Industries and Industrial Policies

Industries and Industrial Policies in news
  • Draft e-commerce rules and their challenges – Explained, pointwise

    The government has proposed changes to the e-commerce rules under the Consumer Protection Act to make the framework under which firms operate more stringent. It comes 11 months after the Government notified the Consumer Protection (E-Commerce) Rules, 2020, The latest proposals aim towards greater compliance and protecting the interests of consumers.

    Ministry of Commerce and Industry has earlier released a few sets of rules to govern the e-commerce operators. Now, the new rules are issued by the Consumer Affairs ministry to deal with ‘unfair’ trade practices that hurt customers.

    Several proposals in the draft e-commerce rules are aimed at increasing liabilities for online retailers. Major industry bodies, including the Confederation of Indian Industry (CII), Federation of Indian Chambers of Commerce & Industry (FICCI) are expected to hold meetings with e-commerce firms and other stakeholders, to discuss amendments to the e-commerce rules.

    About the Draft E-commerce rules
    1. Mandatory registration for e-commerce entities: Any online retailer will first have to register itself with the Department of Promotion for Industry and Internal Trade (DPIIT).
    2. Appointing a chief compliance officer.
    3. A nodal contact person for 24×7 coordination with law enforcement agencies,
    4. Requiring e-commerce entities offering imported goods or services to ‘incorporate a filter mechanism to identify goods based on country of origin
    5. Suggest alternatives to ensure a fair opportunity to domestic goods’.
    6. Specific flash sales or back-to-back sales “which limit customer choice, increase prices and prevents a level playing field are not allowed”.
      • Govt will not seek disclosure of other flash sales from e-commerce companies
    7. All e-commerce entities must provide information within 72 hours on any request made by an authorised government agency, probing any breach of the law including cybersecurity issues.
    8. Introduced the concept of “fall-back liability”: The rules made the e-commerce firms liable in case a seller on their platform fails to deliver goods or services due to negligent conduct, which causes loss to the customer.

    According to the proposed rules, the consumer affairs ministry is planning fresh guidelines for e-commerce companies, including the appointment of a chief compliance officer, etc.

    Need for the draft e-commerce rules
    • Uncompetitive trade practices: The two large e-commerce players(Amazon and Flipkart) have been contending with accusations that their pricing practices are skewed to favor select sellers on their platforms and that their discounting policies have hurt offline retailers. Further, The Competition Commission of India wants to conduct antitrust probes to investigate business practices (Amazon and Flipkart).
      • The Media investigations suggest this to be the case: Internal documents from Amazon, for instance, showed that just 35 of the 400,000-odd sellers on its platform account for two-thirds of sales, suggesting that it extends preferential treatment to a handful of sellers.
      • The e-commerce platforms are both players and regulators, as they provide the marketplace and also compete directly with other sellers using it. This creates a conflict of interest. 
    Advantages of the draft e-commerce rules
    1. Equal protection to all:
      • The rules restrict e-commerce companies from “manipulating search results or search indexes”. It is a long-standing demand from sellers and traders to prevent preferential treatment to certain platforms.
      • Further, the rules also mandate the logistics service provider to not provide differentiated treatment between sellers of the same category.
      • The rules also protect against unfair trade practices and also against misleading advertising.
    2. Push for made-in-India products: The e-commerce companies will have to provide domestic alternatives to imported goods. This will boost made-in-India goods.
    3. Lead to more accountability: The proposed amendments will lead to more accountability from stakeholders of e-commerce firms. The e-commerce companies need to provide an explanation on how they rank the products, which consumers can understand easily, and also create transparency.
    4. Weed out fly-by-night operators: With mandatory registration for e-tailers with DPIIT, the fraudulent e-commerce operators can be tackled.
    Challenges with the draft e-commerce rules:

    Challenges with the draft e-commerce rules

    1. Greater oversight over all online platforms: Following on the heels of the recent IT (Intermediary Guidelines and Digital Media Ethics Code) Rules, the draft e-commerce amendments show the Government’s increasing enthusiasm to exercise greater oversight over all online platforms.
    2. Cannot sell retail products of their own: The new rules mention “none of an e-commerce entity’s ‘related parties and associated enterprises is enlisted as a seller for sale to consumers directly”. This impacts several platforms that retail products supplied by vendors with arm’s length ties.
      • Any entity having 10 percent or more common ultimate beneficial ownership will be considered an “associated enterprise” of an e-commerce platform
      • However, this would not only affect the business operations of Amazon and Flipkart, but even domestic players like Tata and Reliance would find it difficult to integrate multiple brands and sell their products through super apps.
    3. Legal challenges overburden Judiciary: The enforcement of many of these norms is bound to spur extended legal fights. This will overburden the Judiciary.
      • The rules will open the door to subjective government intervention. For instance, flash sales are prohibited if they are back-to-back and limit customer choice. The decision on whether a sale violates these terms remains vulnerable to regulatory interpretation.
    4. Impact on growth and job creation: The new e-commerce rules create over-regulation, along with a scope for interpretative ambiguity in rules. This will retard growth and job creation in the hitherto expanding e-commerce sector.
    5. Discourage MSMEs: E-commerce also has provided MSMEs with a wider audience to sell their products. Tightening of rules for marketplaces will discourage these MSMEs from coming online.
    6. Deprive the strategic autonomy: The proposed draft rules look like a manual for micro-management of e-commerce companies like pre-1991 Licence Raj. Further, If all e-com websites are forced as generic market platforms, these companies could lose their ability to outperform rivals and serve the market’s ultimate cause.
      • These rules appear to be catering to traditional retailers, who have been increasingly unhappy with the huge success of deep discount festive-season flash sales on Amazon and Flipkart.
    7. Contradiction with Commerce and Industry Ministry rules:
      • The new draft rules said no related parties and associated enterprises should be listed as sellers on marketplaces. On the other hand, the Commerce ministry rules forced companies like Amazon to bring down their shareholding in what they called preferred sellers to 24%. This was done to provide a more level playing field among sellers. This creates confusion on the rules.
    8. Other issues:
      • It is not clear, how identifying goods based on “country of origin” will offer domestic manufacturers a better deal unless it is assumed that consumers are driven by patriotism rather than value.
      • Unlike the last set of rules issued by the commerce ministry, this draft doesn’t distinguish between foreign and domestic e-commerce.
    1. Appoint a single nodal agency: The government needs to remove ambiguities that arise from multiple ministries governing the e-commerce sector. So, the government needs to appoint a single nodal agency and streamline rules for online marketplaces.
    2. Need final laws: Until the government doesn’t come with final laws to govern the sector, e-commerce companies will continue to create more structures and build complicated supply chains to evade the current norm. 

    The new rules will only create a new set of problems and possibly give support to some inefficient competitors. So, the new draft rules need a relook.

  • “Gold hallmarking” Becomes Mandatory

    What is the News? The government has announced the phased implementation of mandatory Gold Hallmarking of Jewelry, with effect from June 16, 2021.

    What is gold Hallmarking?
    • The Bureau of Indian Standard (BIS) operates the gold and silver hallmarking scheme in India. It defines hallmarking as the accurate determination and official recording of the proportion of a precious metal(gold) in an article(Jewelry).
    • Hence, this means that it will guarantee the purity or fineness of precious metal articles.
    Which metals are covered under the scheme?
    • The Government of India has notified two categories under the purview of hallmarking—gold jewelry and gold artifacts and silver jewelry and silver artifacts.
    • Therefore, hallmarking in India is available for the jewelry of only two metals—gold and silver.

    Which metals have been exempted from hallmarking?

    • Export and re-import of jewelry as per Trade Policy of Government.
    • Jewelry for international exhibitions and government-approved B2B domestic exhibitions.
    • Watches, fountain pens, and special types of jewelry such as Kundan, Polki, and Jadau.
    What was the need of making Gold Hallmarking mandatory?
    • India is the biggest consumer of gold. However, the level of hallmarked jewelry is very low in the country. At present, only 30% of Indian gold jewelry is hallmarked.
    • This is due to the non-availability of sufficient assaying and hallmarking centers (A&HC) responsible for a low level of hallmarked jewelry. Hence, Gold Hallmarking has been made mandatory.
    Phase wise implementation:
    • In the first phase, gold hallmarking will be available only in 256 districts.
    • Jewelers having an annual turnover above Rs 40 lakh will come under its purview.
    • Moreover, there will be no penalty imposed till August 2021.

    Read Also :-Contribution and Criticism of Supreme Court

    Source: Indian Express

  • “OFB Corporatisation” Approved by Cabinet

    What is the News? The Union Government has approved a plan for Ordnance Factory Board(OFB) Corporatisation.

    About Ordnance Factory Board(OFB):

    • Ordnance Factory Board(OFB) is an umbrella body of 41 Ordnance Factories.
    • Origin: In 1775, British authorities accepted the establishment of the Board of Ordnance in Fort William, Kolkata. This marked the official beginning of the Army Ordnance in India.
    • Nodal Ministry: It is currently a subordinate office of the Ministry of Defence (MoD).
    • Mandate: It provides a major chunk of the weapon, ammunition, and supplies for Indian armed forces, paramilitary forces, and police forces.
    • Headquarters: Kolkata, West Bengal
    Corporatisation of OFB (Ordnance Factory Board):
    • Ordnance Factory Board(OFB) will be dissolved. It will be replaced by seven new Defense Public Sector Undertakings (DPSUs). Each undertaking will have a specific manufacturing role.
    • The 41 factories under the OFB will be subsumed under one or the other of the seven new companies. These all will be 100% government-owned public sector undertakings(PSU).
    • There would be no change in the service conditions of the OFB employees.
      • All OFB employees (Group A, B, and C) from different production units will be transferred to the corporate entities on deemed deputation for an initial period of two years.

    Significance of Corporatization of OFBs: The restructuring of OFBs is aimed at achieving the following objectives:

    • Making it a productive and profitable asset;
    • deepen specialisation in the product range;
    • enhance competitiveness;
    • improve quality and cost-efficiency
    • overcome various shortcomings in the existing system and provide these companies opportunities in the market, including exports
    • Provide more autonomy, as well as improve accountability and efficiency.

    Source: The Hindu

     Read Also :-Center is primed to amend Factories Law

  • Govt launches the first phase of “MCA21 version 3.0” online portal
    What is the News?

    The government of India has launched the first phase of the MCA21 version 3.0 to its digital corporate compliance portal.

    About MCA21:
    • Firstly, MCA21 is the online portal of the Ministry of Corporate Affairs(MCA). It was initially launched in 2006.
    • Secondly, Purpose: It has made all company-related information accessible to various stakeholders and the public.
    • Thirdly, Significance: It is India’s first mission mode e-governance project.
    About MCA21 version 3.0:
    • This MCA21 version 3.0 (V3.0) is being implemented in two phases. The first phase has been launched now. The second and final phase is likely to be launched in October 2021.
    • This version leverages the use of the latest technologies to further streamline the Corporate Compliance and stakeholders’ experiences.

    First Phase: The first phase consists of the following features:

    • Revamped website of MCA: This will refresh the user experience with an enhanced look and feel.
    • E-Book: It will provide easy access to the updated legislation along with a tracking mechanism for historical changes in the law.
    • E-consultation module: It will facilitate virtual public consultation of proposed amendments and new legislation introduced by MCA from time to time.
    • The MCA21 V3.0 will give new meaning to a corporate compliance culture. It will further enhance the trust and confidence in the Corporate regulatory and governance system.
    • This new version will also reduce the requirements of attachments, make the forms web-based and strengthen the pre-fill mechanism.

    Source: Hindu Businessline

  • Analysing the Social security code 2020 for Informal Workforce

    Synopsis: Critical analysis of the social security code 2020  reveals that it is short of providing universal social security for informal workers.

