Daily Current Affairs 21 October 2020 | UPSC Current Affairs 2020

Current Affairs Of Today Are

1) Infrastructure Investment Trusts (InvITs)

Infrastructure Investment Trusts (InvITs) are likely to acquire infrastructure assets worth more than ₹4 lakh crore in the next five years as the market matures, a domestic rating agency said
At present, six InvITs have raised more than ₹27,600 crores from investors, while a seventh entity is at an advanced stage of raising ₹25,200 crores, ICRA said.
The total value of assets under these seven InvITs is estimated at ₹1.3 lakh crore and InvITs are likely to gain significant traction in the next few years
The PowerGrid Corporation and NHAI are planning to transfer some of their operational assets to InvIT platforms,

What is Infrastructure Investment Trusts (InvITs)?

An “Infrastructure Investment Trusts (InvITs)" is a trust (they are called Business Trusts) registered under the Indian Trusts Act, 1882 which manages a fund/ corpus where the funds are invested in infrastructure projects. InvITs are mutual funds like institutions that enable investment into the infrastructure sector by pooling small sums of money from a multitude of individual/institutional investors. InvITs are regulated by the Securities and Exchange Board of India (SEBI).
For example, If a company "XYZ" is owning and operating a Toll road project where there is a regular income from the toll collections. There are a good return from this project but individuals (like me) cannot purchase this infrastructure asset/project because I want to invest only Rs. 2 lakh and the asset value is supposed Rs. 500 crore. So, what happens an "InvIT" will pool in (attract) investments from various individual investors (like me) on the promise that it will put the money into infrastructure assets. Now earlier, individually I was not able to purchase the (entire) Toll road project but now I can invest (purchase) a very small portion of the toll project by investing through the InvIT. So, I (and various other individuals and maybe some institutions also) will put money into InvIT, and with this money, InvIT will purchase/invest in the Toll road project. Now, whatever is the annual return from the Toll road project (basically toll collections), the InvIT will pass to the individual investors. (No need to go into its tax details)
This we analyzed from the individual investor side. Now think about the infrastructure company that has built the toll road project and invested Rs. 1000 crore one time and getting a regular annual return of Rs. 100 crore. Now the infrastructure company's money is blocked say for 10 years. So, it wants to sell this toll project at some profit and would like to get its money back so that it can put it into some other projects. So, InvITs provides a route for the infrastructure company to monetize its assets. InvITs provide a platform for the infrastructure companies for future asset monetization of operational projects. Actually, the InvITs will not get involved in building a project, rather they look to purchase already operational projects which are generating cash flows.
Pension and Insurance funds have long term capital (you put into pension/insurance funds to withdraw only after a long time/retirement). This long-term capital can be put into InvITs which will ultimately be invested in infrastructure projects.
The state-run PowerGrid Corporation and National Highways Authority of India are planning to transfer some of their operational assets to InvIT platforms, the agency said, pointing out that roads, transmission, telecom, and renewable energy are the key sectors which carry huge potential for asset monetization through the InvIT route
REITs are the same as InvITs but they invest in commercial real estate projects.

Source: The Hindu

2) Fish production Data (2017-18)

Daily Current Affairs 21 October 2020 | UPSC Current Affairs 2020 Daily News Teller

Marine: 36.88 lakh tonnes (29%)

Inland: 89.02 lakh tonnes (71%)

Total: 125.90 lakh tonnes

The highest fish production (total of marine and inland) is done by Andhra Pradesh (34.5 lakh tonne) and second is West Bengal (17.42 lakh tonne)

Dept. of Fisheries, Govt. of India

3) Judiciary and Executive: AP CM Letter to CJI

Recently, Andhra Pradesh Chief Minister Y.S. Jagan Mohan Reddy has stirred a hornet’s nest by writing to the Chief Justice of India (CJI) complaining about Supreme Court(SC) judge Justice N.V. Ramana.

What were the allegations leveled in the letter?

