in increasing capital availability in general, while FDI only targets specific sectors C.FDI flows only into the secondary markets, while FII targets primary market D.FII is considered to the more stable than FDI   Answer (B)

 

Source: indianexpress

 

 

COMPREHENSIVE ECONOMIC AND TRADE AGREEMENT (CETA)

 

 

 

1. Context

 

The India-U.K. Comprehensive Economic and Trade Agreement (CETA) came into effect on July 15, a year after it was signed. At the same time, the India-U.K. Double Contribution Convention (DCC) also comes into effect. The trade deal has been hailed by both sides, with Commerce Secretary Rajesh Agrawal even calling it the “gold standard” of India’s free trade agreements.

 

 

2. What Trade Benefits Does India Receive Under CETA?

 

 

• According to India's Chief Trade Negotiator, Rajesh Agrawal, the Comprehensive Economic and Trade Agreement (CETA) is notable not only for its extensive coverage but also for the substantial market access it provides.
• The agreement goes beyond addressing a broad range of tariff and non-tariff measures by offering meaningful concessions across several key sectors, making it one of India's most comprehensive trade agreements.
• Under the agreement, the United Kingdom has committed to eliminating customs duties on 96.8% of its tariff lines immediately after the agreement comes into effect. These tariff reductions account for approximately 97.7% of India's exports by value.
• In addition, tariffs on another 2% of tariff lines, representing nearly 1.8% of trade value, will be reduced through tariff-rate quotas.
• As a result, the agreement ultimately provides preferential market access covering 98.8% of tariff lines and approximately 99.5% of the total value of bilateral trade.
• The scope of CETA extends well beyond tariff liberalization. Spread across 30 chapters, the agreement includes provisions relating to digital commerce, government procurement, innovation, support for micro, small and medium enterprises (MSMEs), labour standards, environmental sustainability, and gender-related issues.
• It also establishes rules to address non-tariff barriers, including Sanitary and Phytosanitary (SPS) Measures and Technical Barriers to Trade (TBT), with the objective of ensuring that such regulations facilitate legitimate public policy goals without becoming unnecessary obstacles to international trade.
• Services trade constitutes another major component of the agreement and is particularly significant for India, where the services sector is a key contributor to economic growth and export earnings.
• Under CETA, the United Kingdom has provided enhanced market access by allowing Indian businesses to establish a commercial presence in sectors such as information technology and computer services, consulting, and environmental services.
• This enables Indian enterprises to expand their operations in the U.K. through branches, subsidiaries, or representative offices, thereby strengthening their participation in the British market

 

 

3. What is the Double Contribution Convention (DCC), and How Does It Benefit Indian Workers in the United Kingdom?

 

 

• A major achievement for India under the Comprehensive Economic and Trade Agreement (CETA) is the inclusion of the Double Contribution Convention (DCC).
• This provision is designed to prevent Indian professionals temporarily employed in the United Kingdom from making mandatory social security contributions in both countries simultaneously.
• Under the DCC, Indian employees who continue contributing to India's social security system, along with their employers, are exempt from paying social security contributions in the U.K. for a period of up to five years.
• The exemption was originally proposed for three years but was subsequently extended to five years during negotiations.
• Before the introduction of the DCC, Indian workers on temporary assignments in the United Kingdom faced the burden of contributing to social security schemes in both India and the U.K.
• Since most Indian professionals are deputed to the U.K. for periods not exceeding five years, they rarely remained in the country long enough to qualify for U.K. social security benefits. Under British regulations, workers generally need to contribute for at least 10 years before becoming eligible to receive pension and other social security benefits.
• Consequently, many Indian employees paid into the U.K. system without ever receiving any corresponding benefits because they returned to India before meeting the eligibility criteria.
• The DCC addresses this long-standing concern by exempting eligible Indian workers from U.K. social security payments during their temporary stay, provided they continue making the required contributions in India.
• This exemption is expected to cover nearly 90% of Indian professionals working in the United Kingdom, enabling them to retain around 23% of their salary that would otherwise have been deducted as U.K. social security contributions

