April

26,
2018
FREE TRADE AGREEMENTS (FTAs)
In April 2018, Niti Aayog released “A Note on Free Trade Agreements (FTAs) and their costs” in
the background of growing wave of protectionism and trade wars dominating global trade.
Fact sheet: India’s trade

 India is a fairly open economy with

overall trade (exports plus imports) as
a percentage of GDP around 40%.
 Trade deficit: India’s trade deficit has
grown from USD 6 billion in FY01 to
USD 109 billion in FY17.
 India’s exports have diversified both in
terms of markets and products and
services in the past two decades.
 Market diversification:
o The size of developed
countries in India’s exports has
declined and that of emerging
economies has increased to over 50%.
o USA and EU now account for only 30% of India’s total exports compared to 45% in 2000.
 Product diversification:
o Export sector has gradually moved up the value chain with focus on high-value products like
industrial machinery, automobiles/car parts, and refined petroleum products.
o Manufactured goods along with petroleum products accounted for nearly 85% of India’s
export basket in FY17.
 Value addition: The foreign content of India’s exports (value of imported intermediate goods and
services that are embodied in India’s exports) has more than doubling from under 10% in 1995 to
24% in 2011.
 Export potential:
o International Trade Center (ITC) estimates India’s untapped export potential to around USD
200 billion with a corresponding import potential pegged at USD 180 billion.
o The markets with greatest potential for India’s exports are United States of America, China
and United Arab Emirates.

Drivers of India’s Exports:

 Global Demand: India’s exports much more sensitive to changes in external demand as compared to
price changes (tariff changes).
 Energy deficiency: Supply-side constraints like energy shortages dampen price responsiveness of
exports. Tackling the issue of energy deficit can boost export performance considerably.

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 Higher logistics cost:
o Higher logistics cost is a major impediment to export growth. Various studies peg logistics
cost in India to be around twice of that in developed countries.
o According to Economic Survey 2017-18, a 10% decrease in indirect logistics cost can
contribute to around 5-8% of extra exports.”

India-china trade: FTA with China?

 Total Trade: Sino-Indian bilateral trade was USD 72bn in FY17 (accounting for almost 10% of India’s
overall trade) making China India’s biggest trading partner.
 Trade deficit: China’s trade surplus with India was USD 52 billion in FY17. In fact, China now
accounts for about 50% of India’s trade deficit.
 Reason for high trade deficit:
o This trade asymmetry is due to the nature
of goods flow.
o India tends to export primary materials
such as ores, minerals and cotton, whereas
Chinese exports high value chain products
(with higher profit margins and which
create more jobs at home) like capital and
manufactured goods.
o China’s export basket is better diversified
than that of India’s. It is this composition of
bilateral trade which worries Indian policy
makers more.

India’s experience with Free Trade Agreements (FTAs):

 Evidences from recent FTAs suggest worsening of our trade balances with our FTA partner. India’s
trade deficit with ASEAN, Korea and Japan has widened post-FTAs.
 Exporters in India have underutilised its existing FTAs. Only 5-25% of India’s international trade is
routed through the preferential route/FTAs, which is one of the lowest in Asia.
 Thus, exports to FTA partner countries and non-partner countries have grown at the same pace.
 Reason for under-utilization of FTAs: Complex rules of origin criteria, lack of information on FTAs,
higher compliance costs and administrative delays dissuade exporters from using preferential
routes.
 Recommendations: Before getting into any multilateral trade deal India should consider the
following five points:
1. Review existing FTAs in terms of benefits to various stakeholders (industry, consumers), trade
complementarities and changing trade patterns in the past decade.

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2. Negotiate bilateral FTAs with those countries where trade complementarities and margin of
preference is high as it may benefit India in the long run.
3. Reduce compliance cost and administrative delay so as to increase utilisation rate of FTAs.
4. Setup Proper safety/Quality standards should to avoid dumping of lower quality hazardous
goods into the Indian market.
5. Circumvention of Rules of Origin (ROO) should be strictly dealt with by Indian authorities.
 In short, FTAs have to be signed keeping two things in mind (1) mutually reciprocal terms and (2)
focusing on products and services with maximum export potential.