Mr. Jagan said that Justice Ramana was a legal adviser and additional advocate-general in the previous government of the TDP.
AP CM has alleged that SC judge Justice N.V. Ramana (next in line to become CJI as per seniority) had been influencing the sittings and posting of cases in the State High Court.
AP CM has also cited instances of how matters important to the opposition Telugu Desam Party had been ‘allocated to a few judges’ and that some High Court judges are hostile to his government & deliberately striking down his government orders
In effect, he has accused many judges of misconduct, corruption, and political bias.
Given the above, the Chief Minister urged the Chief Justice of India to consider initiating steps to ensure that the State’s judicial neutrality was maintained.

How are allegations of misconduct against judges dealt with?

The Constitution protects the independence of judges of the High Courts and the Supreme Court by making them removable only through a long process of impeachment.
However, not all forms of misconduct will warrant impeachment. There could be other kinds of impropriety too.
There are times when serious complaints of this sort are received, and the CJI is called upon to examine them.
Since 1997, judges have adopted an ‘in-house procedure’ for inquiring into such charges.

When was the procedure adopted?

After Justice J.S. Verma took over as CJI in 1997, he circulated among judges a document called ‘Restatement of Values of Judicial life’. This was a set of principles containing the essential elements of ideal behavior for judges.
The Full Court passed a resolution that an ‘in-house procedure’ would be adopted for action against judges for acts of commission or omission that go against these values.
A five-judge committee was constituted to come up with a procedure. Its report was adopted on December 15, 1999. It was made public in 2014.

How does the in-house procedure work?

When a complaint is received against a High Court judge, the CJI should decide if it is considered frivolous or if it is serious and “directly related to the merits of a substantive decision in a judicial matter”.
If it is serious, the CJI should get the judge’s response. He may close the matter if he is satisfied with the response.
If a deeper probe is considered necessary, both the complaint and the judge’s response, along with the CJI’s comments, are recorded for further action.
After considering the High Court’s Chief Justice, the judge involved (accused of Political bias) and the complaint (here AP CM), the CJI, if deemed necessary, forms a three-member committee.
If a Supreme Court judge faces such a charge, the in-house panel will comprise three Supreme Court judges.
The inquiry the three-member committee holds is of the nature of a fact-finding mission and is not a formal judicial inquiry involving examination of witnesses. The judge concerned is entitled to appear before it.

What happens after the probe is done?

If the committee finds substance in the charges, it can give two kinds of recommendations. One, that the misconduct is serious enough to require removal from office, or that it is not serious enough to warrant removal.
In the former case, the judge concerned will be urged to resign or seek voluntary retirement.
If the judge is unwilling to quit, the Chief Justice of the High Court concerned would be asked to withdraw judicial work from him.
The President and the Prime Minister will be informed of the situation. This is expected to clear the way for Parliament to begin the process of impeachment.

How will the CM’s complaint be handled?

The complaint by the Andhra Pradesh Chief Minister will have to be examined by the CJI from the perspective of whether
It can be rejected as baseless, or it requires a deeper investigation.
In detail annexed to his letter, Mr. Reddy has cited several writ petitions in which adverse orders were passed against his regime.

Consequences of this controversy

Impacts Democratic Functioning: Such type of confrontation and mistrust between two organs of State is not conducive for the smooth working of Democracy. The ultimate victim will be the common man who will be bereft of better governance
The politicization of Judiciary: The serious accusation by a sitting Chief Minister brings out to the foreground the weakness of Judiciary. Similar kinds of charges might be leveled by opposition parties when it comes to power. All these lead to the politicization of the Institution of Judiciary.
The integrity of SC Judges is doubted: Every judgment delivered by the judges involved in this controversy will be questioned which is not good even from an Institutional perspective
The legitimacy of the institution at stake: Such type of allegations and counter allegation will create doubts in minds of the public about the ability to get justice from the Formal system. As a result, people will tend to fall back on undemocratic informal judicial systems like Khap Panchayats.
Judiciary’s Grievance Redressal Mechanism tested: How the CJI & SC is going to handle this case will set a precedent to deal with the misconduct of Judges in the future. If the process is not robust, fair & transparent then the calls for greater executive control of the Judiciary will increase (Judicial Standards and Accountability Bill)

Source: The Hindu

4) Myanmar Rohingya- an overview of the crisis

The government of Myanmar, a predominantly Buddhist country, denies the Rohingya citizenship and even excluded them from the 2014 census, refusing to recognize them as a people.
It sees them as illegal immigrants from Bangladesh.