    • Informal workers constitute 91% of the workforce. The Pandemic had pushed them into severe poverty and debt burden due to loss of livelihoods.
    • Social security arrangements could have saved them from the misery. Such as
      • Free basic curative care in public clinics and hospitals,
      • The elderly had old-age pensions,
      • Disability insurance or life insurance,
      • Minimum income guarantee
    • However, an unprepared government had made them helpless.
    • Even the social security code 2020 passed in parliament in September 2020 is short of providing universal social security for informal workers.
    What are the Issues in Social security code 2020?
    1. First, it is just a merger of existing social security laws and does little to provide universal social security for informal workers.
      • The SS Code 2020 amalgamates and rationalizes the provisions of eight existing central labour laws.
      • Even in the new scheme the employee’s provident fund, employees state insurance (ESI), maternity benefit, gratuity still remain only for organised sector workers.
      • Only a subtle change has been done to include informal workers within the ambit of social security administration. For example,
        • In employees’ state insurance, the existing employee threshold has been withdrawn. Now the central government can extend ESI benefits to any organisation irrespective of the number of workers employed.
    2. Second, the SS 2020 scheme takes little consideration to solve the existing hurdles for informal workers in accessing Social security schemes. For instance,
      • The legal framework, as proposed in the Code and Rules, implies that the basic onus lies on informal workers registering as beneficiaries. It makes registration a prerequisite for universal coverage to avail social security.
      • However, it has failed to understand the underlying problem faced by the informal workers while making registration.
        • One, most informal workers lack digital literacy and connectivity. Hence, providing them the option for Online registration will make the Social security scheme a failure.
        • Two, most informal workers are footloose casual workers (26% of all workers) and self-employed (46% of all). This makes it difficult for them to furnish all documentary papers required as part of the registration process.
        • Further, furnishing proof of livelihood and income details in the absence of tangible employer-employee relations is also very difficult.
        • Three, Similar provisions are already there in existing social security schemes run by State governments under the Unorganized Workers’ Social Security Act, 2008.
        • Yet, many informal workers are outside the ambit of any social security because of the failure to address their concerns.
      • Third, unorganised workers are spread across the length and breadth of India. However, the code does not address the need for inter-State arrangements and cooperation for providing social security net.
      • Fourth, Under the SS Code, the provision of maternity benefits has not been made universal. Maternity benefit is presently applicable for establishments employing 10 workers or more. The definition of ‘Establishment’ in the proposed code did not include the unorganised sector. Hence, women engaged in the unorganised sector would remain outside the purview of maternity benefit.
      • Fifth, The SS Code maintains that the Employees’ Provident Fund Scheme will remain applicable, as before, to every establishment in which 20 or more employees are employed.
      • Thus, for informal sector workers, access to employees’ provident fund remains unfulfilled in the new code.
      • Sixth, although payment of gratuity was expanded in the new Code, it still remains inaccessible for a vast majority of informal workers.

    The code fails to recognise that India is ageing without social security. The demographic dividend of the young workforce that could support the ageing will also end in 15 years. Hence, it’s a priority for India to institutionalize a Universal social security arrangement for all including the informal workforce by removing the above-mentioned challenges.

    Source: The Hindu

  • Indian Offshore Model will Dominate Global IT Sector


    The Indian IT industry will dominate the global landscape due to various advantages associated with the offshore model


    According to analysts, India is increasingly becoming an attractive market for tech companies from all over the world.

    What is the offshore model or the Work from home model?

    In simple terms, it is the relocation of a company’s business process to a country that is not in the same geographical region. For example, a company in the US might have the majority of its employees working in India or China due to various benefits.

    Why is India becoming an attractive market for tech companies?

    India is becoming an attractive IT market because:

    • There is an increase in critical shortage of skilled manpower in countries such as the US and Europe
    • Pandemic-induced work-from-home has raised the openness of global tech buyers. They are allowing to work away from onshore (or the client’s location).
    • Markets are witnessing a 50% reduction in the onshore model and about 15% increase in the offshore model.
    Advantages of Work from Home Model or Offshore Model:
    • Zero Commutation: When working remotely, a person doesn’t have to step out of their home. So it will reduce the time and fuel spent to and from the office commute.
    • Flexible Schedule: A person can choose to schedule tasks that would otherwise be left out. For example, when in office and build their working hours around their priorities, either for home or for learning something new.
    • Larger Skill Pool: Employers can extend their reach to hire a better skill pool across the globe, rather than just relying on persons available locally.
    • Saving on Office Space: Having a majority of all the workforce working remotely will help to cut costs significantly on office space and maintenance.
    Limitations of Work from Home Model or Offshore Model:
    • Increased isolation: A person can become quite isolated if he/she spend the majority of the time by him/herself working independently.
    • Loss of Focus: Homes are comfortable, but they present their own challenges. Even with a strict schedule, it is difficult to not get involved with family work or responsibilities.
    • Lack of Accountability and Fall in Productivity: Work from Home makes it difficult for an organisation to chart the strengths and weaknesses of every individual while working remotely.Source: The Hindu

    Global Competitiveness Index

  • “RoDTEP Scheme” -Delay in Notification of Rebate Rates

    What is the News? Exporters are upset over the inordinate delay in the notification of the rates under the RoDTEP (Remission of Duties and Taxes on Exported Products) Scheme.

    About Remission of Duties and Taxes on Exported Products(RoDTEP) Scheme:

    • Ministry of Commerce and Industry announced the RoDTEP scheme in the year 2020. It came into effect on January 1st, 2021.
    • The scheme replaced the Merchandise Export from India Scheme(MEIS). MEIS was not compliant with the rules of the World Trade Organisation(WTO).
      • US lodged a complaint against India’s MEIS scheme in WTO. Further, a dispute settlement panel of WTO ruled against India’s use of MEIS. It had found the duty credit scrips awarded under the scheme to be inconsistent with WTO norms.
    • Purpose: The RoDTEP scheme will refund the embedded central, state, and local duties or taxes to exporters that were previously non-recoverable. Such as:
      • Firstly, the central & state taxes on the fuel used for transportation of export products
      • Secondly, the duty levied by the state on electricity used for manufacturing
      • Thirdly, mandi tax levied by APMCs
      • Lastly, toll tax & stamp duty on the import-export documentation.
    • Exporters will receive the refund of taxes on exports in exporters’ ledger account with the Customs department. Further, exporters can utilize this credit to pay basic customs duty on imported goods. They can also transfer credits to other importers.
    • Coverage: The scheme covers all export goods starting from January 1, 2021.
    • Significance of the scheme: The scheme would lead to the cost competitiveness of exported products in international markets and better employment opportunities in export-oriented manufacturing industries.

    Source: The Hindu

  • “Startup India Seed Fund Scheme” launched

    What is the News? Union Minister of Commerce & Industry launches the Startup India Seed Fund Scheme (SISFS).

    About Startup India Seed Fund Scheme (SISFS):


    • Firstly, Startup India Seed Fund Scheme(SISFS) aims to provide financial assistance to startups. Assistance is provided for proof of concept, prototype development, product trials, market entry, and commercialization.
    • Secondly, it would help to grow startups to a beginner’s level. After that, startups will be able to raise investments from angel investors or venture capitalists or seek loans from commercial banks or financial institutions.

    Read Also:-NITI Aayog launches ‘AIM-PRIME’ to … – 

    •  The Department for Promotion of Industry and Internal Trade (DPIIT) constituted An Experts Advisory Committee(EAC). Which will be responsible for the overall execution and monitoring of the Startup India Seed Fund Scheme.


    1. Firstly, Eligible incubators throughout India will hand out funding to eligible startups across India.
    2. Secondly, Grants of up to Rs 5 Crores shall be provided to the eligible incubators selected by the EAC.
    3. Thirdly, the selected incubators shall provide grants of up to Rs 20 lakhs for validation of Proof of Concept, or prototype development, or product trials to startups.
    4. Finally, Startups will further receive investments of up to Rs 50 lakhs for market entry, commercialization, or scaling up through convertible debentures or debt-linked instruments.


    • The scheme will have a corpus of Rs. 945 Crore. This will be divided over the next 4 years.
    Significance of the scheme:
    • The SISFS scheme will help startups in:
      • Secure seed funding
      • Inspire innovation
      • Support transformative ideas
      • Facilitate implementation and
      • Start startup revolution.
    • The Scheme will also create a robust startup ecosystem particularly in Tier 2 and Tier 3 towns of India. These towns lack adequate funding facilities for startups.

    Source: PIB

    “National Startup Advisory Council” – First Meeting Held

  • “National Startup Advisory Council” – First Meeting Held

    What is the News? The Minister of Commerce & Industry chaired the first meeting of the National Startup Advisory Council(NSAC).

    About the National Startup Advisory Council(NSAC):
    • National Startup Advisory Council(NSAC) was constituted by the Department for Promotion of Industry and Internal Trade(DPIIT).
    • Purpose: To advise the Government on measures required to build a strong ecosystem for nurturing innovation and startups in the country.
    Functions of NSAC:
    • Firstly, to foster a culture of innovation amongst citizens and students, in particular. Further, it also promotes innovation in all sectors of the economy across the country.
    • Secondly, to facilitate public organisations to assimilate innovation. This includes innovations in improving public service delivery, promote the creation, protection, and commercialization of intellectual property rights.
    • Thirdly, to make it easier to start, operate, grow and exit businesses. It aims to achieve this by reducing regulatory compliances and costs, promote ease of access to capital for startups.

    Also readAim Prime For science based start Ups

    Composition of the National Startup Advisory Council:
    • Chairman: Minister for Commerce & Industry.
    • Convener of the Council: Joint Secretary, Department for Promotion of Industry and Internal Trade.
    • Ex-officio Members: Nominees of the concerned Ministries/ Departments/ Organisations not below the rank of Joint Secretary.
    • Non-official members: They are nominated by the Government from various categories like:
      • Founders of successful startups
      • Veterans who have grown and scaled companies in India
      • Persons capable of representing the interests of investors into startups, etc.

    Note: The term of the non-official members will be for a period of two years or until further orders whichever is earlier.

    Source: PIB

    Also read-Govt. included Caracal as Critically Endangered species

  • Prospects of India’s Automotive industry

    Synopsis: Automotive Industry will help India achieve a $5 trillion economy. A favourable government policy can support the Auto industry to grow by 10-12 per cent per year for the next 10 years.

    Recent developments in India’s automotive industry
    • Increase in Demand: for example, in the last 3 decades passenger vehicle volume increased 15 times, the SUV 24 times, and the two-wheeler 12 times.
    • Improvement in Quality and efficiency: The technology features, the safety, the comfort, the emissions, and the energy consumption have improved much better than 3 decades ago.
    • Developments in supply chain ecosystem:
        • India’s Indigenous supplier base has become globally competitive.
        • Quality defects have been reduced by 90 percent.
        • India’s engineering capabilities like their ability to design, engineer, and develop world-class products completely in India, improved a lot.
    • This has contributed to the increase in the global rank of the industry from 16th then to 5th now.
    Significance of Automotive Industry to India’s economic growth
    1. First, contributes to the development of the MSME sector. For example, The MSME share of value-addition to a car is 35 percent. Further the automotive after market provides economic opportunities to thousands of MSMEs engaged in the auto value chain.
    2. Second, boost to the manufacturing sector. The industry contributes 6.4 percent to GDP and around 35 percent to manufacturing GDP.
    3. Third, provides employment. It supports over 8 million jobs directly and as many as 30 million more in the value chain.
    4. Fourth, attracts significant investments. For instance, it has attracted $35 billion over the last 10 years.
    5. Fifth, source of foreign capital. For example, it generates export revenue of $27 billion that is nearly 8 percent of the total merchandise exports from India.
    Suggestions to support the growth of the Automotive industry

    India’s automotive industry contribution to GDP is low compared to countries like Korea, Germany, Thailand, Germany, and Japan. The contribution, there, is more than 10 percent of the country’s GDP. The following measures need to be taken

    1. First, India needs to make a niche for itself in EV tech mobility through rapid localization of EV tech in the production and supply chain.
    2. Second, need to enhance local value addition to invest more in skill development and R&D. It will make it globally competitive in cost, quality, and technology.
    3. Three, to improve exports India needs to sign bilateral treaties to get favorable tariff regimes.
    4. Four, Also, there is a need to rationalize the extremely high GST rates on automobiles in a phase-wise manner.
    5. Five, the Automotive Mission Plan 2026 released by the government needs to revise in the current context by taking inputs from the industry.

    If the above steps are implemented with a will, India’s automotive industry will become a $200 billion industry with exports of $50 billion by 2026.

    Source: Indian Express

  • India will move towards mandatory “gold hallmarking”
    What is the News?

    The government said that it is fully prepared to implement the mandatory hallmarking of gold jewellery and artefacts from June 1, 2021.

    What is Gold hallmarking?
    • Gold hallmarking is a purity certification of precious metal. At present, It is voluntary in nature.

    Gold Hallmarking in India:

    • In 2019, as per the Government announcement, hallmarking of gold jewellery and artefacts became mandatory across the country.
    • The government had given jewellers more than a year to shift to hallmarking and register themselves with the Bureau of Indian Standards (BIS).
    Key Features of Gold Hallmarking:
    • Firstly, Hallmarked gold jewellery will only available in three grades – 14-carat, 18-carat and 22-carat. Currently, it is available in ten grades.
    • Secondly, The Hallmarked Gold jewellery will contain four marks. Such as BIS mark, purity in carat, assay centre’s name and jewellers’ identification mark.
    • Thirdly, Applicability: The rule is applicable only to sales by retailers and not to consumers. However, it is available for consumers if they want to get their old jewellery hallmarked.
    • Fourthly, Penalty: Anybody found violating the provision, will have to pay a minimum fine of Rs 1 lakh or 5 times the price of the article.
    Benefits of Gold Hallmarking:
    • Firstly, Gold Hallmarking will protect the public against lower caratage. It also ensures consumers do not get cheated while buying gold ornaments.
    • Further, it will also help to get the purity, bring in transparency and assure the consumers of quality.
    • Lastly, the new system will also weed out anomalies and corruption in the system of manufacturing of jewellery.

    Note: India is the largest importer of gold. In volume terms, the country imports 700-800 tonne of gold annually.

    Source: Indian Express

  • Insolvency and Bankruptcy Code Ordinance 2021 – Explained, Pointwise

    Promulgated: April 4, 2021

    Ministry: Finance


    The Parliament passed the Insolvency and Bankruptcy Code (IBC) in 2016. It is a comprehensive insolvency code encompassing all companies, partnerships and individuals (other than financial firms). 

