Weekly Current Affairs (8th to 14th March 2023) Part - 2 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

India-Australia Relations

Context: Australian Prime Minister is visiting India for India-Australia Summit in March 2023, seeking to strengthen the new momentum in ties between the two countries through deeper trade, investment and defence relations.

How have been the India- Australia Relations so far?

Historical Perspective

• Australia and India for the first time established diplomatic relations in the pre-Independence period, when the Consulate General of India was first opened as a Trade Office in Sydney in 1941.
• India-Australia relations touched a historic low when the Australian Government condemned India’s 1998 nuclear tests.
• In 2014, Australia signed a Uranium supply deal with India, the first of its kind with a country that is a non-signatory to the Nuclear Non-Proliferation Treaty, in recognition of India’s “impeccable” non-proliferation record.

Shared Values:

• Shared values of pluralistic, Westminster-style democracies, Commonwealth traditions, expanding economic engagement, and increasing high-level interaction have underpinned the India-Australia bilateral relationship.
• Common traits, including strong, vibrant, secular, and multicultural democracies, a free press, an independent judicial system, and English language, serve as the foundation for closer co-operation.

People-to-people Ties:

• India is one of the top sources of skilled immigrants to Australia. As per the 2021 Census, around 9.76 lakh people in Australia reported their ancestry as Indian origin, making them the second largest group of overseas-born residents in Australia.

Strategic Ties:

• In 2020,Prime ministers of both the countries elevated bilateral relationship from Strategic Partnership to Comprehensive strategic Partnership during India-Australia Leaders’ Virtual Summit.
• In 2021, the prime ministers of both the countries met during COP26 at Glasgow.
• In 2022, there has been a series of high-level engagements and exchange of ministerial visits in 2022 and in 2023 including India-Australia virtual summit and Foreign Ministers meet. Several key announcements were made during 2nd India-Australia Virtual Summit including:
• A Letter of Intent on Migration and Mobility Partnership Arrangement to foster the exchange of skills.

Defence Cooperation:

• The 2+2 Ministerial Dialogue took place in September 2021, and the Deputy Prime Minister and Defence Minister of Australia visited India in June 2022.
• The Mutual Logistics Support Agreement (MLSA) was signed during the Virtual Summit in June 2020 to enhance defence cooperation.
• Joint military exercises:
  • Australia will host the "Malabar" exercises in August 2023, with participation from India, Japan, and the US.
  • India has been invited to join the Talisman Sabre exercises in 2023.

China Factor:

• Australia-China ties became strained due to several reasons including Australia banning Huawei from 5G network, call for enquiry into the origins of Covid-19 and Slamming china’s human rights violations in Xinjiang and Hongkong.
  • China responded by imposing trade barriers on Australian exports, and by cutting off all ministerial contact.
• India is facing Chinese aggression along the border which has been highlighted by incidents such as Galwan valley clash.
• Both Australia and India support a rules-based international order and they are seeking to forge regional institutions in the Indo-Pacific which are inclusive, promote further economic integration.
• The countries’ participation in Quad (India, Australia, US, Japan) is an example of their convergence of interests, based on shared concerns.

Multilateral Cooperation:

• Both are members of the Quad, Commonwealth, Indian Ocean Rim Association (IORA), ASEAN Regional Forum, Asia Pacific Partnership on Climate and Clean Development, and have participated in the East Asia Summits.
• Both countries have also been cooperating as members of the Five Interested Parties (FIP) in the World Trade Organization context.
• Australia is an important player in Asia Pacific Economic Cooperation (APEC) and supports India's membership of the organisation.

Economic Cooperation:

• Economic Cooperation Trade Agreement (ECTA): It is the first free trade agreement signed by India with a developed country in a decade which entered into force in December 2022.
• Reduction in Duties: It has resulted in an immediate reduction of duty to zero on 96% of Indian exports to Australia in value (that is 98% of the tariff lines) and zero duty on 85% of Australia’s exports (in value) to India.
• Supply Chain Resilience Initiative (SCRI): India and Australia are partners in the trilateral arrangement along with Japan which seeks to enhance the resilience of supply chains in the Indo-Pacific Region.
• Bilateral trade: Australia is the 17th largest trading partner of India and India is Australia’s 9th largest trading partner. Bilateral trade between India and Australia was US$ 27.5 billion in 2021, there is potential for it to reach around US$ 50 billion in five years.