Who are the Rohingya?

Described by UN Secretary-General Antonio Guterres as “one of, if not the, most discriminated people in the world”, the Rohingya are one of Myanmar’s many ethnic minorities.
They numbered around one million in Myanmar at the start of 2017.
They have their own language and culture and say they are descendants of Arab traders and other groups who have been in the region for generations.

What’s the issue?

The government of Myanmar, a predominantly Buddhist country, denies the Rohingya citizenship and even excluded them from the 2014 census, refusing to recognize them as a people.
It sees them as illegal immigrants from Bangladesh.

When did the latest crisis happen?

In August 2017, a deadly crackdown by Myanmar’s army on Rohingya Muslims sent hundreds of thousands fleeing across the border into Bangladesh.
They risked everything to escape by sea or on foot a military offensive which the United Nations later described as a “textbook example of ethnic cleansing”.
But the army in Myanmar (formerly Burma) has said it was fighting Rohingya militants and denies targeting civilians.
The country’s leader Aung San Suu Kyi, once a human rights icon, has repeatedly denied allegations of genocide.

What has been the international response?

Amnesty International says the Myanmar military also raped and abused Rohingya women and girls.
A report published by UN investigators in August 2018 accused Myanmar’s military of carrying out mass killings and rapes with “genocidal intent”.
The ICJ case, lodged by the small Muslim-majority nation of The Gambia, in West Africa, on behalf of dozens of other Muslim countries, called for emergency measures to be taken against the Myanmar military, known as Tatmadaw until a fuller investigation could be launched.

Where are they now?

About 860,000 Rohingya live in the world’s largest and most densely populated refugee camp in southern Bangladesh.
The Myanmar and Bangladesh governments continue to negotiate terms for the repatriation of Rohingya refugees to Myanmar.
According to the Ministry of Home Affairs, approximately 40,000 Rohingyas are living in India.

Source: The Hindu

5) India International Science Festival 2020

The 6th edition of the India International Science Festival (IISF) will be held virtually in 2020.
The 5th edition was held in Kolkata in 2019.
IISF: It is a festival to celebrate the achievements of India’s scientific and technological advancements with students, innovators, craftsmen, farmers, scientists, and technocrats from India and abroad.
It was launched in 2015 to promote Science and Technology and demonstrate how science could lead India towards a developed nation within a short span of time.
Aim: To engage the public with science and celebrate the joy of science and show the ways how science, technology, engineering, and mathematics (STEM) provide solutions to improve people's lives.
Organizing Agencies: Ministry of Science & Technology and Ministry of Earth Sciences in association with Vijnana Bharati (VIBHA) organize IISF every year.
IISF 2020: The Council of Scientific and Industrial Research (CSIR) will spearhead the IISF 2020 with the support of all other concerned ministries and departments.
CSIR is funded by the Ministry of Science and Technology.

Vijnana Bharati

Swadeshi Science Movement was started in the Indian Institute of Science- Bengaluru by a few eminent scientists under the guidance of Prof. K I Vasu.
This movement gradually gained momentum and emerged as an organization with a national presence.
In 1991, it was decided to launch the Swadeshi Science Movement at all India Level and named it Vijnana Bharati.
It’s one of the objectives is to motivate young scientists towards greater creativity and originality.
It is headquartered in New Delhi.

Source: PIB

6) Extending the New START Treaty

The Russian President has proposed extending by one year the New START (Strategic Arms Reduction Treaty) between the USA and Russia expiring in February 2021.