    Based on the last five-year experience, the government wanted to introduce few changes to make the IBC more effective. Subsequently, The President recently promulgated the Insolvency and Bankruptcy Code (Amendment) Ordinance 2021. This aims to fulfil the intended objectives of IBC.

    Insolvency and Bankruptcy Code, 2016
    • The code replaced all the existing laws and created a uniform procedure to resolve insolvency and bankruptcy disputes.
    • It allows creditors to assess the viability of a debtor as a business decision. Further, the creditors can agree with the plan for its revival or suggest for a speedy liquidation.
    • The Code creates a new institutional framework. This framework facilitated a formal and time-bound insolvency resolution process and liquidation. The framework includes:
      1. Insolvency Professionals: They will administer the resolution process. They also manage the assets of the debtor and provide information for creditors to assist them in decision-making.
      2. Insolvency Professional Agencies: The insolvency professionals will be registered with insolvency professional agencies. The agencies would conduct examinations to certify the insolvency professionals and enforce a code of conduct for their performance.
      3. Information utilities: They will keep a record of debts given by creditors along with details of repayments/ dishonour of debt.
      4. Adjudicating authorities: They will give the approval to initiate the resolution process, appoint the insolvency professional, and approve the final decision of creditors.
        1. National Company Law Tribunal(NCLT): It is the adjudicating authority for companies and limited liability entities 
        2. Debt Recovery Tribunal: It is the adjudicating authority for individuals and partnership firms.
      5. Insolvency and Bankruptcy Board: The Board will regulate insolvency professionals, insolvency professional agencies and information utilities set up under the Code.
    • The code aims to resolve insolvencies in a strict time-bound manner – the evaluation and viability determination must be completed within 180 days.
    • Moratorium period of 180 days (extendable up to 270 days) for the Company. For startups and small companies, the resolution time period is 90 days which can be extended by 45 days.

    Basic Terminologies

    • Insolvency: It is a situation in which a debtor is unable to pay his/her debts.
    • Bankruptcy: It is a legal proceeding involving an insolvent person or business that is unable to repay its outstanding debts.
    • Liquidation: It is a process of bringing a business/company to an end. It involves the distribution of the company’s assets among creditors and other claimants.
    Key provisions of the Insolvency and Bankruptcy Code (Amendment) Ordinance 2021
    1. The Amendment allows the use of Pre-Packaged insolvency resolution as an alternative resolution mechanism for MSMEs. The threshold limit to trigger the Pre-Packaged insolvency resolution is between Rs 10 lakh to 1 Crore.
    2. Section 54A: It allows the use of Pre-Packaged insolvency resolution(PPIR)
      1. PPIR is a form of restructuring that allows creditors and debtors to work on an informal plan and then submit it for approval.Under this system, financial creditors will agree to the terms of a potential investor.
      2. Further, they will seek approval of the resolution plan from the National Company Law Tribunal (NCLT).
      3. However, the submission of the resolution plan cannot happen directly to NCLT. It requires approval of a minimum of 66% of financial creditors that are unrelated to the corporate debtor before submission of a resolution plan.
    3. The threshold limit to trigger the PPIR is between Rs 10 lakh to 1 Crore.
    4. The NCLTs must consider a pre-pack insolvency proceeding before allowing a Corporate Insolvency Resolution Process(CIRP).
      1. CIRP is the process of resolving corporate insolvency according to the provisions of the Insolvency and Bankruptcy Code, 2016.
    Benefits of Insolvency and Bankruptcy Code ordinance
    • Quicker Resolution: Over 86% of the ongoing insolvency resolution proceedings crossed the 270-day threshold as of December 2020. 
      • However, the process under PPIR  is limited to a maximum of 120 days. Further, only 90 days are available to the stakeholders to bring the resolution plan to the NCLT.
    • Greater Autonomy to Debtor: As the existing management retains control in the case of pre-packs. On the other hand, A resolution professional takes control of the debtor as a representative of financial creditors. This results in a cost-effective and value maximising outcome for the debtor.
    • Prevents misuse by errant promoters: The PPIR gives significant consent rights to the financial creditors. For instance, it requires approval of a minimum of 66% of financial creditors before submission of a resolution plan. This prevents any misuse from financial creditors.
    • Amicable settlement: The amendment has made sure that both debtors and creditors have a say in the resolution process. This is a deviation from the earlier approach. As the IBC 2016 gives excessive focus on creditors in resolution.
    • Prevents job losses: Under PPIR, there is less probability of liquidation. Thereby ensuring continuity of business and resulting in fewer layoffs for workers. 
    Challenges in Insolvency and Bankruptcy Code
    • Poor Approval rate: As per the IBBI’s data, (Insolvency and Bankruptcy Board of India) a mere 15% approval rate has been shown by NCLT in corporate insolvency cases from 2016-19.
    • Greater Focus on liquidation: The objective of IBC was to promote entrepreneurship and promote resolution. But ironically IBC put more focus on liquidation. This hinders the economic potential of the country. 
      • In 2019, almost 1/3rd of all corporate cases filed for resolution ended up towards liquidation. 
    • Supreme Court Judgement: The Government had placed a compulsory deadline of 330 days if 270 days mark got breached. However, the SC in the Essar Steel insolvency case relaxed the criteria of “mandatorily” resolving the CIRP within 330 days. This judgement can be used to breach the deadline of the PPIR process also.  
    • Resource Deficit: The government had proposed to set up 25 additional single and division benches of NCLT in July 2019. They were established at various places including Delhi, Jaipur, Kochi, etc. However, most of these remain non-operational or partly operational on account of lack of proper infrastructure or adequate support staff. 
    Suggestions to reform IBC process
    • There is a need to increase the number of NCLT benches and appoint more competent professionals. This will ensure that the IBC platform is not used as a recovery but more as a resolution tool.
    • Further masses should be aware of alternate dispute resolution mechanisms like Lok Adalat, Arbitration etc. This can reduce the workload on insolvency tribunals.
    • The government can place companies such as construction, electricity (that do not have hard assets) outside the NCLT. This would save resources and time in pursuing IBC for these companies. 

    The ordinance will be beneficial for the small players and would encourage time-bound resolution of stressed assets under the IBC model. Nonetheless, further augmentation is necessary for the success of IBC.

  • “PLI Scheme” for white goods and solar photovoltaic modules
    What is the News?

    The Union Cabinet approves two PLI schemes for white goods (air-conditioners and LED lights) and high-efficiency solar photovoltaic modules.

    About Production Linked Incentive Scheme(PLI):
    • The Government of India launched the Production-Linked Incentive(PLI)  in March 2020.
    • Aim: The aim is to make manufacturing in India globally competitive by removing sectoral disabilities, creating economies of scale, and ensuring efficiencies.
    • Under the scheme, incentives are offered to companies on incremental sales from products manufactured in India over the base year.
    PLI Scheme For White Goods:
    • PLI Scheme for White Goods shall provide an incentive of 4% to 6% on incremental sales of goods manufactured in India. The scheme is for a period of five years for the manufacturers of Air Conditioners and LED Lights.
    • Eligibility:
      • Selection of companies under the scheme aims to incentivize the manufacturing of components or sub-assemblies in India. Mere assembly of finished goods shall not qualify for incentives.
      • Incentives shall be open to companies making both brownfield or green field Investments.
    • Significance: The scheme is estimated to lead to an incremental investment of ₹7,920 crore over five years. It will lead to production worth ₹1.68 lakh crore as well as lead to 4 lakh jobs.
    PLI Scheme for High-Efficiency Solar PV (Photovoltaic) Modules:
    • Background: Firstly, solar capacity addition presently depends largely upon imported solar PV cells and modules. The domestic manufacturing industry has limited operational capacities of solar PV cells and modules.
      • Hence, the expectation from this scheme is to reduce import dependence in a strategic sector like electricity.
    • Secondly, under the scheme, Solar PV manufacturers will be selected through a transparent competitive bidding process.
    • Thirdly, the incentives will be disbursed for 5 years post commissioning of solar PV manufacturing plants on sales of high efficiency solar PV modules.
    • Fourthly, A Manufacturer will get reward for higher efficiencies of solar PV modules and also for sourcing their material from the domestic market. Thus, the PLI amount will increase with increased module efficiency and increased local value addition.
    • Significance: The scheme may lead to 10,000 MW of additional capacity of solar PV plants and investment of around ₹17,200 crores in solar PV manufacturing projects. It would also lead to direct employment of 30,000 people and indirect jobs to 1.2 lakh.

    Source: The Hindu

    [Answered]What is OLED technology? How it is different from LED? Discuss its various uses.

  • IBC Amendment Ordinance 2021 Allows “Pre-Pack Insolvency Resolution”

    What is the news? The President of India promulgates the IBC Amendment Ordinance 2021. It allows the use of Pre-Pack insolvency resolution.

    About Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021:

    • IBC Amendment Ordinance 2021 amends the Insolvency and Bankruptcy Code, 2016.
    • The Amendment allows the use of Pre-Packaged insolvency resolution as an alternative resolution mechanism for MSMEs. The threshold limit to trigger the Pre-Packaged insolvency resolution is between Rs 10 lakh to 1 Crore.
    What is Pre-Pack insolvency resolution?
    • A pre-pack resolution is a form of restructuring that allows creditors and debtors to work on an informal plan and then submit it for approval.
    • Under this system, financial creditors will agree to the terms of a potential investor. Further, they will seek approval of the resolution plan from the National Company Law Tribunal (NCLT).
    • However, the resolution plan cannot be submitted directly to NCLT. It requires approval of a minimum of 66% of financial creditors that are unrelated to the corporate debtor before submission of a resolution plan.
    • Further, NCLTs also require to consider any application for a pre-pack insolvency proceeding before considering a Corporate Insolvency Resolution Process(CIRP).
      • CIRP is the process of resolving corporate insolvency according to the provisions of the Insolvency and Bankruptcy Code, 2016.
    Benefits of Pre-Packs over CIRP:

    Quicker Resolution:

    • One of the key criticisms of the CIRP is the time taken for resolution. At the end of December 2020, over 86% of the ongoing insolvency resolution proceedings crossed the 270-day threshold.
    • In contrast, the pre-pack resolution process is limited to a maximum of 120 days. Further, only 90 days are available to the stakeholders to bring the resolution plan to the NCLT.
    Management Control:
    • Another key difference between pre-packs and CIRP is that the existing management retains control in the case of pre-packs. Whereas a resolution professional takes control of the debtor as a representative of financial creditors in the case of CIRP.

    Source: Indian Express

  • Production-Linked Incentive or PLI Schemes and its challenges – Explained, pointwise

    Recently the Ministry of Commerce & Industry submitted the Status of Production-Linked Incentive Schemes in India. PLI Scheme is a cornerstone of the Government’s push for achieving an Atmanirbhar Bharat. In the Union Budget 2021, the Finance Minister announced an outlay of INR 1.97 Lakh Crores for PLI Schemes in 13 key sectors.

    So far 9 of the 13 PLI schemes are notified and another four Schemes are in process. Let’s have a look at the associated benefits and challenges with PLI schemes.

    About the Production-Linked Incentive(PLI) Schemes

    The PLI Scheme was launched as a part of the National Policy on Electronics 2019  to give incentives of 4-6% to electronic companies. Especially for the companies manufacturing electronic components like mobile phones, diodes, transistors, etc.

    1. The major aim of the scheme was to invite foreign investors to set up their manufacturing units in India. Similarly, the PLI scheme aims to promote the local manufacturers to expand their manufacturing.
    2. Features: Under the Scheme, companies will get incentives on incremental sales from products manufactured in domestic units.
    3. Implementation: The scheme is implemented by the concerned ministries/departments.

    Initially, the Scheme focussed on three sectors.

    Sl. NoPLI SchemeConcerned Ministry/Department
    1Mobile Manufacturing and Specified Electronic Components Ministry of Electronics and Information Technology (MeiTY).
    2Critical Drug Intermediaries, Active Pharmaceutical IngredientsDepartment of Pharmaceuticals
    3Manufacturing of Medical DevicesDepartment of Pharmaceuticals
    Expansion of the PLI Scheme to other sectors

    In, 2020 the Cabinet gave its approval to introduce the Production-Linked Incentive(PLI) Scheme for another 10 key sectors. Of these, the government notified the PLI Scheme for 6 sectors so far. These are,

    Sl. NoNotified PLI SchemeConcerned Ministry/Department
    1Electronic/Technology ProductsMinistry of Electronics and Information Technology
    2Pharmaceutical drugsDepartment of Pharmaceuticals
    3Telecom & Networking ProductsDepartment of Telecom
    4Food ProductsMinistry of Food Processing Industries.
    5White Goods (ACs & LED)Department for Promotion of Industry and Internal Trade.
    6High-Efficiency Solar PV ModulesMinistry of New and Renewable Energy

    The government is actively pursuing along with the concerned ministry/department for PLI Scheme in the following sectors.