View on Regional Comprehensive Partnership Agreement (RCEP):

 What is it? RCEP is a proposed free trade

agreement (FTA) between 10 ASEAN countries
and their six FTA partners, namely Australia,
China, India, Japan, Korea and New Zealand.
 India and RCEP: RCEP countries account for
almost 27% of India’s total trade. Exports to
RCEP account for about 15% of India’s total
exports and imports from RCEP comprise 35% of
India’s total imports.
 Arguments against joining RCEP:
o India runs a trade deficit with ASEAN as
well as the partner countries of RCEP.
India’s trade deficit with the bloc has risen from $9 billion in FY05 to $83 billion in FY17, of
which China alone accounts for over 60% of the deficit.
o India already has bilateral FTAs with ASEAN, Korea and Japan and negotiations are
underway with Australia and New Zealand.
o Given India’s inability to negotiate a good services deal in the past, RCEP negotiations
especially with China need a second thought.
o Indian industry will have more to lose than gain if it agrees to a liberal tariff elimination
schedule specially w.r.t China.
o At a time of growing protectionism and US’s stance towards China, opening our market to
China can be prove to be disastrous given proper standards and processes are not in place in
India.

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DRAFT NATIONAL CLEAN AIR PROGRAMME (NCAP)
In April 2018, the Union Environment Ministry released a Draft of the National Clean Air
Programme (NCAP). The ministry seeks comments from concerned stakeholders by May
17, 2018.
About:

 The NCAP aspires to overcome the deficits of the ongoing government initiatives targeted towards
air pollution control.
 It lays down a comprehensive strategy framework for enhanced management of air quality.
 A budget amounting to Rs. 637 crore has been set aside for aiding implementation of the
programme. The document lays down specific targets and timelines for each initiative listed under
the programme.

Salient features:

 Monitoring:
o Augmentation of existing air quality monitoring network by increasing number of existing
manual and continuous monitoring stations.
o Introducing rural monitoring stations.
o Identifying alternative technology for real-time monitoring network.
o Augmenting capabilities of existing monitoring stations to measure PM2.5 concentration
 Studies:
o It calls for carrying out detailed studies for devising air quality management plans for 100
non-attainment cities.
o In addition to city-specific source apportionment studies, it lays down the need for a
national-level emission inventory.
 Technology assessment cell: It will be setup for evaluation of new pollution prevention and control
technologies has also been proposed.
 In addition to setting up of an Air Information Centre that would analyse and disseminate
monitored data, an Air Quality Forecasting system is also being envisioned.

No mention of emission reduction targets:

 While the document mentions emission reduction targets, nowhere does it actually quantify these
targets.
 The concept note for NCAP released earlier in March 2018, clearly listed specific targets to reduce
35 % pollution levels in the next three years and 50 % pollution levels in the next five years. These
targets don’t find a mention in the recent draft.
 It will be interesting to observe whether NCAP’s well-intended and ambitious initiatives without
quantified targets would result in significant impact or not.

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PREVENTION OF CRUELTY TO ANIMALS IN ANIMAL MARKETS
RULES, 2018
In April 2018, Centre notified a new set of rules, called the Prevention of Cruelty to
Animals in Animal Markets Rules, 2018.
Background:

 In May 2017, Centre had banned the sale of cattle for slaughter at animal markets across the
country.
 Due to opposition to the move from various quarters, Union Government has proposed a new set of
rules, called the Prevention of Cruelty to Animals in Animal Markets Rules, 2018, “in supersession”
of the earlier notification.
 These norms will be available for public feedback for 30 days after which it will become law.

Salient features:

 Every district is to have in place a ‘Prevention of Cruelty to Animals committee’ that has to ensure
that animals in animal markets are not subjected to “unnecessary suffering and pain.”
 Moreover, it would have to ensure that the sale of animals was properly registered and that these
markets had adequate facilities.
 The committee has to ensure that animal markets located near international borders were not used
as hubs for cross-border transport, unless they complied with a separate set of rules.
 There were, however, no restrictions on the location of such markets as opposed to earlier rules
which said they could not be located within 50 km of an international and 25 km of a State border.
 In short, there are no restrictions on the sale of cattle for slaughter in animal markets.

INDIA–IRAN PTA
In April 2018, Indian government started examining the feasibility of a Preferential Trade
Agreement (PTA) with Iran.
Background:

 Iran has been keen on a PTA with India for long, but New Delhi had not been pursuing it with vigour
as it was already engaged in a number of bilaterals with other countries.
 But now India is keen on a PTA. During the visit of Iranian President Hassan Rouhani to India in
February 2018, India made the promise for negotiating a PTA with Iran.

Significance for India:

1. India’s focus is on market access for products such as pharmaceuticals, man-made fibre, rice and
automotive parts that hold a lot of promise in Iranian Market.