The New START Treaty:

It is a treaty between the United States of America and the Russian Federation on Measures for the further reduction and limitation of strategic offensive arms.
It entered into force on 5th February 2011.
New START has replaced the 1991 START I treaty, which expired in December 2009, and superseded the 2002 Strategic Offensive Reductions Treaty (SORT), which terminated when New START entered into force.
It is a successor to the START framework of 1991 (at the end of the Cold War) that limited both sides to 1,600 strategic delivery vehicles and 6,000 warheads.
It continues the bipartisan process of verifiably reducing the USA and Russian strategic nuclear arsenals by limiting both sides to 700 strategic launchers and 1,550 operational warheads.
It will lapse in February 2021 unless extended for a five-year period.

Recent Proposal:

Russia has extended the proposal along with concerns of a lack of interest from the United States.
In 2019, the United States has also suspended the Intermediate-Range Nuclear Force Treaty (INF Treaty) with Russia.
It was a nuclear arms-control accord reached by the United States and the Soviet Union in 1987 in which the two nations agreed to eliminate their stocks of intermediate-range and shorter-range (or “medium-range”) land-based missiles (which could carry nuclear warheads).
The United States withdrew from the Treaty on 2nd August 2019.

USA’s Stand:

The USA wanted any replacement treaty should include China and to encompass all of Russia’s nuclear weapons — not just the “strategic” weapons covered under New START but also Russia’s sizable stockpile of smaller, “tactical” nuclear weapons that fall outside the treaty.
Russia rejected the demands, and China has refused to take part in negotiations.
The USA has agreed to negotiate the extension.

Source: The Hindu

7) Environmental Clearance to Kaleshwaram Project Invalid

Recently, the National Green Tribunal (NGT) has declared that the environmental clearance (EC) granted to the Kaleshwaram Lift Irrigation Project in Telangana was ex post facto (i.e. granted after completion of substantial work) and illegal.

Issues in the Project:

The petition filed in 2018 stated that while the Kaleshwaram Project was a lift irrigation system, the state government wrongly claimed, until the grant of environmental clearance (EC), that the project was not for lift irrigation, but only for drinking water supply.
Substantial work on the project had already been undertaken before granting of EC in December 2017. Thus, the EC was ex post facto, in violation of the Environmental Impact Assessment (EIA) Notification, 2006.
The Ministry of Environment, Forest and Climate Change (MoEFCC) had published the draft Environmental Impact Assessment (EIA) notification 2020, intending to replace the existing EIA Notification 2006 under the Environment (Protection) Act, 1986.
The draft notification has provisions for post facto project clearance, a reiteration of a March 2017 notification for projects operating without clearance.
The Project also underwent change by an increase in capacity and inclusion of Mission Bhagiratha to provide drinking water to Hyderabad and certain villages of Telangana.
However, the pre-feasibility report submitted in January 2017 and draft of the EIA report submitted in July 2017 did not mention the Mission Bhagiratha which involved interlinking of the two projects.
The feasibility of the changed project was never evaluated while granting EC.

NGT’s Observation:

Two legal issues are confronting the Project:
One, Kaleshwaram Lift Irrigation Project was functioning without requisite prior environmental clearance under EIA Notification, 2006, until 2017, when the EC was granted.
Second, project contractor L&T was alleged to have cleared large areas of forest land for the construction of quarters for its employees, without requisite forest clearance under the Forest (Conservation) Act, 1980.
The NGT directed that until the Telangana government obtains final forest clearance, it should stop all work except the drinking water component.
It has further asked MoEFCC to consider measures to prevent the recurrence of such violations where EC has sought ex post facto.
It is particularly required when the projects are multi-purpose and part of it requires EC so that such requirement is not defeated on the specious plea that the project was partly not covered by the schedule Environmental Impact Assessment (EIA) Notification as has happened in the present case.
It observed that the accountability of the responsible person needs to be fixed and remedial measures have to be taken.
For that purpose, it has directed the MoEFCC to constitute a seven-member expert committee.
The expert committee could assess the extent of damage caused by going ahead with the project without EC – the period from 2008 to 2017 — and identify the necessary restoration measures.
The expert committee must be constituted within a month and needs to complete its exercise within six months.