Cooperation in Education Sector:

• The Mechanism for Mutual Recognition of Educational Qualifications (MREQ) was signed in March 2023. This will facilitate mobility of students between India and Australia.
  • Deakin University and University of Wollongong are planning to open campuses in India.
  • More than 1 lakh Indian students are pursuing higher education degrees in Australian universities, making Indian students the second largest cohort of foreign students in Australia.

Cooperation on Clean Energy:

• In February 2022, countries signed a Letter of Intent on New and Renewable Energy for cooperation to reduce the cost of renewable energy technologies, including ultra low-cost solar and clean hydrogen.
• India announced Australian Dollars(AUD) 10 million for Pacific Island Countries under the International Solar Alliance (ISA).
• Both the countries committed to USD 5.8 million to the three-year India-Australia Critical Minerals Investment Partnership.

What are the Challenges in India-Australia Relations?

• Adani coal mine controversy: There was controversy over the Adani coal mine project in Australia, with some activists protesting against it, which created a strain in the relationship between the two countries.
• Visa issues: There have been concerns over visa restrictions for Indian students and professionals seeking to work in Australia.
• Violence with Indian Diaspora: Attacks on Indian Diaspora and temples in the recent past by Khalistan supporters have been a issue of strain.

Way Forward

• The India-Australia relations have strengthened in recent years due to shared values, interests, geography, and objectives.
• Both countries envision a free, open, inclusive, and rules-based Indo-Pacific region, unilateral or coercive actions are not preferred and are to be avoided in resolving any disagreements or conflicts.
• Renewed relationship between India- Australia through initiatives such as India Australia bilateral Summits give an opportunity to further strengthen the ties between the two countries to play an active role in ensuring rule-based order in the Indo-Pacific.

Centre brings Crypto under PMLA

Context: The Union Ministry of Finance, through a gazette notification, has brought Virtual Digital Assets (VDA) or the Crypto Currency under the Prevention of Money Laundering Act (PMLA).

What are the Key Points of the Move?

Need:

• Cryptocurrency transactions continue to lack transparency and the trail is difficult to establish.
• This moves pushes responsibility on the cryptocurrency markets to bring transparency to cryptocurrency trading.
• In the digital era of finance, compliance is a must not just to safeguard interest of investors but also of the country and in this aspect the crypto industry is becoming increasingly important, governments and regulators around the world are paying closer attention to this rapidly evolving space.
• The measure is also expected to aid investigative agencies in carrying out action against crypto firms.

Norms:

• VDA service providers / businesses have now become the ‘Reporting Entities’ under PMLA Act, and they have to follow similar reporting standards and KYC norms as the other regulated entities like banks, securities intermediaries, payment system operators, etc.

Activities covered under PMLA:

• Exchange between virtual digital assets (VDA) and Fiat Currencies.
• Exchange between one or more forms of VDAs
• Transfer of VDAs
• Safekeeping or administration of VDAs or instruments enabling control over VDAs.
• Participation in and provision of financial services related to an issuer’s offer and sale of a VDA.

What are the Related Concerns?

• The notification does not offer entities time to adhere to the fresh norms. The Crypto industry is also concerned that in the absence of a central regulator, crypto entities could end up dealing directly with enforcement agencies like the Directorate of Enforcement (ED).
• 17 lakh users Indian VDA users have switched from domestic centralized VDA exchanges to foreign counterparts since the announcement of the tax regime in the Union Budget in February 2022
  • Indian crypto traders have moved over USD 3.8 billion in trading volume from local exchanges to international crypto platforms.
• This is likely to lead to a large negative impact on tax revenues, as well as a decrease in transaction traceability— which defeats the two central goals of the extant policy architecture.
• The downside impact of the VDA tax architecture is likely to further accentuate capital outflow and deter international investors.

What is the Legal Status of Crypto in India?

• In the Union Budget 2022-23, even though the government brought in a tax for cryptocurrencies, it did not proceed with framing regulations.
• Earlier, the Reserve Bank (RBI) of India had proposed a ban that was set aside by Supreme Court order.
• In July 2022, flagging the RBI’s concerns, the finance minister told Parliament that “international collaboration” would be needed for any effective regulation or ban on cryptocurrency.
• From April 2022, India introduced a 30% income tax on gains made from cryptocurrencies.
  • In July 2022, rules regarding 1% tax deducted at source on cryptocurrency came into effect.