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2. It would also help in bridging the trade imbalance. Iran’s exports to India in 2017-18 were worth
$11.11 billion, whereas India’s exports were $2.65 billion during the fiscal. The trade imbalance is
mainly because of India’s import of oil from Iran.
3. Iran and Pakistan are also negotiating for deepening the PTA. If it happens then, Pakistan by getting
preferential access for its exports could be a competitor for India in the Iranian market which could
hurt India’s interest.

TALIBAN’S SPRING OFFENSIVE

In April 2018, Taliban announced the start of their annual spring offensive, thus marking
the symbolic start of the fighting season.
About:

 By this they have dismissed an offer for peace talks by President Ashraf Ghani by calling the peace
overtures as a “conspiracy”.
 The militants said the campaign was a response to a more aggressive U.S. military strategy adopted
in 2017, which aims to force the militants into peace talks.
 But they have pledged to focus on U.S. forces. Its primary target will be the American invaders and
their intelligence agents. Their internal supporters will be dealt with as a secondary target
 Comment:
o The announcement underlines the risk to parliamentary and district council elections due to
be held in October.
o A BBC survey of 2018 estimated the insurgents were active in 70% of the country.

LCU MK-IV
In April 2018, the third ship of the Landing Craft Utility (LCU) MK-IV project was inducted
into the Indian Navy at Port Blair. The remaining five ships of the project are in an
advanced stage of construction.
About:

 The ship was commissioned as INLCU L53

 It is an amphibious ship with a displacement of 830 Tons and is capable of transporting combat
equipment such as Main Battle Tanks Arjun, T72 and other Armoured Vehicles.
 It would be based in the Andaman and Nicobar Command bolstering the Command’s capability in
undertaking multi role activities such as beaching operations, search/ rescue, and supply and
replenishment of distant islands.
 It is indigenously designed and built by Garden Reach Shipbuilders and Engineers (GRSE), Kolkata.

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INNOVATE IN INDIA FOR INCLUSIVENESS PROJECT
In April 2018, India signed a loan agreement with world bank for US$ 125 million for “Innovate in
India for Inclusiveness Project”.
About:

 Objectives: To support public, private, and the academic institutions to overcome the key market
failures currently holding back the development of an innovative biopharmaceutical and medical
devices industry in India.
 Components: The project consists of the following parts –
o Strengthening of pilot-to market innovation ecosystem,
o Acceleration of the pilot –to-market process for specific products and
o Project Management and monitoring & Evaluation.
 Project duration: The closing date of Innovate in India for Inclusiveness project is 30 June, 2023.

139 TERROR ENTITIES IN PAKISTAN

The UN Security Council’s updated list of terrorists and militant groups released in April 2018
has 139 entries from Pakistan alone, including Lashkar-e-Taiba (LeT).
About:

 The list identifies all those individuals who have lived in Pakistan, operated from there or have been
associated with groups that used Pakistani territory for carrying out their operations.
 The terrorist entities that are allegedly based in Pakistan, have worked from there or had links to
Pakistani individuals include Jaish-e-Mohammed, Lashkar-e-Jhangvi and Tehreek-e-Taliban Pakistan.
 Hafiz Saeed is listed as a person also wanted by Interpol for his involvement in terrorist activities.
 The list also includes Dawood Ibrahim, who, according to the UN, has held several Pakistani
passports issued in Rawalpindi and Karachi. The UN claims that he owns a bungalow in the hilly area
of Noorabad, Karachi.

DOWRY
In April 2018, CJI Dipak Misra agreed to review the July 2017 order of Supreme court on
dowry.
July 2017 order on dowry:

 Supreme court said that women were filing frivolous dowry complaint against husbands and in-laws.
 Thus it banned the immediate arrest of accused persons and allows grant of bail to them on the
same day thus diluting anti-dowry harassment law.
 It said that there should be no arrest of accused until the local Family Welfare Committees, set up by
the National Legal Services Authority, composed of social workers, homemakers, retired persons,
etc., vet the complaint.

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 Criminal proceedings in dowry harassment cases can be settled and the accused can get bail. Even
the recovery of dowry articles should not be a deterrent for grant of bail.

Opposition:

 In its aftermath, States had written back to the Centre, saying that setting of family welfare
committees and monitoring them were not “implementable”.
 It is also argued that the July 27 order blunted the purpose of Section 498A as an effective law to
protect human rights of married woman who live in torture.