Mission Bhagiratha

It is a project for safe drinking water for every village and city household in Telangana State.
It aims to provide piped water to 2.32 crore people in 20 lakh households in urban and 60 lakhs in rural areas of Telangana.
The project will supply clean drinking water to all households in the state through water sourced from River Godavari and River Krishna.

Source: Indian Express

8) Taiwan Insecurity of China

Recently, China has objected to any official exchanges between India and Taiwan.

Chinese Concern:

The statement from China came in response to reports that India and Taiwan were considering going forward with talks on a trade deal.
China believes the 'One-China principle’ is a universal consensus of the international community, including India.
China also objected to the recent campaign (posters and social media) in India wishing Taiwan “Happy National Day” (October 10) and referring to it as a “country” or a “nation”.
China is also opposing the inclusion of Australia in the upcoming Malabar naval exercise with India, Japan, and the United States.

India-Taiwan Relations

India and Taiwan do not maintain formal diplomatic relations. The areas of cooperation between India and Taiwan have been limited due to negligible political relations.
From 1995 to 2014, the bilateral trade turnover has grown manifold from just $934 million to $5.91 billion.
Technology: In the field of science and technology, there are more than thirty ongoing government-funded joint research projects.
In August 2015, the Taiwan-based Foxconn, one of the largest hardware manufacturers in the world, announced an investment of $5 billion in India.
In India and Taiwan in 2018 signed a bilateral investment agreement. India-Taiwan trade ties have been expanded and Taiwanese firms are prominent investors in India,
Taiwan has for long been a world leader in high-tech hardware manufacturing and can contribute much to the “Make in India”, “Digital India” and “Smart Cities” campaigns.
Taiwan’s agro-technology and food processing technology can also be very beneficial for India’s agriculture sector.
Both sides have also expanded educational exchanges after a mutual degree recognition agreement in higher education was signed in 2010.

Challenges:

One China policy: India finds it difficult to realize the full potential of its bilateral relationship with Taiwan. At present, about 16 countries worldwide continue to recognize Taiwan as an independent state. India is not among the sixteen countries.
Trade & Investment: The economic exchange is still relatively insignificant. Taiwan’s share of trade with India is around 1% of its global trade.

Taiwan

Taiwan - the Republic of China (ROC), home to twenty-three million people, is an island off the southern coast of China that has been governed independently from mainland China since 1949.
Its neighbors include China (officially the People’s Republic of China, PRC) to the west, Japan to the northeast, and the Philippines to the south.
Taiwan is the most populous state that is not a member of the United Nations and the largest economy outside the UN.
Taiwan is Asia’s 5th largest economy.
It is a global leader in chip manufacture and the second-largest manufacturer of IT hardware, etc.
China’s Claim: The People’s Republic of China (PRC) views the island as a province, while in Taiwan—a territory with its own democratically elected government—leading political voices have differing views on the island’s status and relations with the mainland.
China and Taiwan maintain a fragile relationship, which has improved during the past seven years but is periodically tested.

Source: The Hindu

9) Punjab Assembly Rejects Centre’s Farm Laws

Recently, Punjab became the first state in the country to formally reject the Central government’s three Farm Acts bypassing three Bills to negate the Union laws.
It also rejected the proposed Electricity Amendment Bill and demanded their immediate annulment.