 

 

4. What Benefits Does the United Kingdom Receive Under CETA?

 

 

• The Comprehensive Economic and Trade Agreement (CETA) provides the United Kingdom with substantial opportunities to expand its presence in the Indian market across both goods and services.
• While India has safeguarded certain strategically important and sensitive sectors from excessive foreign competition, the agreement nevertheless offers British businesses significantly improved access to one of the world's fastest-growing major economies.
• Under the agreement, India has committed to eliminating customs duties immediately on products representing 30.3% of bilateral trade value.
• Tariffs on another 47% of trade value will be phased out over a specified period, while products accounting for 12.1% of trade value will benefit from preferential tariff concessions through tariff-rate quotas.
• Overall, the agreement provides preferential access covering 89.5% of India's tariff lines, representing approximately 89.4% of the total value of bilateral trade.
• Among the sectors expected to benefit the most are several iconic British exports. The gradual reduction in import duties will make U.K.-made whisky more affordable for Indian consumers.
• Similarly, tariffs on British automobiles, engineering equipment, and a range of industrial products will decline, improving their competitiveness in the Indian market and creating new export opportunities for U.K. manufacturers.
• The agreement also strengthens market access for British service providers. India has agreed to liberalize several important service sectors, including accountancy, auditing, financial services, telecommunications, and environmental services.
• As a result, U.K.-based firms operating in these fields will be able to provide services to Indian clients under more favourable conditions, often without the need to establish a permanent commercial presence in India.
• In addition, India has committed to recognizing certain U.K. professional qualifications, particularly in the fields of law and accounting, thereby making it easier for qualified British professionals to engage with the Indian market and offer their expertise

 

 

5. Are There Any Unique Features of the CETA?

 

 

• In addition to its comprehensive coverage and extensive market access commitments, the Comprehensive Economic and Trade Agreement (CETA) contains several distinctive provisions that make it different from India's earlier free trade agreements.
• Among the most noteworthy are the provisions relating to automobile imports and government procurement, both of which represent significant policy developments.
• One of the landmark features of the agreement is India's decision to reduce import duties on automobiles from the United Kingdom.
• This is the first time India has agreed to provide preferential tariff treatment for imported passenger vehicles under a trade agreement.
• As notified by the Directorate General of Foreign Trade (DGFT) on 10 July, the agreement permits the import of 20,000 fully built petrol and diesel passenger vehicles from the U.K. during the first year at concessional customs duty rates ranging from 30% to 50%, depending on factors such as engine capacity and vehicle category.
• These preferential rates are substantially lower than the regular import duties, which generally range between 66% and 110%.
• The agreement also establishes a phased quota mechanism for automobile imports. The annual import quota for eligible passenger vehicles will gradually increase to 37,000 units by the fifth year of the agreement.
• Thereafter, the quota will progressively decline, eventually stabilizing at 15,000 vehicles annually from the fifteenth year onwards. During this period, the concessional tariff applicable to vehicles imported within the quota will also be reduced, reaching 10% by the fifth year and remaining at that level thereafter.
• Separate quota limits and tariff schedules have also been negotiated for electric and other alternative-fuel passenger vehicles, as well as for commercial vehicles, reflecting the diversity of the automobile sector.
• Government procurement is another area where the agreement introduces important changes. Under CETA, companies from the United Kingdom will be permitted to participate in procurement tenders floated by the Government of India.
• However, their participation will be subject to specific conditions, and they will be treated as Class-II local suppliers in eligible Central Government tenders, ensuring that domestic firms continue to enjoy preferential treatment in public procurement.
• At the same time, Indian businesses will benefit from improved access to the United Kingdom's government procurement market. Indian suppliers will continue to receive Class-I local supplier preference in the U.K., enabling them to compete more effectively for eligible public contracts.
• Nevertheless, this access is limited to procurement by non-sensitive Central Government departments and public utilities, while contracts awarded by central public sector enterprises (PSUs) and state or local government bodies remain outside the scope of the agreement.
• According to India's Ministry of Commerce, the arrangement grants Indian companies legal access to U.K. government procurement opportunities valued at approximately £90 billion (around US$122 billion).
• In return, India has opened procurement opportunities worth nearly US$114 billion to eligible British firms, creating a mutually beneficial framework for public sector contracting