    Sl. NoOther PLI SchemesConcerned Ministry/Department
    1Automobiles & Auto ComponentsDepartment of Heavy Industries
    2Advance Chemistry Cell (ACC) BatteryNITI Aayog and Department of Heavy Industries.
    3Textile Products (MMF segment and technical textiles)Ministry of Textiles
    4Speciality SteelMinistry of Steel
    Need for PLI Scheme

    The government expanded the PLI Scheme for fulfilling various needs in the manufacturing sector. Such as,

    1. The PLI Scheme provides enough support to Sunrise industries at their initial stage.
      Sunrise Industry: These are relatively new industries but growing fast at present. Further, these are expected to become important in the future. For Example, Solar energy industries, Food Processing Industries, etc.
    2. Further, India despite dominating the services sector, contributes very little to the global supply chain.  PLI scheme can help India to build an export base.
      For example, According to the Parliamentary report, the minimum production in India due to PLI Schemes is expected to be over US$ 500 billion in 5 years.
    3. At present, there is a growing demand for diversification of supply chains. Especially to avoid the dominance of China. The PLI Scheme by increasing production can reduce Chinese demands.
    4. Attract the global investment to India after the Covid-19 pandemic. India is a consumer-based economy. By providing incentives, the PLI scheme attracts more foreign investment to India.
    Advantages of PLI Schemes

    The Scheme provides various advantages to the Indian Manufacturing sector.

    1. Firstly, Expansion of the present capacity: The PLI Scheme augments the present achievements of India. For example,
      • Indian Textile Industry is one of the largest in the world
      • India is the second-largest producer of steel
        Introducing the PLI Scheme in these sectors will further expand these sectors.
    2. Secondly, India is expected to have a USD 1 trillion digital economy by 2025. The projects like Smart City Mission and Digital India require huge investments. India at present importing the equipment and raw materials. On the other hand, the PLI Scheme will provide low-cost indigenous products. So the cost associated with other projects will also come down.
    3. Thirdly, the government can not make sustained investments in capital-intensive sectors. Because they have a longer gestation period. But the PLI Scheme based on incremental output is more effective than the other grant-based input subsidy schemes like Mega Food Parks, etc. This will reduce the Government expenditure.
    4. Fourthly, Generate employment opportunities: The sectors such as textile, steel are labour-intensive in nature. By increasing manufacturing in these sectors, India can reduce the unemployment ratio and also create skilled manpower.
    5. Fifthly, Encouraging local manufacturing units: The scheme aims to develop local industries. Further, the scheme also facilitates innovation and research, development and up-gradation of technology of Indian firms. Thus, the local manufacturing units can become globally competitive in the long run.
    Challenges associated with the PLI Schemes
    1. The scheme contains a financial cap on incentives. This makes an over-performing company not to reap the benefits of its over achievements.
    2. In India for the majority of the PLI Scheme focussed sectors the effective cost of manufacturing is higher than the competitors. For example, Ernst & Young study shows that if the cost of production of one mobile is Rs.100. Then the effective cost of manufacturing the mobile is 79.55 in China, 89.05 in Vietnam, and 92.51 in India(including PLI). So, the investors will prefer other countries despite the PLI scheme.
    3. Apart from that, the scheme did not address the core challenges faced by the Sunrise industry manufacturers. Such as,
      • First, less presence of domestic firms: The Scheme will benefit the international player more than the Domestic firms. As the international players can invest their revenues and produce in India and take domestic market share. Thus, the domestic manufacturer will be in a disadvantage position. For example, About 99% of Xiaomi phones sold in India were made in India. So, Indian firms might face challenges in getting market share.
      • Second, the problem of Cheap imported material: Domestic firms may also face competition from cheap imports. Especially from Chinese in Solar PV Modules, White Goods etc.
      • Third, lack of cutting edge technology and Foundries:  India so far not focussed on adequate R&D development and Raw machinery. This resulted in poor talent retention and eventually ‘brain drain’. So, the development of industries under the PLI Scheme is questionable.
    4. The Challenge of WTO:  In September 2019, Chinese Taipei contested the raise in tariffs under the Phased Manufacturing Programme(PMP). If the PMP is found to be the WTO non-compliant, then the growth of domestic industries is limited.

    To make India a global manufacturing hub along with the PLI Schemes, certain reforms are necessary. These include,

    1. Focus on supply chain co-location: The government has to encourage the Foreign firms under the PLI policy to co-locate(placement of several entities in a single location) with their established industrial ecosystems. This will reduce government expenditure to invest and develop the ecosystems for the investor. This will bring the assemblers and component manufacturers together. So that, it reduces the effective cost of manufacturing.
    2. Further, the government must also focus on the service industry also. As other countries like China focus on the development of both Manufacture and Service sectors simultaneously in the long run.
    3. India also needs to focus on other key challenges of the manufacturing sector through initiatives such as,
      • Reduction in costs– India also needs to consider reducing its factor costs of power and logistics.
      • Encouraging states to be competitive and not indulge in trade-restrictive practices like Job reservation for locals, etc.
      • Further, Implementing structural reforms such as Land reforms, etc.
      • Also, India needs to improve human capital to meet the demands of the sunrise industries.
    4. Profiting from Anti-Chinese Sentiments: The global players including the USA, Australia aims to diversify their supply chains and also raise allegations against China. India should utilize this golden opportunity to act fast to attract outgoing investment from China.

    India’s PLI scheme was so far has been able to attract 22 top companies, including Apple and Samsung mobile phones in the electronics manufacturing segment. Apart from that, it is also expected that, over the next five years, a manufacturing capacity of over $150 billion and exports of $100 billion will be tied up through the PLI scheme. Further, the government needs to rectify the challenges faced by Indian firms in manufacturing. Else India can become a global manufacturing hub of International companies.

  • Govt. Extends “Emergency Credit Line Guarantee Scheme”

    What is the News? Government extends the Rs. 3-lakh-crore Emergency Credit Line Guarantee Scheme (ECLGS) until 30th June 2021. It also widens its scope to new sectors, including hospitality, travel and tourism.

    About Emergency Credit Line Guarantee Scheme (ECLGS):
    • Emergency Credit Line Guarantee Scheme(ECLGS) launched as part of the Covid-19 relief package called the Atma Nirbhar Bharat Abhiyan.
    • Aim: The aim is to provide Rs 3 lakh crore worth of collateral-free, government guaranteed loans to micro, small and medium enterprises(MSMEs) across India. Further, it aims to mitigate the distress caused by the coronavirus-induced lockdown.
    • National Credit Guarantee Trustee Company(NCGTC) is the guarantee provider under the ECLGS scheme.
    ECLGS 1.0:
    • Purpose: It aims to provide fully guaranteed and collateral free additional credit to MSMEs, business enterprises, MUDRA borrowers and individual loans for business purposes. The credit provided to the extent of 20% of their credit outstanding as of 29th February, 2020.
    • Eligibility: MSMEs with up to Rs 25 crore outstanding and Rs.100 crore turnover were eligible.
    • Duration: It had a 1-year moratorium period and a 4-year repayment period.
    ECLGS 2.0:
    • Purpose: It aims to extend the ECLGS Scheme to the 26 stressed sectors identified by the Kamath Committee and the healthcare sector.
    • Eligibility: Companies with dues of Rs 50-500 crore as of February 29, 2020 were eligible.
    • Duration: The tenor of the credit under the ECLGS 2.0 was five years including a one-year moratorium.
    ECLGS 3.0:
    • Under ECLGS 3.0, business enterprises in the hospitality, travel and tourism, leisure and sporting sectors would be able to avail credit.
    • Extension of Credit: It involves the extension of credit of up to 40% of the total credit outstanding from 20% earlier.
    • Duration: The tenor of loans granted under ECLGS 3.0 is six years, including a moratorium period of two years.
    • Eligibility: The scheme will only consider loans less than 60 days overdue as on February 29, 2020, with total credit outstanding not exceeding Rs 500 crore.

    Note: The validity of ECLGS that is ECLGS 1.0, ECLGS 2.0 & ECLGS 3.0 has been extended upto 30 June 2021 or till guarantees for an amount of Rs. 3 lakh crore are issued.

    About National Credit Guarantee Trustee Company(NCGTC):
    • NCGTC was set up in 2014 as a private limited company. The Department of Financial Services, Ministry of Finance established it under the Indian Companies Act,1956.
    • Purpose: To act as a common trustee company to manage and operate various credit guarantee trust funds.

    Source: Livemint


  • Union Minister inaugurates Event for “DSIR-PRISM Scheme”
    What is the News?

    The Union Minister for Science & Technology inaugurates the Event for Publicity of the PRISM (Promoting Innovations in Individuals, Startups, and MSMEs) scheme.

    About PRISM Scheme:
    • Nodal Ministry: PRISM is an initiative of the Department of Scientific and Industrial Research(DSIR), Ministry of Science and Technology.
    • Aim: The aim is to help an individual innovator to become a successful technopreneur. It promotes, supports, and funds implementable and commercially viable innovations created for society.
    • Who is eligible? Under the initiative, an innovator of Indian nationality – student, professional and common citizen- is eligible.
    • Features:  Eligible candidates are provided with technical, strategic, and financial assistance by DSIR-PRISM. Assistance is provided on the stages like idea development, prototype development, and pilot scaling and patenting.
    • Sectors Covered: The proposals under the scheme will be accepted for the following sectors:
      • Green technology
      • Clean energy
      • Industrially utilizable smart materials
      • Waste to Wealth
      • Affordable Healthcare
      • Water & Sewage Management and
      • any other technology or knowledge-intensive area.
    • Financial Assistance: The grant under the scheme is given in two phases:
      1. Phase I:
        • Category-I: For proof of concept/prototype/models, a grant amount of around Rs. 2 lakhs to Rs. 20 lakhs.
        • Category-II: For fabrication of working model/ process know-how/ testing, a grant amount of around Rs. 2 lakhs to Rs. 20 lakhs.
      2. Phase II: For Enterprise incubation, a grant amount of a maximum of around Rs.50 lakhs.

    Source: PIB

  • Concerns with the Insurance (Amendment) Bill, 2021

    Synopsis:The Insurance (Amendment) Bill, 2021 has few important concerns. But the move is a welcome step to the Insurance sector.


    The Lok Sabha has passed the Insurance (Amendment) Bill, 2021. The Bill had earlier been cleared by the Rajya Sabha also. Now it only requires the presidential assent to become a law.

    About the Insurance (Amendment) Bill, 2021:
    1. The Bill amends the Insurance Act,1938. The Bill seeks to increase the maximum foreign investment allowed in an Indian insurance company from 49% to 74%.
    2. However, such foreign investment may be subject to additional conditions as may be prescribed by the Central Government. The conditions include,
      • The majority of directors on the Board and key management persons in health and general insurance companies has to be resident Indians.
      • At least 50% of directors of the Insurance companies have to be independent directors.
    3. The bill also removes restrictions on ownership and control.

    Click Here to Read more about the Insurance (Amendment) Bill

    Concerns with the Insurance (Amendment) Bill:

    There are certain key concerns raised by the critics of the bill. These include,

    1. The present actual share of FDI in the insurance sector is less than the current limit of 49%. Further, the present target was aimed to achieve within 5 years. But that is not achieved so far. Hence, there is no justification for increasing the limit to 74%.
    2. Infusion of market funds in the insurance sector is not viable. The critics mention the time when financial institutions like DHFL, Yes Bank have collapsed, infusing market funds might lead to the collapse of insurance institutions also.
    3. The Bill does not have a provision to prevent financially weak foreign companies from entering into the Indian insurance sector.
    4. Many Indian insurance companies are already in Joint Venture with foreign companies. Hence, the Government’s claim that foreign investment is needed for bringing newer technology to the country is not substantiated.
    Government’s response to the concerns:
    1. The bill is aimed at solving some long-term capital availability issues in the insurance sector.
    2. The banking and insurance industry fall under the strategic sectors according to the government’s strategic disinvestment policy. The 74% cap is just a limit posed on the FDI. Hence, there should be no apprehension on privatization.
    3. The bill will increase competition in the insurance sector. This will in turn facilitate affordable schemes for middle-class people.
    4. Half of the market share of the Indian insurance sector is already held by private companies. The public sector insurance market share is merely 38.78%. On the other hand, the private sector enjoys 48.03% of the market share. So the increase in FDI is essential to improve the insurance penetration further.

    The Insurance (Amendment) Bill might facilitate insurance penetration among middle-class Indians. But the adequate safety mechanisms have to put in place to check the insurance companies.

    Source: The Hindu

  • “Handicrafts and Handlooms Export Corporation” closed permanently

    What is the News?

    Union Cabinet has approved the closure of loss-making Handicrafts and Handlooms Export Corporation of India Ltd(HHEC).

    About Handicrafts and Handlooms Export Corporation of India Ltd(HHEC):

    • It is a central public sector undertaking (CPSE) established in 1958 under the administrative control of the Ministry of Textiles.

    Mandate/Objectives of the Handicrafts and Handlooms Export Corporation:

    • To undertake exports of handicrafts, handlooms products, khadi and products of village industries from India.
    • The HHEC undertake special promotional measures in countries. Especially in countries that the import potential is not fully realized for Indian handicrafts products, khadi and products of village industries.
    • To trade in and carry on business in goods of any nature where the HHEC can trade conveniently and profitably.