Way Forward

• If there are laws and guidelines against crypto laundering, investors will have the fear of being penalized. To make things more streamlined, exchanges in India must track transfers made by investors within a tax year exceeding a certain amount and report the same to the tax authorities.
• To overcome the impact of VDA tax architecture, the Government should adopt a progressive tax structure with differentiated rates for short-term and long-term gains, in line with international best practices.
  • A new tax regime pertaining to VDA was announced in 2022, switching users from domestic to international counterparts, which furthered the capital outflow.

India-US Commercial Dialogue

Context: Recently, India and the US have launched Joint Statement on their 5th Ministerial level Commercial Dialogue, discussing supply chain issues and agreeing on a semiconductor partnership initiative.

• In January 2023, the Union Minister of Commerce and Industry of India and the US Trade Representative Ambassador co-chaired the 13th Ministerial-level meeting of India – US Trade Policy Forum (TPF) in Washington D.C.

What are the Key Highlights of the Joint Statement?

India-US Strategic Partnership:

• Both discussed India-US strategic partnership, as well as economic and commercial engagement between the two countries, including through the Initiative on Critical and Emerging Technology (iCET) and the Indo-Pacific Economic Framework (IPEF).

MoU on Semiconductor Supply Chain:

• Both countries signed a Memorandum of Understanding (MoU) on semiconductor supply chain and innovation partnership to promote cooperation in the segment.

Talent, Innovation and Inclusive Growth:

• Both countries recognized that small businesses and entrepreneurs are the lifeblood of the US and Indian economies and there is a need to facilitate collaboration between the SMEs of the two countries and to foster innovation ecosystems.
• In this context, both sides announced the launch of a new Working Group on Talent, Innovation and Inclusive Growth under the Commercial Dialogue.

Travel and Tourism Working Group:

• They re-launched the Travel and Tourism Working Group to continue the progress from before the pandemic and to also address the many new challenges and opportunities to create a stronger travel and tourism sector.

Standards and Conformance Cooperation Program:

• Both countries also launched the Standards and Conformance Cooperation Program that will be carried out in partnership between US’s American National Standard Institute (ANSI) and India’s Bureau of Indian Standards (BIS) towards standards cooperation.

Strategic Trade Dialogue:

• It will address export controls, explore ways of enhancing high technology commerce, and facilitate technology transfer between the two countries.

Environmental Technology Business Development Mission:

• Also, the US will send a senior government official-led Clean Energy and Environmental Technology Business Development Mission to India in 2024.
• The trade mission would be an opportunity to further foster US-Indian business partnerships in grid modernization and smart grid solutions, renewable energy, energy storage, hydrogen, liquefied natural gas, and environmental technology solutions.

Global Biofuels Alliance:

• Both sides also pledged to work together in the Global Biofuels Alliance and in the development and deployment of hydrogen technologies.

US-India Energy Industry Network:

• The two sides made an announcement regarding US-India Energy Industry Network (EIN) as a broad platform for facilitating US industry involvement in the Clean EDGE Asia initiative, the US government’s signature initiative to grow sustainable and secure clean energy markets throughout the Indo-Pacific region.

Telecommunications:

• Both sides expressed interest in working together in developing next generation standards in telecommunications, including 6G.

How are India’s Trade Ties with the US?

• India-US bilateral partnership today encompasses a whole host of issues including the response to Covid-19, economic recovery post-pandemic, the climate crisis and sustainable development, critical and emerging technologies, supply chain resilience, education, the diaspora, and defence and security.
• The bilateral goods and services trade between the two countries has almost doubled since 2014, exceeding US USD 191 billion in 2022.
• The United States has become India’s largest trading partner in 2022.
• The US is India’s largest exporter and trade partner, while India is the 9th largest trading partner for the US.
• Both nations aim to achieve bilateral trade of USD 500 billion by 2025.
• The US is also the third biggest investor in India with a cumulative Foreign Direct Investment (FDI) inflow of USD 56,753 million from April 2000 to September 2022.

Protecting Earth's Orbit from Space Debris

Context: Since, United Nations agreed on a treaty to conserve and sustainably use the high seas beyond national boundaries, scientists are calling for a legally-binding agreement to protect the Earth's orbit from space debris.

• The United Nations Committee on the Peaceful Uses of Outer Space has laid out guidelines to mitigate space debris, but there is no international treaty that seeks to minimise it.

What is Space Debris?