The Punjab assembly introduced three farm Bills:

The Farmers Produce Trade and Commerce (Promotion and Facilitation) (Special Provisions and Punjab Amendment) Bill, 2020.
It seeks to ensure that the sale or purchase of wheat or paddy in Punjab is not allowed below the Minimum Support Price (MSP).
It also seeks to provide for punishment for harassment of farmers or payment of less price to the farmers.
The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services (Special Provisions and Punjab Amendment Bill, 2020.
It provides for imprisonment of not less than three years and fines for sale-purchase of wheat or paddy under a farming agreement below the MSP.
The Essential Commodities (Special Provisions and Punjab Amendment) Bill, 2020.
It prevents hoarding and black-marketing of agricultural produce and seeks to ensure status quo ante about the implementation of the Central Act namely, ‘The Essential Commodities (Amendment) Act, 2020’.
While the central law abolished any market fees or licenses for private players outside the APMCs, the Punjab bills have reintroduced it.
These fees will go towards a fund for the welfare of small and marginal farmers.
The Assembly also introduced the Code of Civil Procedure (Punjab Amendment) Bill, 2020.
It seeks to exempt agricultural land not exceeding 2.5 acres from Section 60 of The Code of Civil Procedure, 1908, which provides for attachment of various properties - moveable and immoveable in the execution of decree (judgement).
It also seeks to exempt the Properties of the farmers such as cattle, implements, cowsheds, etc from attachment.
These exemptions are provided, given the farmers’ apprehension about attachment-decree of their land as a consequence of the enforcement of farming contracts.

Rationale:

The Central laws were aimed to do away with government interference in agricultural trade by creating trading areas free of middlemen and government taxes outside the structure of Agricultural Produce Market Committees (APMCs).
This according to farmers was giving preference for corporate interests at the cost of farmers’ interests and a lack of regulation in these non-APMC mandis was a cause for concern for farmers.
The absence of any regulation in non-APMC mandis was seen as a precursor to the withdrawal of the guarantee of MSP-based procurement.
To annul the apprehensions of farmers, the Punjab government has changed the application of central laws to the state. It will restore the agricultural safeguards for the farmers through the regulatory framework of the Punjab Agricultural Produce Markets Act, 1961.
However, there are apprehensions that this step taken by the Punjab Government may discourage private players to buy at rates less than MSP.
The Punjab government states that 86.2% of farmers in the state are small and marginal, with the majority owning less than two acres of land. Consequently, they have limited access to multiple markets and lack the negotiation power needed to operate in a private market.
The Bills also point out that agriculture, agricultural markets, and the land are the primary legislative domain of the state.

Constitutional Issues

Earlier three Farm Acts were passed by the Central Government under Entry 33 of the Concurrent List. Entry 33 of the Concurrent List mentions trade and commerce, production, supply, and distribution of domestic and imported products of industry; foodstuffs, including oilseeds and oils; cattle fodder; raw cotton and jute.
However, if foodstuffs are considered synonymous with agriculture, then all the powers of states in respect of agriculture, listed so elaborately in the Constitution, shall become redundant.
States have no authority to overrule the legislation passed by the Centre except under Article 254(2).
Article 254(2) enables a State government to pass a law, on any subject in the Concurrent List, that may contradict a Central law, provided it gets the President’s assent.
In 2014, the Rajasthan government took this Article 254 (2) route to make changes to the central labor laws — the Factories Act, the Industrial Disputes Act, and the Contract Labour Act — which subsequently got the President’s assent.
However, the Parliament is not barred from enacting at any time any law concerning the same matter including a law adding to, amending, varying, or repealing the law so made by the Legislature of the State.
Article 257(1) also states that the executive power of every State shall be so exercised as not to impede or prejudice the exercise of the executive power of the Centre.
It authorizes the Centre to impose President’s Rule in the case when the State is exercising its executive power prejudicial to the Centre’s executive power.
Apart from the Governor, the Punjab government's new farm Bills need the assent of the President since they seek to amend laws passed by the central government. If not, they can at best serve as a symbolic political statement against the Centre's farm laws.

Source: The Hindu

10) FDI Inflow

From April to August 2020, a total Foreign Direct Investment (FDI) inflow of USD 35.73 billion was received. It is the highest ever for the first 5 months of a financial year.
FDI inflow has increased despite the Gross Domestic Product (GDP) growth contracted 23.9% in the first quarter (April-June 2020).