    Why is the government closing Handicrafts and Handlooms Export Corporation?

    • HHEC has been incurring losses since the financial year 2015-16. Further, the HHEC is not earning sufficient income to meet its running expenses. There is also very little scope for its revival, necessitating the closure of the company.
    • Further, the decision to close HHEC is in line with the government’s strategic disinvestment policy. Under the policy, the government aimed to disinvest completely in non-strategic sectors. The HHEC falls under the non-strategic sector.

    About Public Sector Enterprise Policy:

    The government of India has released a New ‘Public Sector Enterprise Policy’. The policy classifies public sector commercial enterprises into the strategic and non-strategic sector:

    • Strategic Sector: There would be a maximum of four public sector companies in strategic sectors such as atomic energy, space, defence, power, coal, telecom, banking among others.
    • Non- Strategic Sector: The central public sector enterprises (CPSEs) of this sector shall be privatized or closed, if privatization is not possible.

    Click Here to Read Further about Public Sector Enterprise Policy

    Source: Business Today

  • India’s Rise as the new global manufacturing hub

    Synopsis: India’s recent achievements have positioned it as an alternative global manufacturing hub to China at the global level.

    • Democratic countries consider a rising China, with its authoritarian one-party system, as a challenge to the democratic order.
    • This provided the strategic case for the formation of Quadrilateral Security dialogue. It envisioned to develop a more sustainable model of governance.
    • But the QUAD formed in 2007 was not able to progress further. The dependence on China’s factories kept the grouping of democracies from emerging.
    • But two recent developments have completely changed the dynamic.
        • One, Australia returning to the Malabar Naval exercises in 2020, after 13 years.
        • Two, the first summit-level meet of the Quad is scheduled to take place in March.
    • The rise in India’s manufacturing ability seen as an alternative global manufacturing hub to China. This has been one of the reasons for the above-mentioned developments.

    What are the recent promising developments showcasing India as a new global manufacturing hub?

    1. First, the success in manufacturing PPE kits at a large scale. Initially, after the pandemic, the world was dependent on china to secure supplies of PPE kits. But, India’s ability to produce on a mass scale at a much cheaper price provided an alternative to the other countries. A similar case was with ventilators and other essential supplies, such as the drug HCQ.
    2. Second, the success of ‘Vaccine Maitri’ diplomacy. India exported millions of vaccines to other countries in need and all through domestically-manufactured vaccines. For example, Canada Pakistan, Caribbean Islands, Brazil and many more.
    3. Third, the growing success of India’s private industry. For example, the manufacturing capacity of Hindustan Syringes & Medical Devices was almost 6,000 syringes a minute.
    4. Fourth, India’s success in precision high-end manufacturing. India’s PLI scheme was able to attract 22 top companies, including Apple and Samsung mobile phones in the electronics’ manufacturing segment. It is expected that, over the next five years, a manufacturing capacity of over $150 billion and exports of $100 billion will be tied up through the PLI scheme.
    5. Fifth, the success of India’s fourth-generation fighter jet Programme. The government has decided to procure 83 indigenously-developed Light Combat Aircraft (LCA) Tejas for the Indian Air Force. Very few countries have such ability to indigenously manufacture high-tech fighter planes.
    6. Sixth, simultaneously India’s Economic policy reforms have made India an attractive manufacturing destination. For example,
        • India has the lowest tax rate anywhere in the world. (15 per cent for new manufacturing units).
        • FDI norms have been further relaxed to allow for automatic approval processes in some sectors even up to 100 per cent.
        • Privatisation of PSUs to bring more efficiency and managerial capacity.
        • Labour laws have been reformed to ease compliance burdens.
        • Abolition of Rent-seeking behaviour by making the taxation procedure faceless.
    7. Apart from this, effective bankruptcy laws, low-interest rates, strong digital infrastructure makes India a more attractive destination for manufacturing.

    All the benefits that China provided – quality, scale, speed, skilled manpower and a huge domestic market are now operative in India without the drawbacks of the Chinese model. So, India have positioned itself well as a new global manufacturing hub.

    Source: Indian Express

  • The ill effects of Job reservation for locals

    Synopsis: Haryana has introduced a new law where it assures 75% Job reservation for locals. This could be a disastrous decision for the Indian Economy.


    The Governor of Haryana has approved a law that regulates job reservation in the private sector. This could possibly hamper India’s investment climate and its socio-economic framework.

    • The Haryana State Employment of Local Candidates Act of 2020 seeks to provide for a 75 per cent job reservation for local people in private-sector jobs. The reservation is ensured on jobs having salaries less than Rs. 50,000 a month.
    • Apart from Haryana, States such as Madhya Pradesh, Karnataka, Andhra Pradesh also tried to provide Job reservation for locals.

    Few major provisions of Haryana’s Law:

    1. Firms and companies need to register all of their employees receiving a gross salary of Rs 50,000 or less on a government portal and update it at regular intervals.
    2. An exemption can be claimed by employers when there enough number of local candidates are not available with the desired skills, qualifications, and proficiency. However, an officer of the rank of deputy commissioner or higher will evaluate such a claim.

    What are the issues with Job reservation for locals?

    1. This law is not consistent with the provisions of the constitution. Especially Article 19(1)(g) and Article 16(2).
      • Article 19 (1)(g): Right to freedom of profession or Right to carry on any occupation, trade or business
      • Article 16(2):  State cannot provide discrimination on grounds only of religion, race, caste, sex, descent, place of birth, residence or any of them. The law imposes difficult and argumentative responsibilities on key personnel of firms in the State.
    2. The Law creates barriers for businesses by attaching severe monetary penalties for alleged non-compliance. The penalties can go up to Rs. 2,00,000 rupees.
    3. Apart from that, the government will have the power to enter firms’ premises for inspections. This could possibly bring back the ‘Inspector Raj’ system. This process discourages employers from operating in the State. Further, It will lead to decreasing local jobs and increasing the unemployment rate in the long run.
    4. Impact on the entire country: The law will be an example for more such laws from State governments. This will lead to a mass departure of investors from India.
      • For instance, a disturbance in the Gurgaon back-office operations of a global firm will damage India’s reputation as a stable, trustworthy investment destination with a talented workforce.
    5. The law is completely against the Prime Minister’s vision such as ‘Ek Bharat Shreshtha Bharat’ and ‘One Nation One Market’.

    Way forward

    • It is time the Centre discourages job reservation for locals. Because these laws threaten to unleash a ‘work visa’ regime for Indians within the country and also damage crucial workplace diversity.
  • Concerns associated with Local Reservation Laws

    Synopsis: Enactment of local reservation laws by states would have a negative impact on low-income internal migrants. Laws will also fail to go through the constitutionality test.


    • There have been numerous instances of subnational nativism in the past:
      • Mulki rules in Nizam-ruled Hyderabad in the late 19th century
      • Anti-South Indian movements in Bombay in the 1960s
      • Sons of the soil movement in Assam
    • However rarely we saw a formal law supporting local reservation as:
      • The politicians used subnational nativism just to woo voters
      • Constitution prohibits discrimination in employment on the basis of place of birth.
      • The report of the Working Group on Migration in January 2017 inferred the Supreme Court’s decision in the Charu Khurana v Union of India case, 2014. As per which the restrictions based on residence for the purposes of employment are unconstitutional.
    • Nonetheless, a rise in the enactment of local reservation laws is witnessed in India.
    Recent Local Reservation Laws:
    • Andhra Pradesh became the first state to pass such a law in 2019. It reserved 75% private jobs across all categories in industrial units, factories, joint ventures as well as Public-Private Projects.
    • In March 2021, the Haryana government notified its Haryana State Employment of Local Candidates Bill, 2020. It provides for a 75 % job quota for local people in private sector jobs which offer a salary of less than Rs. 50,000 a month.
    Problems with Local Reservation Laws:
    • Constitutionality Test: Article 16(2) provides that there cannot be any discrimination on grounds only of religion, race, caste, sex, descent, place of birth, residence or any of them.  
      • Further, it curtails the employer’s choice of recruiting labour from anywhere in the country. It is against Article 19(g) that provides the freedom to practise any profession, or to carry on any occupation, trade, or business.
    • Flawed Objective: One of the aims is to control interstate migration but census 2011 shows that the majority of migration is intrastate. 
    • Depriving state of cheap labour: Migrants offer better services at cheap prices. Further, the natives are reluctant to engage in some jobs which are taken by migrants. This is evident from Surat’s power loom industry which employs workers from Odisha.
    • Plight of Low-income migrants: He/she already faces the challenge of the uncertain job and portable job security. Now another obstacle of native laws is placed in front of them.
    • Discriminatory Criteria: The income cut-off in Haryana’s law conveys that the rich can move anywhere in India. However, similar opportunities are denied to poorer inter-state migrant workers.
    • Parallel Markets: There is a fear of development of fake local residence certificate markets in order to get jobs within a state.
    Way Forward:
    • The law passed by the Andhra Pradesh assembly is already challenged in court. The decision would make it clear whether states can give any local reservation in jobs or not. 
    • Further, the states must realize that a rise in interstate migration will definitely happen. It is evident from the development trajectory of any other country. This was also seen in China during the last 3 decades of its growth.
    • The states shouldn’t indulge in hypocrisy. For instance, the residents of Haryana and Andhra Pradesh have benefited from internal and international migration in the past. But now is restricting migration in their respective states. 

    Discouraging protectionism has been the traditional stance of India as evident from the criticism of the Trump administration for enhancing barriers on H1B migrants. The change of Biden administration has brought hope to Indians who want to live the American dream, but local reservation policies at home have certainly discouraged the internal migrants.

  • The Advantages of Work from Anywhere

    Synopsis: The new policy of Work from anywhere gained momentum during the pandemic. It has multiple benefits for all stakeholders.


    • Lack of clarity and flexibility in the US H-1B visa Programme remains major concerns for high-skilled Indian migrants, seeking to relocate to the U.S.
    • This uncertainty was high during the Trump administration, with visa denial rates rising significantly.
    • With the new administration in the US, reforms of the immigration system became a priority.
    • However, bringing reforms will take more time owing to the lack of consensus among the political forces in the U.S.
    • In this scenario, the new Work from Anywhere policy is gaining acceptance among corporates. It has the potential to mitigate the dependence on H-1B visas.

    What are the reforms proposed by Mr. Biden to ease the immigration system?

    Mr. Biden wants to ease the legal immigration for both family-based and employment-based migrants.

    • First, for the high skilled population, he proposed the removal of country-specific quotas for employment-based visas. A green card for STEM Ph.D. students pursuing from a U.S. institution is also in the proposal.
    • Second, the current H-4 visa holders (spouses and children of H-1B visa holders) will be made eligible for work permits.
    • However, given the partisan divisions in the U.S. legislature, it is unlikely that the proposal in its current form will become a law.
    • But for those skilled workers hoping to access U.S.-based opportunities have an alternative option of Work from Anywhere.
    What are the benefits of the Work From Anywhere (WFA) policy?
    1. First, benefits for the workers: It grants individuals the choice to live in their preferred locations without the need of commuting to an office. Whereas the traditional work-from-home (WFH) model allows workers WFH a few days every week.
        • WFA allows workers to relocate to their hometown, be closer to family and friends, manage dual career situations.
        • Workers can also benefit by moving to (or continuing to live in) a lower cost-of-living location.
    2. Second, benefits for the organisation: WFA allows new companies to access a global pool of talent with relatively low investment in office space.
        • It can also help to reduce real estate costs of the organization as the workforce shifts to remote work.
        • Also, it helps to increase the efficiency of workers. For example, According to research, worker productivity under a work-from-anywhere policy increased  4.4% compared to the traditional work-from-home environments.
    3. Third, benefits for the society. Society, too, can benefit, as daily work commutes are a major source of carbon emissions.
        • According to research shifting to remote work cut emissions by their employees by more than 44,000 tons.
    TCS case study
    1. Recently, Tata Consultancy Services (TCS) announced that its 400,000-plus employees will be 75% remote by 2025.
    2. TCS has rolled out a ‘25-25 remote-work model’:
        • 25% of the workforce will be in a physical office at any one time
        • Also, workers will  be expected to work from an office for  only 25% of their working hours,
    3. The Harvard Business School explored the changes being implemented by TCS and identified the following advantages.
        • One, this model enables TCS clients to access the best talent within TCS, independent of the location of talent.
        • Two, the model also offers TCS employees an opportunity to simultaneously work on multiple projects around the globe. It doesn’t require relocation to the client site or worrying about immigration.

    The TCS example shows how work-from-anywhere can help Indian companies and workers mitigate the challenges of immigration.

    PM suggested “Special Visa Scheme” for medical staff in South Asia

  • Job reservation in private sector for locals – Explained, pointwise

    Recently Haryana government notified its Haryana State Employment of Local Candidates Bill, 2020. This bill provides job reservation in the private sector for locals.