 

 

6. Way Forward

 

One notable aspect absent from the India–U.K. Comprehensive Economic and Trade Agreement (CETA) is a dedicated investment commitment. Unlike some of India's recent trade agreements, CETA does not contain a provision requiring the United Kingdom to facilitate a specific level of investment into India over a defined period.

For instance, the Trade and Economic Partnership Agreement (TEPA) between India and the four member countries of the European Free Trade Association (EFTA) includes an investment-related commitment under which the EFTA bloc has agreed to facilitate US$100 billion in investments in India over a 15-year period. Similarly, the India–New Zealand Free Trade Agreement contains a provision whereby New Zealand has committed to facilitating US$20 billion of investment in India during the same 15-year timeframe.

 

For Prelims: Comprehensive Economic and Trade Agreement (CETA), Double Contribution Convention (DCC)   For Mains: GS II - International relations

 

 

Previous Year Questions   1. Consider the following countries: 1. Australia 2. Canada 3. China 4. India 5. Japan 6. USA Which of the above are among the free-trade partners' of ASEAN? (UPSC 2018) A. 1, 2, 4 and 5          B.  3, 4, 5 and 6      C.  1, 3, 4 and 5       D.  2, 3, 4 and 6   Answer: C   2. Increase in absolute and per capita real GNP do not connote a higher level of economic development, if (UPSC 2018) (a) Industrial output fails to keep pace with agricultural output. (b) Agricultural output fails to keep pace with industrial output. (c) Poverty and unemployment increase. (d) Imports grow faster than exports. Answer: C 3. The SEZ Act, 2005 which came into effect in February 2006 has certain objectives. In this context, consider the following: (2010) Development of infrastructure facilities. Promotion of investment from foreign sources. Promotion of exports of services only. Which of the above are the objectives of this Act? (a) 1 and 2 only     (b) 3 only         (c) 2 and 3 only           (d) 1, 2 and 3 Answer: A 4. A “closed economy” is an economy in which (UPSC 2011) (a) the money supply is fully controlled (b) deficit financing takes place (c) only exports take place (d) neither exports nor imports take place Answer: D 5. With reference to the “G20 Common Framework”, consider the following statements: (UPSC 2022) 1. It is an initiative endorsed by the G20 together with the Paris Club. 2. It is an initiative to support Low Income Countries with unsustainable debt. 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: C

 

Source: The Hindu

 

 

HYDROGEN POWERED TRAIN

 

 

 

1. Context

 

On July 17, Prime Minister Narendra Modi flagged off India’s first train powered by hydrogen. It operates on an 89-km stretch between Jind and Sonipat in Haryana.

 

2. Integral Coach Factory (ICF) Project

 

• The Integral Coach Factory (ICF) project holds strategic importance for Indian Railways, aligning with India’s broader goals to cut down greenhouse gas emissions and enhance the adoption of renewable energy sources. Using hydrogen — a much cleaner alternative to traditional fuels — is expected to help decrease reliance on fossil fuels.

• The initiative is spearheaded by the Northern Railway zone and was launched during 2020-21. It comprises two main tasks: transforming two conventional 1600 HP diesel power cars into hydrogen fuel cell-driven units, and establishing a hydrogen storage and refueling station in Jind, Haryana.

• The estimated cost of the entire project stands at around ₹136 crore. The core design work, testing, and validation are being carried out by the Research Design & Standards Organisation (RDSO) under Indian Railways.

• The train powered by hydrogen will operate between Jind and Sonepat in Haryana, covering two round trips over a stretch of 356 km. The Jind facility will be capable of storing up to 3,000 kilograms of hydrogen.