About:

• Space debris refers to the collection of artificial objects in orbit around the Earth that have lost their utility or are no longer in use.
• These objects include non-functional spacecraft, abandoned launch vehicle stages, mission-related debris, and fragmentation debris.

Concern:

• The number of satellites orbiting Earth is expected to reach 60,000 by 2030, up from the current 9,000, and the amount of untracked debris is a cause for concern.
• Around 27,000 pieces of "space junk" are being tracked by NASA but over 100 trillion untracked pieces of old satellites circle the planet.
• Currently, companies are not incentivised to clean up orbits or to include de-orbiting functions in satellites.
  • De-orbiting means bringing dead satellites back to Earth.
• The current Outer Space Treaty is hindered by ever-changing geopolitics, technology and commercial gain.

Initiatives to Curb Space Debris:

• India: In 2022, ISRO set up the System for Safe and Sustainable Operations Management (IS 4 OM) to continually monitor objects posing collision threats. ‘Project NETRA’ is also an early warning system in space to detect debris and other hazards to Indian satellites.
• Global: Inter-Agency Space Debris Coordination Committee (IADC) Clean Space Initiative of European Space Agency (ESA)

How Space Debris Can be Tackled?

• Space Treaty with Extended Producer Responsibility: A legally binding agreement is necessary to protect the Earth's orbit from space debris.
  • The treaty should ensure that producers and users take responsibility for their satellites and debris and enforce collective international legislation with fines and other incentives to make countries and companies accountable for their actions.
• Incentivisation: Countries using the Earth's orbit should commit to global cooperation, and companies should be incentivized to clean up orbits and include de-orbiting functions in satellites.
• Reusable Launch Vehicles: Using reusable launch vehicles instead of single-use rockets can help reduce the number of new debris generated from launches.

Evolution of Women's Movements in India

Context: According to the Economic Survey 2022-23, there are about 1.2 crore Self Help Groups (SHG) in India, most of which are all-women. The Indian women's movement has been recognized globally for its vibrancy. However, the evolution of the movement has received less attention.

How the Women's Movement Evolved in India?

Evolution:

• The movement has transformed over time from serving as a beacon for the nationalist movement to a rights-based civil society movement to a state-led movement for economic empowerment.

Three Phases:

• Nationalist Movement (1936-1970s)
  • Women were the face of the nationalist movement. The clarion call by Mahatma Gandhi to the 1936 All India Women’s Conference was the hallmark of a nationalist movement that relied on women to serve as its face.
  • The movement aimed to give women political power. The political history of the Indian women’s movement was observed when women satyagrahis were arrested during the salt satyagraha and the Quit India movement.
  • These movements set the stage for women's leadership in politics.
• Rights-Based Civil Society Movement (1970s-2000s)
  • Women's groups were mobilised to sensitize women about their rights.
  • The greatest success of this mobilisation came when the 73rd Amendment to the Constitution was passed, reserving one-third of seats in panchayat and leadership positions in local bodies for women.
  • Chipko, one of the earliest ecofeminist movements in the world broadcasting pictures of women clinging to trees to protest logging.
  • It was a non-violent agitation which originated in Uttar Pradesh’s Chamoli district (now Uttarakhand) in 1973.
  • Also, Self Employed Women’s Association began to unionise women in the informal sector leading the advocacy for reforms in legal and social protection for women workers.
• State-Led Movement for Economic Empowerment (2000s-present)
  • The government invested heavily in building and supporting SHGs.
  • SHGs function mainly as thrift and credit institutions.
  • The movement aimed to enhance women's access to income-generating activities.
  • The movement seeks to address the deficiency of vocational skills and entrepreneurship among women.

What are Self Help Groups?

About:

• SHGs are informal associations of people who choose to come together to find ways to improve their living conditions.
• It can be defined as a self-governed, peer-controlled information group of people with similar socio-economic backgrounds and having a desire to collectively perform a common purpose.

Objectives:

• SHG relies on the notion of “Self Help” to encourage self-employment and poverty alleviation.
• To build the functional capacity of the poor and the marginalized in the field of employment and income generating activities.
• To resolve conflicts through collective leadership and mutual discussion.
• To provide collateral free loans with terms decided by the group at the market driven rates.
• To work as a collective guarantee system for members who propose to borrow from organised sources.

Conclusion
The women's movement in India has evolved over time, with each phase addressing different aspects of women's lives. The future of the women's movement in India depends on how effectively the state-led movement can transform women's lives by taking economic empowerment programs to scale.