Recent Increase in FDI Inflows:

FDI (USD 35.73 billion) received in the first 5 months of 2020-21 is 13% higher as compared to the first five months of 2019-20 (USD 31.60 billion).
Total FDI inflow grew by 55%, i.e. from USD 231.37 billion in 2008-14 to USD 358.29 billion in 2014-20.
FDI equity inflow (one of the three components of FDI) received from April to August 2020 was USD 27.10 billion. It is also the highest ever for the first 5 months of a financial year and 16% more compared to the first five months of 2019-20 (USD 23.35 billion).
Measures taken by the Government on the fronts of FDI policy reforms, investment facilitation, and ease of doing business have resulted in increased FDI inflows into the country.
According to the World Investment Report 2020 by the UNCTAD, India was the 9th largest recipient of FDI in 2019.

Government Measures to increase FDI:

In 2020, schemes like the production-linked incentive (PLI) scheme for electronics manufacturing, have been notified to attract foreign investments.
In 2019, the Central Government amended FDI Policy 2017, to permit 100% FDI under automatic route in coal mining activities.
Further, the government permitted 26% FDI in digital sectors. The sector has particularly high return capabilities in India as favorable demographics, substantial mobile, and internet penetration, massive consumption along with technology uptake provides a great market opportunity for a foreign investor.
FDI in manufacturing was already under the 100% automatic route, however, in 2019, the government clarified that investments in Indian entities engaged in contract manufacturing is also permitted under the 100% automatic route provided it is undertaken through a legitimate contract.
Contract Manufacturing: Production of goods by one firm, under the label or brand of another firm.
Foreign Investment Facilitation Portal (FIFP) is the online single point interface of the Government of India with investors to facilitate FDI. It is administered by the Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry.

An increase in FDI Inflows is further Expected:

As foreign investors have indicated an interest in the government’s moves to allow private train operations and bid out airports.
In March 2020, Government permitted non-resident Indians (NRIs) to acquire up to 100% stake in Air India.
Valuable sectors such as defense manufacturing where the government enhanced the FDI limit under the automatic route from 49% to 74% in May 2020, could also attract large investments going forward.

Foreign Direct Investment

FDI is the process whereby residents of one country (the home country) acquire ownership of assets to control the production, distribution, and other activities of a firm in another country (the host country).
It is different from Foreign Portfolio Investment where the foreign entity merely buys stocks and bonds of a company. FPI does not provide the investor with control over the business.
Flows of FDI comprise capital provided (either directly or through other related enterprises) by a foreign direct investor to an enterprise.
FDI has three components, viz., equity capital reinvested earnings, and intra-company loans.
Equity capital is the foreign direct investor’s purchase of shares of an enterprise in a country other than its own.
Reinvested earnings comprise the direct investors’ share (in proportion to direct equity participation) of earnings not distributed as dividends by affiliates, or earnings not remitted to the direct investor. Such retained profits by affiliates are reinvested.
Intra-company loans or intra-company debt transactions refer to short- or long-term borrowing and lending of funds between direct investors (or enterprises) and affiliate enterprises.
Routes through which India gets FDI:

Automatic Route: In this, the foreign entity does not require the prior approval of the government or the RBI.
Government route: In this, the foreign entity has to take the approval of the government.
The Foreign Investment Facilitation Portal (FIFP) facilitates the single window clearance of applications that are through the approval route.

Source: The Hindu

11) Antitrust Case Against Google: USA

Recently, the US Justice Department has sued Google, accusing the company of illegally abusing its dominance in internet search in ways that harm competitors and consumers.
The lawsuit (or antitrust action against the company) comes after a report by the US House of Representatives panel that found Google and three other tech giants -- Facebook Inc, Apple Inc, and Amazon.com Inc — all abused their power as gatekeepers in the digital economy to thwart competitive threats.