• Hydrogen-based fuel systems are still a relatively new domain for Indian Railways. Given hydrogen’s high flammability, the project faces numerous technical and safety hurdles. Each modified power car will house 220 kg of hydrogen in specially designed high-pressure (350 bar) cylinders. Ensuring the safety of these cylinders and fuel cell systems requires thorough structural testing and validation.

• As the lightest chemical element, hydrogen is invisible, has no smell or taste, and is extremely combustible. These properties necessitate strict safety protocols in its handling and usage.

• The hydrogen-powered train will be equipped with a range of safety mechanisms, including pressure relief systems, sensors for flame and gas leakage detection, temperature monitoring, and advanced ventilation designs.

• To maintain high safety standards, a German independent agency — Technischer Überwachungsverein Süd (TÜV-SÜD) — has been appointed for auditing. The engineering design and retrofitting are being carried out at ICF Chennai by Medha Servo Drives, a company based in Hyderabad.

 

3. Hydrogen as a fuel

 

• Hydrogen, although the most abundant element in the universe, is not found in its pure form naturally. It must be separated from compounds like water (Hâ‚‚O), which combines two hydrogen atoms with one oxygen atom. Despite being an environmentally friendly element, the extraction process requires significant energy input.

• The concept of using hydrogen as a sustainable energy source has been around for nearly a century and a half. However, it was the oil crises of the 1970s that sparked serious interest in exploring hydrogen as an alternative to fossil fuels.

• Hydrogen is classified based on its production methods, often referred to by color labels. The most widely produced form today is grey hydrogen, which is derived from fossil fuels without capturing the resulting emissions.

• When hydrogen is produced from fossil fuels but with carbon capture and storage technology, it is known as blue hydrogen. In contrast, green hydrogen is created through electrolysis powered by renewable energy, making it the cleanest variant.

• Green hydrogen offers specific advantages:

  (i) It burns cleanly and can significantly reduce emissions across several hard-to-abate sectors such as transport, chemical manufacturing, and the iron and steel industry.

  (ii) It enables the productive use of surplus renewable energy that cannot be immediately consumed or stored by the grid

 

4. National Green Hydrogen Mission

 

 

• In 2023, the Union Cabinet gave its approval to the National Green Hydrogen Mission (NGHM), acknowledging the pivotal role that green hydrogen will play in helping India achieve energy self-reliance by 2047 and reach its Net Zero emissions target by 2070.

• The mission, spearheaded by the Ministry of New and Renewable Energy (MNRE), identifies green hydrogen as a promising emerging sector. It aims to position India as a leading global center for the production, consumption, and export of green hydrogen and its related products.

• One of the key targets under the mission is to develop the capacity to produce at least 5 million metric tonnes (MMT) of green hydrogen annually by the year 2030

 

5.Why India is Pursuing Green Hydrogen?

 

• Under the Paris Agreement of 2015, India is committed to reducing its greenhouse gas emissions by 33-35% from the 2005 levels.
• It is a legally binding international treaty on climate change to limit global warming to below 2°C compared to pre-industrial levels.
• At the 2021 Conference of parties in Glasgow, India reiterated its commitment to move from a fossil and import-dependent economy to a net-zero economy by 2070.
• India's average annual energy import bill is more than $100 billion.
• The increased consumption of fossil fuel has made the country a high carbon dioxide (CO2) emitter, accounting for nearly 7% of the global CO2 burden.
• To become energy independent by 2047, the government stressed the need to introduce green hydrogen as an alternative fuel that can make India the global hub and a major exporter of hydrogen.

 

5. What is Green Hydrogen?

 

Green hydrogen refers to hydrogen gas that is produced through a process called electrolysis, which involves splitting water molecules into hydrogen and oxygen using electricity generated from renewable energy sources such as solar, wind, or hydropower. Unlike conventional methods of hydrogen production, which rely on fossil fuels and emit greenhouse gases, green hydrogen production is considered environmentally friendly because it does not generate carbon emissions. Green hydrogen is thus a clean and sustainable energy carrier that can be used in various sectors, including transportation, industry, and power generation, to help reduce reliance on fossil fuels and mitigate climate change.