India-US Pact on Semiconductor

Context: Recently, India and the US have signed Memorandum of Understanding (MoU) on establishing the Semiconductor Supply chain during India – USA 5th Commercial Dialogue 2023, which can help India realize its long-nurtured dream of becoming a hub for electronic goods.

• The MoU seeks to establish a collaborative mechanism between the two governments on semiconductor supply chain resiliency and diversification in view of US’s CHIPS and Science Act and India’s Semiconductor Mission.

What is the Significance of the Deal?

Commercial Opportunities:

• The US and China are giants in chip manufacturing. So, this pact with the US to strengthen cooperation in the semiconductor sector to facilitate commercial opportunities and development of innovation ecosystems is likely to help India immensely.

Electronics Supply Chain:

• It can help India get aligned into a more central role in the global electronics supply chain.

Can Address Semiconductor Crunch:

• The crunch in semiconductors supply began during the Covid-19 and went on to intensify in 2021. A Goldman Sachs report suggested that at least 169 industries had been impacted by the global chip supply shortage in 2021.
• The crunch has eased now but some disruptions in the supply chain still exist.

Realignment towards Chip Manufacturing:

• From a domestic perspective, this could also prompt a potential realignment of India’s current policy approach on chip manufacturing: which is currently focused, almost entirely, on the manufacture of mature nodes – generally defined as chips that are 40 nanometres (nm) or above and find application in sectors such as the automotive industry – before trying to attempt an entry into the more advanced nodes (smaller than 40nm), which are far more strategic, but require exceptional manufacturing capabilities and project execution skills.

What are the Challenges for India?

• High Investments Required: Semiconductors and display manufacturing is a very complex and technology-intensive sector involving huge capital investments, high risk, long gestation and payback periods, and rapid changes in technology, which require significant and sustained investments.
• Minimal Fiscal Support from Government: The level of fiscal support currently envisioned is minuscule when one considers the scale of investments typically required to set up manufacturing capacities in the various sub-sectors of the semiconductor industry.
• Lack of Fabrication Capacities: India has a decent chip design talent but it never built-up chip fab capacity. The ISRO and the DRDO have their respective fab foundries but they are primarily for their own requirements and are also not as sophisticated as the latest in the world.
  • India has only government-owned semiconductor fabrication unit- can be added as there might be other private fabs old fab which is located in Mohali, Punjab.
• Extremely Expensive Fab Setup: A semiconductor fabrication facility (or fab) can cost multiples of a billion dollars to set up even on a relatively small scale and lagging by a generation or two behind the latest in technology.
• Resource Inefficient Sector: Chip fabs are also very thirsty units requiring millions of litres of clean water, an extremely stable power supply, a lot of land and a highly skilled workforce.

Where does India Stand in the Semiconductor Market?

• India currently imports all chips and the market is estimated to touch USD 100 billion by 2025 from USD 24 billion now. However, for the domestic manufacturing of semiconductor chips, India has recently launched several initiatives:
  • The Union Cabinet has allocated an amount of Rs 76,000 crore in 2021 for supporting the development of a ‘semiconductors and display manufacturing ecosystem’.
  • Consequently, a significant number of incentives would be provided to design companies to design chips.
• India has also launched the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) for manufacturing of electronics components and semiconductors.
• In 2021, India announced its roughly USD 10 billion-dollar Production-Linked Incentive (PLI) scheme to encourage semiconductor and display manufacturing in the country.
• In 2021, the MeitY also launched the Design Linked Incentive (DLI) Scheme to nurture at least 20 domestic companies involved in semiconductor design and facilitate them to achieve a turnover of more than Rs.1500 Crore in the next 5 years.
• India’s own consumption of semiconductors is expected to cross USD 80 billion by 2026 and to USD 110 billion by 2030.

What are the Top 5 Countries Producing Semiconductors?

• Top 5 Countries that produce the most semiconductors are Taiwan, South Korea, Japan, United States, China.
• Taiwan and South Korea make up about 80% of the global foundry base for chips. TSMC, the world’s most advanced chipmaker, is headquartered in Taiwan.
• Currently, foundries in Taiwan account for over 70% of the chips that mobile devices made in India utilise, according to industry estimates by the Indian Cellular and Electronics Association.

Way Forward

• It is likely that India will achieve its long-nurtured dream of becoming an electronics hub and help ensure that there is no demand-supply gap in semiconductors.
• It is also likely that buyers won't ever have to wait for the second key to their vehicles.