    Prior to Haryana, States such as Madhya Pradesh, Karnataka, Andhra Pradesh also tried to provide reservation in private jobs. Now the question is whether it is a constitutionally or legally correct move by the state government to provide job reservation in the private sector or not?

    About Haryana State Employment of Local Candidates Bill, 2020
    1. It provides for a 75 per cent job quota for local people in private sector jobs which offer a salary of less than Rs. 50,000 a month.
    2. The law applies to private companies, societies, trusts, and partnership firms, among others, located in the state. Furthermore, it is applicable to organizations having 10 or more employees.
    3. Firms and companies need to register all of their employees receiving a gross salary of Rs 50,000 or less on a government portal and update it at regular intervals.
    4. It will be applicable to the new job openings only and won’t affect the outsiders already working in the private sector.
    5. An exemption can be claimed by employers when there enough number of local candidates are not available with the desired skills, qualifications, and proficiency. However, an officer of the rank of deputy commissioner or higher will evaluate such a claim.
    6. Penalty for non-compliance ranges from Rs. 10,000 to Rs. 2,00,000 rupees.
    7. A domicile certificate would be mandatory for the candidate seeking benefit under the law.
    Other states tried to provide reservation in private jobs to locals
    1. The MP government in 2018 made it mandatory to give 70% of jobs to locals. But this law was not implemented on the private companies as a whole.
    2. Andhra Pradesh also passed a law to provide job reservation for locals. It reserved 75% private jobs across all categories in industrial units, factories, joint ventures as well as Public-Private Projects. The law passed by the Andhra Pradesh assembly is currently challenged in the court and the court is yet to decide on it.
    3. The Karnataka government also approved a new industrial policy (2020-2025) in 2020. The policy aims to give minimum employment of 70 per cent employment to Kannada people on an overall basis. Further, the reservation went up to 100 per cent in the case of Group C and Group D employees.
    Rationale behind such reservation in private jobs
    1. The objective is to empower the local youth by giving them better jobs.
    2. In recent times, the government was not able to generate sufficient employment. So, reservations in private jobs are seen as essential to avoid higher unemployment among local people.
    3. Since the private sector uses public infrastructure in many ways like subsidized allotment of land, tax exemptions etc. The state has a legitimate right to require them to comply with the reservation policy.
    4. The Supreme Court in its earlier judgements has supported domicile reservation in education. So, the state governments assume that the court will allow similar reservations in private jobs as well.
    5. Globally also many countries allow such reservation in private jobs. For example,
      • The US Civil Rights Act of 1964 allows the courts to order monetary damages and relief, for victims of discrimination(i.e local people).
      • The Employment Equity Act in Canada also protects minority groups from job deprivation. The Act protects the native people from discrimination in all the federally regulated industries, even in the private sector.
    Legal Provisions related to reservations in employment

    The constitution under Article 16 and Article 371 mentions the Reservation in jobs.

    1. Under Article 16, there were 3 sub-clauses dealing with the job reservation. They are,
      • 16(1): It provides for equality of opportunity for all citizens in matters relating to ’employment or appointment’ to any office under the State. 
      • 16(2): It provides that there cannot be any discrimination on grounds only of religion, race, caste, sex, descent, place of birth, residence or any of them. 
      • 16(3): It provides an exception by saying that Parliament may make a law “prescribing” a requirement of residence for jobs in a particular state. This power vests solely in the Parliament, not state legislatures. 
    2. Article 371: Some states have special protections under Article 371. Andhra Pradesh under Section 371(d) has powers to have “direct recruitment of local cadre” in specified areas. 
    Supreme Court Judgements regarding reservation in private jobs
    1. Dr. Pradeep Jain v Union of India (1984) case: The Supreme Court discussed the issue of legislation for “sons of the soil”. Further, The court held an opinion that such policies would be unconstitutional but did not expressly rule on it
    2. Sunanda Reddy v State of Andhra Pradesh (1995) case: The Supreme Court repeated its earlier interpretation in Dr Pradeep Jain case. Further, the court strikes down the state government policy that gave 5% extra weightage to candidates who had studied with Telugu as the medium of instruction.
    3. The Rajasthan government gave preference to “people belonging to the concerned district or the rural areas of that district” in appointments. But, in 2002 the Supreme Court invalidated the appointment of government teachers in Rajasthan.
    4. In 2019, the Allahabad High Court struck down a recruitment notification issued by the Uttar Pradesh Subordinate Service Selection Commission. The commission prescribed preference for women who were original residents of the state in job appointments.
    Concerns associated with reservation in private jobs
    1. Delaying Economic Recovery: The pandemic scenario has made it imperative for states to focus on fast and effective economic recovery. However, compulsion on companies to employ locals might compromise quality and delay the recovery phase.
    2. Discourage Investment: Compulsions to employ decreases the competitiveness of companies. Apart from that, such measures directly discourage investment potential in a state.
    3. Impracticability: The shortage of qualified workers in a state may impact its implementation. And also, the private sector cannot employ outsiders without the permission of concerned authorities. It might lead to the inspector raj prior to 1991 economic reforms.
    4. A threat to unity: This step would create friction among locals and non-locals in the implementing states. This will shake the fundamental of Indian democracy(Unity in Diversity) in long run. 
    5. Against constitutional provisions: These laws are against the spirit of constitutional provisions:
      • Article 14 allows for equality before the law. But the reservations to locals are against that equality.
      • Reservation to locals also violates Article 19(1)(g) is violated by Haryana’s law as outsiders won’t be able to effectively do any job of their choice in the state. 
      • Article 16(3) allows reservation based on the residence by a parliamentary law in matters of public employment and not in private employment.
    6. Against the reservation ceiling: Giving 75% reservation goes against the Supreme court’s ceiling of 50% for maintaining meritocracy. 
    Way Forward
    • The Supreme court must define the question on the reservation in private jobs. If permitted then the constitutional limit of 50% reservation cannot be allowed to breach by State government laws.
      • The law passed by the Andhra Pradesh assembly is already challenged in court. So, the supreme court has to define a clear stand on the reservation in private jobs.
    • There should be voluntary encouragement as various companies are already having 50-60% employees from the local state only (under the salary of 50000 per month).
    • The State government should focus on better education delivery, greater job creation and skill enhancement. It will make companies to employ more local youth automatically.  

    Giving reservations in jobs is only a temporary solution, the need of the hour is to focus on better job creation and skill development. A further idea of local reservation also goes against the spirit of Ek Bharat Shreshtha Bharat’ that demands an integrated and mobile labour market within the country.

  • Knowledge Economy in India

    Synopsis: India has lost its leadership in the production of a knowledge economy. But still India maintaining leaderships in few sectors like space, pharma and information technology.

    India as Knowledge economy


    • The global success of the Indian Space Research Organisation (ISRO) and the pharmaceutical industry signifies the diplomatic potential of India’s Knowledge Economy(production of goods and services is based principally on knowledge-intensive activities).
    • For instance, recently ISRO launched Brazil’s Amazonia-1 satellite and India exported the COVID-19 vaccine to Brazil, as part of its “Vaccine Maitri” diplomacy.
    • However, India does not hold its leadership position in the production of knowledge Economy like in the 1950s.

    What was the reason behind the success of these two sectors?

    1. Sustained state support: India’s current knowledge economy leadership in space and pharmaceuticals is due to 50 years of sustained state support.
        • It was Prime Minister Indira Gandhi who authorised the creation of ISRO in 1972.
        • Again, it was her decision to enact the Indian Patents Act, 1970. The Act facilitated the growth of the domestic pharmaceuticals sector.
        • Subsequent governments have all contributed to the development of both industries.
    2. The credit to Indian engineering, scientific and technological talent. There is large scale development of educational institutions throughout India. This made Indian students pursuing world-class standards at a fraction of the cost compared to developed countries.
    3. With these initiatives, India became the leader in the Knowledge Economy in the space and pharma sector. Further, India built the capacity to place satellites of several countries at globally competitive rates and also able to supply drugs and vaccines at affordable prices to developing countries.
    4. Moreover, It has to be noted that these two sectors were successful even when the western countries created constraints for indigenous technology development. For instance,
        • Unilateral sanctions were imposed by the US to deny Indian industry access to technology and markets.
        • A multilateral regime for intellectual property rights (IPRs) protection was created, under the aegises of the World Trade Organisation.
        • Even today, Many developed countries oppose India’s Compulsory Licence of medicines.

    Proof for India as a Knowledge Economy in the past:

    There were many instances in the past that shows India’s knowledge is in high demand. They are,

    1. Students from across Asia and Africa sought admission to Indian universities for post-graduate courses.
    2. Indian expertise was sought by global organisations such as the FAO, UNIDO, etc.
    3. The government of South Korea even sent its economists to the Indian Planning Commission till the early 1960s. They got their training in long-term planning.
    4. Rail India Technical and Economic Services (RITES), had acquired a global profile with business in Africa and Asia.
    5. The development of India’s dairy and livestock economy also attracted global interest.

    Why India its leadership in the Knowledge Economy?

    Irrespective of the dominant position during the 1950s, India lost its leadership in the production of the knowledge economy. The reasons are,

    1. Flight of Indian talent to other developed countries. It had accelerated since the 1970s and has sharply increased in recent years.
    2. China has emerged as a major competitor offering equally good S&T products and services at a lower cost.
    3. The appeal of higher education in India for overseas students has decreased. This is the biggest setback for India trying to become the powerhouse of the knowledge economy. This is because of two reasons,
        • The quality of education offered in most institutions is not up to date. The education institutes in India still teach old technologies instead of new ones.
        • The social environment offered in India is no longer as cosmopolitan as it used to be. There is a significant growth in the narrow-minded ideologies in India.
    4. Lack of political and intellectual support to the development of India’s knowledge base and an inadequate commitment by the government. For example, the Technical Education Quality Improvement Programme (TEQIP) is discontinued without an alternative programme hurts the quality of technical education in India.

    The success of the ISRO and Pharma sector is a tribute to public policy, government support, private sector involvement and middle-class talent. This has to spread across the sector to regain India as the leader of the Knowledge Economy.

  • PM Modi’s Acknowledgement of role of private sector

    Synopsis: Future growth in India should be led by the private sector. The government should encourage the private sector as a central part of its strategy.


    Recently the prime minister acknowledged the role of the private sector. Now it is up to the private sector to grow their business, pursue excellence, follow the law of the land and pay taxes.

    Why the role of the private sector is critical in India?

    • India has limited capital and the private sector is the best provider of capital in the economy. The private sector will deliver the most benefit in terms of growth or return on capital employed.
    • Private sector focus on wealth creation. The PM also praised the wealth creators with a logic that if you can’t create wealth, you won’t be able to distribute it. The creation of wealth is essential for growth, employment and the reduction of poverty.
    • India’s successes in many fields linked to the private sectors. Sectors such as banks, airlines, insurance, telecom, IT services, IT-enabled services etc were created a huge growth after they have been open up to private players.

    What can be expected from PM speech?

    The Prime Minister’s speech has raised the expectations that more positive reform for the private sector is around the corner.

    • First, the government can now bring in policy and future economic reforms in India as it has recognised the private sector’s role in parliament.
    • Second, India has been making worthy steps in the Ease of Doing Business. It is easier to start a business in India than it was a decade ago. The government is willing to listen and gives a good head start to solving those problems.
    • Third, the success of the Mudra Yojana and Start-up India has proven the new wave of innovation and enterprise in young India. India is now willing to look at other sectors such as space, defence, aeronautics.
    • Fourth, Private involvement in the India stack (Stack is a combination of technological projects that comprises all the technologies required to operate for any particular sector) has revolutionised the fintech sector. Now the digital health stack will likely to do the same for the health tech sector.


    • The private sector should now follow the law of the land and pay taxes. They should also become good corporate citizens of India or else the mistrust of the private sector might affect the sector.
    • The upcoming entrepreneurs will be the strong foundations of Atmanirbhar Bharat. The recent Union Budget has made it clear that the government will pursue economic reform and go for growth.

    [Answered] Economic survey 2019, pitch for wealth creation as a means of prosperity and welfare for all. Critically comment.

  • “PLI Scheme for pharmaceuticals and IT hardware” Approved

    What is the News?

    Union Cabinet has approved the Production Linked Incentive(PLI) Scheme for the pharmaceuticals and IT hardware sectors.

    About PLI Scheme for Pharmaceutical Sector:

    • Objective: It will promote the manufacturing of high-value products in the pharmaceutical sector.
    • Duration: The duration of the scheme will be for nine years from 2020-21 till 2028-29.

    Category of Goods: The scheme shall cover pharmaceutical goods under three categories as mentioned below:

    • Category 1: Biopharmaceuticals such as complex generic drugs, patented drugs, Gene therapy drugs, phytopharmaceuticals, and orphan drugs.
    • Category 2: It would cover active pharmaceutical ingredients, key starting materials, and drug intermediaries.
    • Category 3: Drugs not covered under Category 1 and Category 2.

    Significance of the scheme: The scheme will benefit domestic manufacturers. Moreover, it will help to create employment and will make available a wider range of affordable medicines for consumers.