 

Difference between Green and Grey Hydrogen

 

Characteristic	Green Hydrogen	Grey Hydrogen
Production Method	Electrolysis of water using renewable energy sources (solar, wind)	Steam methane reforming from natural gas
Environmental Impact	Virtually emissions-free, utilizing renewable energy and water as feedstock	High carbon emissions contribute to environmental degradation
Carbon Emissions	No carbon emissions during production or consumption	High carbon emissions during production
Sustainability	Represents an end-to-end green pathway for hydrogen production	Contributes significantly to carbon emissions and environmental degradation
Purpose	Offers a sustainable alternative to traditional hydrogen production	Predominantly used in industrial applications

 

6. Hydrogen Fuel Cell Vehicles

 

A hydrogen internal combustion engine (ICE) vehicle operates similarly to traditional cars powered by diesel or petrol, but with a key difference: there are no carbon emissions produced during combustion.

Hydrogen Fuel Cell Electric Vehicles (FCEVs)

Hydrogen fuel cell electric vehicles (FCEVs) utilize hydrogen electrochemically by converting it into electricity through a fuel cell. This process involves storing hydrogen in a high-pressure tank and generating electricity, with water being the only byproduct. While hydrogen ICE vehicles don't emit carbon, research suggests that burning hydrogen is less energy-efficient compared to converting it into electricity in a fuel cell.

Advantages of Hydrogen FCEVs Over Battery Electric Vehicles (BEVs)

Compared to battery electric vehicles (BEVs), where the battery constitutes the heaviest part of the vehicle, hydrogen FCEVs are typically lighter. This is because hydrogen is a lighter element, and a fuel cell stack weighs less than an electric vehicle (EV) battery. This feature makes hydrogen fuel cell technology a promising alternative to EV battery technology, particularly for heavy-duty trucks that can benefit from increased payload capacity without emitting smoke from burning diesel.

The Promise of Hydrogen Fuel Cell Technology

Research indicates that long-haul FCEVs can carry freight amounts comparable to diesel trucks, whereas long-haul BEVs face a weight penalty of up to 25% due to heavier batteries. Given the imperative to reduce carbon emissions in the transportation sector while maintaining revenue-generating payload capacity, green hydrogen emerges as a promising solution.

 

For Prelims: Green Hydrogen, compressed natural gas, Electric Vehicles, Hydrogen Fuel Cell vehicles, Grey Hydrogen, The Ministry of New and Renewable Energy For Mains:  1. Green hydrogen production utilizes electrolysis, a process powered by renewable energy sources. However, large-scale production of renewable energy also has environmental implications. Discuss the ethical considerations involved in promoting green hydrogen as a sustainable solution. (250 words) 2. India aspires to become a global hub for green hydrogen production and export. What are the strategic advantages India possesses to achieve this goal? Discuss the policy measures and technological advancements needed to make India a leader in this emerging field. (250 words)

 

 

Previous Year Questions   1. With reference to 'fuel cells' in which hydrogen-rich fuel and oxygen are used to generate electricity, consider the following statements: (UPSC 2015) 1. If pure hydrogen is used as a fuel, the fuel cell emits heat and water as by-products. 2. Fuel cells can be used for powering buildings and not for small devices like laptop computers. 3. Fuel cells produce electricity in the form of Alternating Current (AC) Which of the statements given above is/are correct? A. 1 only        B. 2 and 3 only         C. 1 and 3 only        D. 1, 2 and 3     2. With reference to green hydrogen, consider the following statements: (UPSC 2023) 1. It can be used directly as a fuel for internal combustion. 2. It can be blended with natural gas and used as fuel for heat or power generation. 3. It can be used in the hydrogen fuel cell to run vehicles. How many of the above statements are correct? A. Only one      B. Only two        C. All three      D. None   Answers: 1-A, 2-C

 

Source: The Indian Express