US Government’s Stand:

Google is illegally protecting its dominant position in the market for search and search advertising with the deals it has struck with companies like Apple.
Google pays Apple billions of dollars a year to have its search engine set as the default option on iPhones and other devices.
Challenges contracts that Google has with smartphone makers that use Google’s Android operating system, requiring them to install its search engine as the default.
All this stifles competition and innovation from smaller upstart rivals to Google and harms consumers by reducing the quality of search and limiting privacy protections and alternative search options.
Many countries have broad laws that protect consumers and regulate how companies operate their businesses. The goal of these laws is to provide an equal playing field for similar businesses that operate in a specific industry while preventing them from gaining too much power over their competition. These are called antitrust laws.
Investigated Google’s behavior and acquisitions in the overall market for digital advertising, which includes search, web display, and video ads.
Online advertising was the source of virtually all of Alphabet’s USD 34 billion in profit last year. Alphabet Inc. is Google’s parent company.
Most of Google’s services are offered for free in exchange for personal information that helps it sell its ads.
Goods that are free to consumers are not exempt from antitrust oversight.
In the landmark Microsoft case of the late 1990s, the software giant bundled its web browser for free into its dominant Windows operating system.
Microsoft lost because, using restrictive contracts, it bullied personal computer makers and others to try to prevent them from offering competing web browser software — a competition that could have undermined the Windows monopoly.

Google’s Defense:

The deals that the Justice Department is citing are entirely legal. Such company-to-company deals violate antitrust law only if they can be shown to exclude competition.
Users can freely switch to other search engines, like Microsoft’s Bing or Yahoo Search, anytime they want. Google’s search service is the runaway market leader because people prefer it.
Further, its services have helped hold down the prices of smartphones.

Report by the US House of Representatives panel:

Big Tech Companies like Google, Facebook, Amazon, and Apple act as a “gatekeeper”, i.e. can control access to information.
Gatekeepers can also decide whether a message will be spread to a wider audience.
These companies not only wield tremendous power, but also abuse it by charging exorbitant fees, imposing oppressive contract terms, and extracting valuable data from the people and businesses that rely on them.
Companies ran the marketplace for their respective domains, while also competing in it, and to ensure they retain the number one position, the companies have restored to “self-preferencing, predatory pricing, or exclusionary conduct”.
Self-preferencing involves actions by an undertaking which are designed to favor its own products or services over those of its competitors.
Predatory pricing is an act of setting prices low in an attempt to eliminate the competition.
Exclusionary conduct is conduct that creates or maintains monopoly power by disadvantaging and harming competitors.

Significance:

The step is a response to the policy question of what measures, if any, should be taken to curb today’s tech giants, which hold the power to shape markets, communication, and even public opinion.
The US Justice Department has come up with the possibility of structurally breaking up Google, and not just imposing conditions on its behavior as has happened in Europe.
Critics contend that multibillion-dollar fines and mandated changes in Google’s practices imposed by European regulators in recent years weren’t severe enough and that structural changes are needed for Google to change its conduct.

Scenario in India

Various antitrust probes are going on against Google in India. Google has had run-ins with regulators, especially the Competition Commission of India (CCI).
In the last two years, the CCI has raised issues with Google’s commercial flight search option, its dominant position in the search marketplace, the abuse of its dominant position in the Android phone and smart television market, and others.
In 2019, for example, CCI had held Google guilty of misuse of its dominant position in the mobile Android market and said the company had imposed “unfair conditions” on device manufacturers to prevent them from using other operating systems.
Recently, Google has also been accused of following a high and unfair commission mechanism for apps listed on its Play Store.

Antitrust Laws

Antitrust laws are regulations that monitor the distribution of economic power in business, making sure that healthy competition is allowed to flourish and economies can grow.
Antitrust laws apply to nearly all industries and sectors, touching every level of business, including manufacturing, transportation, distribution, and marketing.
These prohibit several business practices that restrain trade. Examples of illegal practices are price-fixing conspiracies, corporate mergers that are likely to cut back the competitive fervor of certain markets, and predatory acts designed to gain or hold on to monopoly power.
In India, competition policy has been implemented via the Competition Act, 2002 which along with its amendment, establishes a Competition Commission of India to prevent anti-competitive practices, promote and sustain competition, protect the interests of the consumers and ensure freedom of trade in the markets in India.

Source: The Hindu