    About PLI Scheme for IT hardware sectors:

    • Objective: It will boost domestic manufacturing and investments in the value chain of IT Hardware.
    • Target Segment: The target sectors under the scheme includes laptops, tablets, all-in-one PCs and servers.
    • Incentives: Under the scheme, beneficiaries will be given incentives of 4% to 1% on net incremental sales over the base year(2019-20) for a period of four years.
    • Significance: The government expects the scheme to reduce India’s import dependence for IT hardware in a major way. Currently, 80% of the country’s laptop and tablet demand is met through imports.

    Click Here to Read about PLI Scheme

     Source: The Hindu

    Production Linked Incentive (PLI) scheme


  • Production Linked Incentive (PLI) scheme

    What is the News?

    The Union Cabinet has approved the production-linked incentive(PLI) scheme for the telecom sector.

    About the production-linked incentive(PLI) scheme for the telecom Sector

    • Aim of the scheme: It will make India a global hub for manufacturing telecom equipment. Moreover, it will create jobs and reduce imports especially from China.
    • Focus of the scheme: The scheme will offset the huge import of telecom equipment worth more than Rs 50,000 crore. By that, it will encourage the foreign manufacturers and domestic manufacturers to set up production units in India.  
    • Coverage: The scheme will cover domestic manufacturing of equipment such as
      • core transmission equipment,
      • 4G/5G and next-generation radio access network and wireless equipment,
      • Internet of Things (IoT) access devices,
      • enterprise equipment such as switches and routers
    • Duration of the Scheme: The scheme will be operational from April 1 and will run for the next five years.
    • Eligibility: The eligibility for the scheme will be subject to;
      • Achieving a minimum threshold of cumulative investment
      • incremental sales of manufactured goods, with 2019-20 as the base year.
    • Incentives: For the inclusion of MSMEs in the scheme, the minimum investment threshold has been kept at ₹10 crores while for others it is ₹100 crore. Further, for MSMEs, It proposes a 1% higher incentive in the first three years.

    Significance of the scheme:

    • The Government Schemes may lead to an incremental production of about ₹2.4 lakh crore with exports of about ₹2 lakh crore over five years. Moreover, it may bring in investments of more than ₹3,000 crores.
    • With the inclusion of telecom equipment manufacturing under the ambit of PLI schemes, the total number of sectors under such programmes stands at 13.

    Click here to Read about PLI Scheme

     Source: The Hindu

  • Causes of accidents in firework industry

    Synopsis: Labour reforms and technological advances within the fireworks industry is the need of the hour to minimise the causes of accidents in the firework industry.


    Thousands of workers in Tamil Nadu’s famed fireworks’ industry are working in unsafe conditions. It resulted in a series of accidents. Such as

    • 20 workers died and 28 injured in the latest accident at a fireworks unit in Virudhunagar.  These incidents take place due to gross violation of norms governing the industry and human error in handling explosive substances.
    • 25 lives were lost in an accident in three fireworks factories in Virudhunagar (9), Cuddalore (9), and Madurai (7) in the past 11 months. 
    • After such accidents, only short-term action is taken. It includes
      • Registration and identification of cases,
      • Arrest the person responsible for an accident
      • Symbolic inspections,
      • Issuance of warnings and safety advisories

    What are the causes of such accidents?

    • First, there is a large-scale illegal sub-leasing of workers for licenced firework units.
    • Second, there is a violation of the limit on workers to be deployed. This leads to crowding in each shed. 
    • Third, there is a piece-rate system in payment (payment to workers is provided based on the number of firecrackers produced by workers). People are tempted to produce more units per day. For example, a tired worker hurriedly emptied semi-finished crackers, which caused the recent accident.
    • Fourth, there is also a lack of trained workers. This encouraged the industry to hire new workers with limited skills leading to accidents.
    • Fifth, Unlicensed units have expanded. They mostly escape the inspection until an accident occurs. 

    The way forward

    • Supervision of the chemicals to be mixed or stored is a key task to avoid casualty.
    • There should be periodic inspections at factories and strict penal action against violators.
    • Central and State governments must provide the needed manpower for enforcement agencies as the industry has grown manifold.
    • A continuous political push for labor reforms and technological innovations within the industry is also essential. 


  • NITI Aayog study to track “Economic Impact of Green Verdicts”

    What is the News?

    NITI Aayog has commissioned a study to examine the unintended economic consequences of judicial decisions that have hindered and stalled projects on environmental grounds.

    About the study

    • Responsible body: The study is to be undertaken by Jaipur-headquartered CUTS (Consumer Unity and Trust Society) Centre for Competition, Investment, and Economic Regulation. It also has an international presence.

    What is the purpose of this study?

    • The judgments of the different courts negatively impact major infrastructure projects. These decisions don’t adequately consider their economic fallout — in terms of loss of jobs and revenue.
    • Hence, this study aims to sensitize the judiciary on the economic impact of their decisions. The findings will also be used as a training input for judges of commercial courts, NGT, HCs, SCs.

    What will the study examine?

    • The study will examine five major projects that are impacted by judicial decisions of the Supreme Court or the National Green Tribunal.
    • For that, It will interview people who have been affected by the closure of the projects, environmental campaigners, experts, and assessing the business impact of the closure.
    • The five projects to be analyzed include:
      1. Stay on the construction of an airport in Mopa, Goa;
      2. Ending of iron ore mining in Goa.
      3. Shutting down of the Sterlite copper plant in Thoothukudi, Tamil Nadu.
      4. Suspension of sand mining operations in Uttar Pradesh
      5. Stopping of construction activities in the National Capital Region.

    Source: The Hindu

  • New Farm Laws and Labour Codes is the way forward

    Source: The Indian Express

    Syllabus: GS-3  Issues related to direct and indirect farm subsidies and Issues related to direct and indirect farm subsidies 

    Synopsis: The agriculture and labour reforms passed recently creates a condition for productivity and enhance growth. This benefits millions of small farmers and unorganised workers.

    Farm Laws and the changes it brings: 

    In India, Farmers earn less than people engaged in the services sector. This difference is not common in all countries.

    • An RBI study shows that a potato farmer only gets 28 per cent of the amount paid by the consumer. Across all crops, the farmgate price (the net price of the product when it leaves the farm) is 40-60 per cent less than the consumer price.

    How the earlier existing laws were problematic to farmers? How the new farm laws are of help?

    The Green Revolution and subsidies have expanded India’s agricultural production. But the farmers have not gained. This is because the mediators have taken 40-60 per cent of the profit. The problems with the earlier laws are, 

      • First, the stock limits mentioned in the Essential Commodities Act. The Act mention a certain amount of stocks to be maintained to satisfy the food security needs of India. This restricted large-scale processing units from running at full capacity. This led to the problem of food wastage. 
        • 30-40 per cent of vegetables and fruits are lost due to inadequate storage, processing and transportation facilities.
        • New Farm Law (The Essential Commodities (Amendment) Act, 2020): The Act removed the stock limits and introduction of the contract farming act. This will bring in new investments to tap the wasted resource.
      • Second, earlier under the APMC Act, only traders registered in APMCs can buy farmers’ produce. This restricted the outsiders and favoured registered intermediaries. Intermediaries used this to make a profit instead of farmers. 
        • New Farm Law (The Farmers’ Produce Trade And Commerce (Promotion And Facilitation) Act, 2020): The new laws amend this provision that favoured the intermediaries. Farmers now will have an option. Either sell to the traders registered or to the outsiders.   
        • Now private market/non-APMCs registered trader can also set up an agricultural market and compete with APMCs registered intermediaries.
        • For example, Karnataka implemented the Uniform Market portal in 2014, enabling trade across taluka APMC limits without APMC fees. This increased farmer’s profit.

    Labour reforms and the changes it brings:

    • Parliament has passed 3 labour code bills aimed at labour welfare reforms. These codes cover more than 50 crores unorganized and organized workers in India. This also includes platform or gig workers also. These three codes were
      1. Industrial Relations Code, 2020
      2. Code on Occupational Safety, Health & Working Conditions Code, 2020
      3. Social Security Code, 2020.

    First, multiple labour laws have not encouraged employment creation. These laws have created hindrances for job creation due to the high costs of compliance. For example, India’s employment elasticity with respect to GDP growth is 0.2. China and Bangladesh have an elasticity of 0.44. And 0.38 respectively.

        • New Labour Codes: India’s labour reforms will promote growth with higher employment elasticity. This is because these codes are the simplified comprising of many prior labour laws.

    What is employment elasticity?

    Employment elasticity is a measure of how employment varies with economic output. For example, An employment elasticity of 1 implies that with every 1 percentage point growth in GDP, employment increases by 1%.

    • Second, the old labour laws protected existing jobs at the cost of preventing new job creation.
      • New codes: The new codes would incentivise the firms to create new jobs. It is also in line with the reforms being undertaken by our neighbouring countries.
      • For example, Bangladesh increased formal jobs by legalising fixed-term employment and banning union activity in FDI industries. It raised the threshold for seeking prior permission for laying off workers. 

    Suggestions to improve further:

    • India should bring in economic reforms. Aadhaar-enabled social safety nets and direct income transfer to the poor will pay off by enabling growth with a massive expansion in employment.
    • The social safety nets have been created to ensure the right to food and direct income transfers to farmers. This will protect incomes of the vulnerable even as competition increases productivity and growth.
    • The government should continuously communicate with those unhappy with the reforms. The government should explain how the current status quo is hurting farmers and informal workers.


  • What is “Make in India Initiative 2.0”?

    What is the News?

    The Minister of Commerce and Industry has informed Lok Sabha about the Make in India Initiative 2.0.

    Make in India Initiative:

    • Launched Year: It was launched in 2014 by the Government of India.
    • Aim: To make India a global hub for the manufacturing, research and innovation. Also, the integrations of India in the global supply chain.
    • Objectives:
      • To increase the manufacturing sector’s growth rate to 12-14% per annum in order to increase the sector’s share in the economy;
      • To create 100 million additional manufacturing jobs in the economy by 2022; and
      • To ensure that the manufacturing sector’s contribution to GDP is increased to 25% by 2022 (revised to 2025) from the current 16%.

    Make in India 2.0:

    • It presently focuses on 27 sectors with a special focus on ten champion sectors including; 1. capital goods, 2. auto, 3. defence, 4. pharma, 5. renewable energy, 6. biotechnology, 7. chemicals, 8. leather, 9. textiles, 10. food processing.
    • These sectors have the potential to become global champions and drive double-digit growth in manufacturing.
    • In manufacturing, the action plans are coordinated by the Department for Promotion of Industry and Internal Trade (DPIIT). In services,  action plans are coordinated by the Department of Commerce.

    Achievements so far:

    • Foreign Direct Investment(FDI): India has registered its highest-ever annual FDI Inflow of US $74.39 billion during the last financial year 2019-20 as compared to US $ 45.15 billion in 2014-2015.
      • Further, in the last six years (2014-20), India has received FDI inflow which is 53% of the FDI reported in the last 20 years.
    • Ease of Doing Business Ranking: India has jumped to 63rd place in World Bank’s Ease of Doing Business ranking. This is due to reforms in the areas of Starting a Business, Paying Taxes, Trading Across Borders, and Resolving Insolvency.

    Source: PIB

  • What is “One District One Product Scheme”?

    What is the News?

    The Ministry of Commerce and Industry has informed Lok Sabha about the One District One Product Scheme.

     One District One Product Scheme(ODOP):

    • Aim: To identify one product per district based on the potential and strength of a district and national priorities. A cluster for that product will be developed in the district and market linkage will be provided for that.
    • Significance: This initiative is seen as a transformational step towards realizing the true potential of a district. It will fuel economic growth and generate employment and rural entrepreneurship.

    Merging of ODOP  One District One Product with Districts as Exports Hub initiative:

    • The ODOP  One District One Product  initiative has been operationally merged with the ‘Districts as Export Hub’ initiative. Later is implemented by the Director-General of Foreign Trade (DGFT), Department of Commerce.
    • Objective: To convert each District of the country into an Export Hub by identifying products with export potential. It also aims to address bottlenecks in exporting products and support local manufacturers.
    • Under the initiative, the State Export Promotion Committee(SPEC) and District Export Promotion Committee (DEPC) have been constituted in several districts.

    Source: PIB

    Central Government Schemes News

  • Government launches “Portal to collect data on gig workers”

    What is the News?

    The Finance Minister has announced the launch of a portal to collect data on gig, building, and construction workers.

    About the Portal:

    • The portal aims to collect relevant information on gig and platform workers along with building, construction and other such workers.
    • The information collected will help in formulating health, housing, skill, insurance, credit and food schemes for them.

    What are Gig and Platform Workers?

    • These are those workers who are employed by various e-commerce businesses like Uber, Ola, Swiggy and Zomato. These workers are deprived of social security benefits like provident fund, group insurance and pension.
    • During Budget 2021-22, the Finance Minister announced that for the first time, social security benefits will extend to gig and platform workers. Minimum wages will also apply to all categories of workers, and they will all be covered by the Employees State Insurance Corporation (ESIC).

    Click Here to Read on One Nation One Ration Card Scheme

     Source: The Hindu

  •  Indian cricket team’s success can be a model for country’s manufacturing sector

     Source: Indian express

    Gs3: Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.