PANIC SAFETY SWITCHES

In April 2018, it was reported that the Union Ministry of Electronics and IT has tied-up
with IIT-Delhi to make a switch-based device in cars and buses to aid safety of women.
About:

 These ‘panic switch’ will be installed across all public transport vehicles – taxis and buses – which
when activated will alert the local police station about the vehicle’s coordinates by sounding an
alarm and sending a live video feed.
 Trials have been conducted in certain locations and now the measure has been notified.
 The project is supported by the Nirbhaya Fund, which works towards the safety of women.
 Concerns:
o However, industry officials said the effectiveness of the system depends on adequate
deployment of the traffic police.
o Also, it needs to be ensured the IT systems at the backend work efficiently and seamlessly to
ensure there are no disruptions when the panic switch is deployed by someone in trouble.

NEW FORMULA FOR CALCULATING ROAD CONSTRUCTION

In April 2018, Government announced that it would adopt international norms for calculating
highways construction from this fiscal, which would include measuring “lane kilometres instead
of linear distance”.
About:

 Until now India followed the linear distance method under which, whether (1 kilometre of) six lanes
was constructed or 14 lanes, it was considered as 1 kilometre
 This method did not truly reflect the amount of work completed. Globally the length of each lane
was calculated separately.
 The new method for calculating road construction would be used from the current fiscal.
 E.g. According to the existing method, 26.92 km of roads a day were constructed in the fiscal ended
March 31, 2018, while according to the global method a total of 94.18 lane km was built.

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BIO-MEDICAL WASTE MANAGEMENT (AMENDMENT) RULES,

2018
In March 2018, Government notified the Bio-Medical Waste Management (Amendment)
Rules, 2018 to amended the Bio-Medical Waste Management Rules, 2016 Rules so as to
strengthen the sound management of biomedical waste in India.
Salient features of Bio-Medical Waste Management (Amendment) Rules, 2018:

 Bio-medical waste generators including hospitals, veterinary institutions, blood banks etc. will have
to phase out chlorinated plastic bags (excluding blood bags) and gloves by March 27, 2019. Blood
bags have been exempted for phase-out, as per the amended BMW rules, 2018.
 Operators of common bio-medical waste treatment and disposal facilities shall establish bar coding
and global positioning system for handling of bio-medical waste by March 27, 2019.
 The State Pollution Control Boards will have to provide detailed information to Central Pollution
Control Board regarding biomedical waste such as district-wise bio-medical waste generation,
information on common bio-medical waste treatment etc.
 Every occupier of a facility generating biomedical waste shall pre-treat the biomedical waste
through disinfection or sterilization on-site according to WHO guidelines and then sent to the
Common bio-medical waste treatment facility for final disposal.

Comment:

 The new rules notified, though markedly better than the earlier norms, seem to fall short on some
key issues. The most critical among these is that, despite easing of goals, their execution may be
difficult.
 E.g. the government has given such waste generators more time to phase out the use of chlorinated
plastic bags and for setting up facilities for on-site pre-treatment of medical waste. However, it is
doubtful whether they will be able to do so within the given timeframe.

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 Many in the health industry are of the view that there is no suitable alternative to chlorinated plastic
bags, which emit toxic gases on incineration.
 Bar-coding and GPS tracking may also be difficult for most medical facilities, barring big government
and private hospitals. Besides, the absence of Internet services in remote places may pose another
formidable hurdle.
 In any case, small-scale healthcare facilities may need liberal government assistance, both technical
and financial, for this purpose.
 Nevertheless, the task has to be undertaken to prevent infectious medical waste from being mixed
with general garbage and ending up in landfill sites.

E-WASTE (MANAGEMENT) AMENDMENT RULES, 2018

In March 2018, government notified the E-Waste (Management) Amendment Rules,
2018 thereby amending the E-Waste Management Rules 2016 to ensure
environmentally sound management of e-waste in India.

Objective:

 To channelize the E-waste generated in the country towards authorized dismantlers and recyclers in
order to formalize the e-waste recycling sector.

Salient features of the E-waste (Management) Amendment Rules, 2018:

1. The e-waste collection targets under Extended Producer Responsibility (EPR) have been revised and
will be applicable from 1 October 2017.
a. The phase-wise collection targets for e-waste in weight shall be 10% of the quantity of
waste generation as indicated in the EPR Plan during 2017-18, with a 10% increase every
year until 2023.
b. After 2023 onwards, the target has been made 70% of the quantity of waste generation as
indicated in the EPR Plan.
2. Separate e-waste collection targets have been drafted for new producers, Producer Responsibility
i.e. those producers whose number of years of sales operation is less than Organisations' (PROs)?
the average lives of their products.
3. it is mandatory for the 'Producer Responsibility Organisations' (PROs) to A PRO provides end-to-end e-
waste management solutions for
register themselves with the CPCB. This will help the CPCB to keep a
implementation of ‘Extended
constant watch on them to check their activities.
Producer Responsibility’(EPR)
4. Under the Reduction of Hazardous Substances (RoHS) provisions, cost for obligation of manufacturers and
sampling and testing shall be borne by the government for conducting the importers of electronic items.
RoHS test. If the product does not comply with RoHS provisions, then the
cost of the test will be borne by the Producers.

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Comment:

 The new rules though markedly better than the earlier norms, seem to fall India ranks fifth in the world in
short on some key issues. generating e-waste, according to
the UN’s Global E-Waste
 The most critical among these is that their execution may be difficult due to
Monitor, 2014.
limited existing capacity and expertise in this field. Due to this, a sizeable
amount of this waste either remains untreated or is handled by the
unorganised sector in a very clumsy manner.
 There is a need to encourage the emergence of private waste treatment enterprises and also to
launch a massive programme of training waste-pickers in the safe handling of discarded electronic
devices.

CAG REPORT ON ASIATIC LIONS

In March 2018, CAG released a report on the Gujarat’s Gir Sanctuary, the last abode of
Asiatic lions in Asia.
Increasing population:

 Due to conservation efforts, the population of Asiatic Lions has increased from 205 in 1979 to 523
lions in 2015.
 Of the 523, 167 lions, or a third of the total population have their habitat outside the Gir Protected
Area. There had been a 54.6% increase in the population of the Asiatic lion outside the Gir Sanctuary
between 2011 and 2015.
 Thus there is an increasing pressure on the existing protected area.

Protected area not increased:

 Inspite of that, the state government had done little to expand the protected area – essential both
to conserve the lion population and protect humans and livestock.
 The last expansion of the lion habitat had been approved by the Union Ministry of Environment
Forest and Climate Change in 2008, but no action has been taken since.
 As a result, at least 21 lions have died of unnatural causes between 2012-’13 and 2016-’17.

Recommendation:

 In view of the rising population and high instances of deaths of lions outside the Gir Protected Area
during 2012-’13 to 2016-’17, the creation of new protected areas was one of the available options
with the forest department.

NATIONAL ANNUAL RURAL SANITATION SURVEY (NARSS)

In March 2018, findings of the National Annual Rural Sanitation Survey (NARSS) 2017-18
were released.

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It was conducted by an Independent Verification Agency (IVA) under the World Bank
support project to the Swachh Bharat Mission Gramin (SBM-G).
Key findings:

 77% of households were found to have access to toilets during the survey period.
 93.4% of the people who had access to toilets used them.
 95.6% of villages which were previously declared and verified as ODF were confirmed to be ODF.
The remaining 4.4% villages also had sanitation coverage of over 95%.
 70% of the villages surveyed found to have minimal litter and minimal stagnant water.

SEYCHELLES–INDIA MILITARY TIES

In March 2018, Seychelles opposition blocked the Military Deal with India.

Assumption island:

 During PM Modi’s visit to Seychelles (Mar 2015), an Agreement on the Development of facilities on
Assumption Island was signed.
 In January 2018, India signed a revised agreement with Seychelles that will allow India to:
o Build military infrastructure on Assumption Island,
o Conduct joint efforts in anti-piracy operations and
o Undertake enhanced Exclusive Economic Zone (EEZ) surveillance to prevent illegal fishing,
poaching and drug and human trafficking.
 Significance:
o Situated only 600 miles east of Diego Garcia, the US air and naval base, the Indian Ocean
archipelago – Seychelles – is becoming a hub of geopolitical competition.
o To expand it’s strategic reach in the Indian Ocean, India is working hard to mark a military
presence on both Seychelles and Mauritius (Agalega island).
 Opposition:
o In March 2018 it was reported that the Seychelles opposition has refused to allow it to be
ratified by their parliament.
o There have been public protests against India in Seychelles for the past couple of months
raising fears that India would appropriate the island.
o Later, India clarified that Assumption Island Project is a joint project that India is executing
at the request of the Government of Seychelles.

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