    Synopsis: The good practices behind the success of Cricketing standards can be used in the Indian manufacturing sector. It will make Manufacturing in India more competitive


    • India achieved a remarkable victory in Australia recently. It is a result of high-quality governance instituted by the BCCI over the years, to make India’s cricket team a global champion.
    • Due to this systemic effort, India was able to compete so well against Australia, with a third-choice Indian team.
    • Similar practices can be adopted by policy makers for Manufacturing sector. It can develop India into a globally competitive ‘champion manufacturing sector’.

    What are the good practices that policy makers can use?

    • First, Institutionalisation of IPL facilitated the inclusion of Overseas players. Competing against the world’s best players has led to a significant rise in the skills of domestic cricketers.
        • Similarly, allowing foreign industries in India will raise the standards of the domestic manufacturing sector and make them more competitive. For example, Foreign competition in the food sector (McDonald’s) has increased the standard and competitiveness of Indian players (Haldiram’s).
    • Second, the mandatory rule for the preferential treatment for locals. It limits the number of foreign players, to be used in any team. (only 4 overseas players are allowed in any playing team).
        • This has led to an increasing number of domestic players. English Premier League (EPL) failed to create a world-class England football team due to this fact. EPL is dominated by overseas players without enough opportunities for local players in top teams.
        • So, considering this fact the policy makers should provide some limited protection from destructive competition from overseas. This move will facilitate the growth of Indian domestic manufacturers.
    • Third, BCCI provided high-class infrastructure by setting up top-class cricket facilities in non-traditional cricketing centers. It provided access, opportunity, and a level playing field to all talented cricketers.
        • Similarly, the Government should try to provide high-class infrastructure in the manufacturing sector. It includes plugging the existing gaps between Indian and global standards, particularly on logistics. This will make the manufacturing sector cost-competitive and enable a level playing field for every Indian entrepreneur.
    • Fourth, Success of Indian cricket has ensured that every good cricketer pursues their dream during studies. This has led to the retention of the best talent in Indian cricket.
        • But, It is not the case in manufacturing due to the lack of success and the presence of obstacles. The best entrepreneurial talent of India looks for opportunities elsewhere either in the services (Flipkart) or overseas manufacturing (for example, textiles in Bangladesh).
        • For India, to create a robust manufacturing sector it needs to retain the best talent by removing the obstacles.

    If policymakers learn the right lessons from cricket and implement those lessons with honesty, we can become globally competitive in the manufacturing sector. To be the best, we must be able to compete with and defeat the best.

  • 4th edition of “Future Investment Initiative” Forum

    Why in News?

    The Union Minister for Health and Family Welfare has addressed the 4th edition of the Future Investment Initiative(FII) Forum.


    • Future Investment Initiative(FII): It is an annual investment forum held in Riyadh, Saudi Arabia. The Forum discusses trends in the world economy and investment environment.
    • Hosted by:  Public Investment Fund of Saudi Arabia (PIF). The first event was held in 2017.
    • Purpose of 4th FII: To find solutions on how business and government can expand access to healthcare, train healthcare workers, remove regulatory barriers and encourage investment in advanced health technologies.

    Key Highlights from the address: Union Minister has highlighted the five big trends which are influencing global business, due to COVID-19:

    • The impact of Technology and Innovation
    • Importance of Infrastructure for Global Growth
    • Changes coming in human resource and future of work
    • Compassion for environment
    • Business-friendly governance with a focus on the whole of society and government approach.

    Source: PIB

  • Decriminalisation of offences under LLP Act

    Why in News?

    The Company Law Committee has recommended decriminalizing 12 offences under the Limited Liability Partnership(LLP) Act. It has also said that LLPs should be allowed to issue non-convertible debentures(NCDs) to raise funds. It will help them in improving the ease of doing business for LLP firms.


    • Limited Liability Partnership(LLP): It is an alternative corporate business form in which some or all partners (depending on the jurisdiction) have limited liabilities.
    • Under this, partners are not responsible or liable for another partner’s misconduct or negligence. This is an important difference from the traditional unlimited partnership in which each partner has joint liability.
    • Act: All limited liability partnership in India is governed under the limited liability partnership act of 2008. The Ministry of Corporate Affairs implements the Act.

    Recommendations of the committee:

    • Decriminalising offences: The committee has recommended decriminalizing several offences related to timely filings, including annual reports and filings on changes in partnership status of the LLP, not related to fraud.
      • It is to be noted that none of these offences attracts imprisonment. Instead, these offences attract fines.
    • Penalties instead of Fines: Committee recommended the companies should be made to pay penalties instead of fines.
      • This is because fines are counted in the criminal charges. It results in a convicted person being disqualified or becoming ineligible for various posts.
    • Authority to impose Penalty: The Registrar of Companies should have the authority to levy penalties for any contravention of provisions of the LLP Act.
    • LLPs to issue NCDs: LLPs which are currently not allowed to issue debt securities should be allowed to issue non-convertible debentures (NCDs) to facilitate the raising of capital and financing operations. The move is likely to benefit startups and small firms in sectors which require heavy capital investment.

    Additional Facts:

    What are Non-convertible debentures(NCDs)?

    • Debentures are long-term financial instruments which acknowledge a debt obligation towards the issuer. Some debentures have a feature of convertibility into shares after a certain point of time at the discretion of the owner. The debentures which can’t be converted into shares or equities are called non-convertible debentures (or NCDs).
    • NCDs are used as tools to raise long-term funds by companies through a public issue.To compensate for this drawback of non-convertibility, lenders are usually given a higher rate of return compared to convertible debentures.
    • Besides, NCDs offer various other benefits to the owner such as high liquidity through stock market listing, tax exemptions at source and safety since they can be issued by companies which have a good credit rating.

    Source: Indian Express

  • SC ruling on Section 32A of IBC

    Section 32A was introduced in the IBC by the amendment act of March, 2020.  

    By this section, government provided protection to successful bidders during corporate insolvency resolution process (CIRP). These bidders offer reasonable and fair value for the corporate debtor.    

    Why this Provision was introduced? 

    Since the implementation of IBC in 2016, insolvency resolution plan for many big companies could not be implemented. It was because of investigations by agencies like ED and SEBI.    

    • For example, In 2017 Bhushan Power and Steel with more than Rs. 47,000 crore debt, entered into insolvency proceeding. After a long bidding process, JSW Steel won the rights to take over Bhusan steel. However, ED jumped in and attached their assets worth Rs. 4,000 crores for the fraud by the company’s previous owner.  

    What was the case and ruling of Supreme Court on that? 

    Petitioners of the case argued that section 32A closes the door for individual investors to recover their claims from the new management. Thus, they are left with the only option of pursuing remedies under criminal law against the former management. 

    • Supreme Court in its recent decision upholding the validity of Section 32A of IBC.  
    • Justice Joseph stated that the purpose of the amendment was to enable a new and clean beginning for the new management and a clean break from the company’s past.  
    • Thus, new management cannot be prosecuted for an offence committed prior to the commencement of the corporate insolvency resolution process.  
    • It will also be immune from investigations being conducted either by any investigating agencies ED or other statutory bodies such as SEBI. Immunity is granted only for the matters linked with prior management.  
    • However, such immunity would be applicable only if there are an approved resolution plan and a change in the management control of the corporate debtor.  

    This will provide the corporate bidders with confidence to proceed with confidence while bidding on disputed companies and their assets. 

  •  National Startup Advisory Council 

    Why in News? 

    The Government of India has nominated 28 non-official members on the National Startup Advisory Council. 

     About National Startup Advisory Council: 

    • National Startup Advisory Council: It was constituted by the Department for Promotion of Industry and Internal Trade (DPIIT) in January, 2020. 
    • Objective: This is to advise the Government on measures needed to build a strong startup ecosystem. The ecosystem will nurture innovation and startups in the country. It will drive sustainable economic growth and generate large scale employment opportunities. 
    • Composition: 
      • Chairman: Minister for Commerce & Industry. 
      • Convener of the Council: Joint Secretary, Department for Promotion of Industry and Internal Trade. 
      • Ex-officio Members: Nominees of the concerned Ministries/Departments/Organizations not below the rank of Joint Secretary.  
      • Non-official members to be nominated by the Government from various categories like 
    • Founders of successful startups 
    • Veterans who have grown and scaled companies in India 
    • Persons capable of representing the interests of investors into startups, etc.  
    • The term of the non-official members will be for a period of two years or until further orders, whichever is earlier. 

    Article Source

  • Startup India Seed Fund 

    Why in News? 

    Rs 1,000-crore ‘Startup India Seed Fund’ was launched during the ‘Prarambh: Startup India International Summit’. 

     Salient features of Startup India Seed Fund Scheme: 

    • ObjectiveFund has been set up to provide initial capital to the startupsAfter that start-ups will be provided with the Govt. Guarantees, to help them raise debt capital. 
    • Coverage: The fund would offer financial assistance to startups for proofs of concept, prototype development, product trials, market-entry, and commercialization of products or ideas. 
    • Funding: The Scheme will offer startups up to Rs. 20 Lakhs as grant for Proof of Concept. Upto Rs. 50 Lakhs can also be availed through convertible debentures or debt or debt-linked instruments for commercialization. 

     Fund of Funds for Start-ups(FFS) Scheme: 

    • It was launched by the Prime Minister in 2016 in line with the Start-up India Action Plan. 
    • Purpose: The fund has a corpus of INR 10,000 crore and is managed by Small Industries Bank of India(SIDBI) for contribution to the corpus of Alternative Investment funds(AIFs) which in turn invest in equity and equitylinked instruments of various Startups. 

     Startups in India: 

    • India is home to the world’s thirdlargest startup ecosystem. There are over 41,000 startups in the country. 
    • In 2014, there were only four startups in the unicorn club but in 2020 there are more than 30. Further, 11 of these startups entered the unicorn club in 2020 itself.  
    • The startups in India are not limited to big cities and about 40% of such budding entrepreneurs are coming from tier-II and -III cities. 

     Further Reading on Prarambh Summit:

  • Union Minister inaugurates the ‘Prarambh: Startup India International Summit’

    News: Union Minister of Commerce has inaugurated the ‘Prarambh: Startup India International Summit’.


      • Prarambh: Startup India International Summit: The summit has been organized by the Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry.
      • The summit is organized as a follow-up to the announcement made by the Indian Prime Minister at the 4th BIMSTEC Summit held in Nepal in 2018. During the occasion, India committed to host the BIMSTEC Startup Conclave.
      • The focus of the Summit: Enhancing multilateral cooperation and engagement with countries from around the globe to collectively develop and strengthen the startup ecosystems.
      • Significance: With participation from over 25 countries and more than 200 global speakers, the Summit is the largest Startup India International Summit organized by the Government of India since the launch of the Startup India Initiative.

    Additional Facts:

      • Startup India Initiative: It was launched in 2016 with the objective of supporting entrepreneurs, building a robust startup ecosystem and transforming India into a country of job creators instead of job seekers.
      • Managed by: The programs under the initiative are managed by a dedicated Startup India Team which reports to the Department for Industrial Policy and Promotion (DPIIT).
      • Key Pillars: The Key Pillars of Support for Startups under the Startup India Initiative are:
        • Simplification and Handholding: Easier compliance, easier exit process for failed startups, legal support, fast-tracking of patent applications and a website to reduce information asymmetry.
        • Funding & Incentives: Exemptions on Income Tax and Capital Gains Tax for eligible startups; a fund of funds to infuse more capital into the startup ecosystem and a credit guarantee scheme.
        • Incubation & Industry-Academia Partnerships: Creation of numerous incubators and innovation labs, events, competitions and grants.

    Further Reading on BIMSTEC:

    Article Source




  • 1,600 new tech start-ups and 12 unicorns in 2020: Nasscom’s Indian Tech Start-up Ecosystem report

    News: National Association of Software and Services Companies (Nasscom) has released the annual start-up report ‘Indian Tech Start-up Ecosystem – On the March to Trillion Dollar Digital Economy’.


    Key Takeaways from the Report:

    NASSCOM Report

    Source: NASSCOM Report

    • India has added 1,600 new tech start-ups and a record 12 unicorns in 2020 (the highest ever added in a single year).
      • Unicorn: It is a term in the business world to indicate a startup company valued at over $1 billion.
    • The Tech start-up base continues to expand steadily at 8-10%. Sectors, which benefited from covid-19, such as edtech, agritech and gaming, are seeing a steady rise in first-time funding.
    • Remote working continues to see significant adoption amongst tech startups, with around 30-35 % offering remote roles and 15-20 % companies having committed to remote work culture.
    • In 2020, 14% of total investments were in deep-tech startups up from 11% in 2019.Furthermore, 87% of all deep-tech investments were in artificial intelligence (AI) and machine learning (ML) startups.
    • India will have at least 12 more unicorns in 2021 taking the total count to 50.

    Core growth drivers for Startup’s in 2020

    • Digital acceleration, and shift from moving from offline to online
    • Vocal-for-Local provided market support for start-ups to thrive
    • Remote work enabled start-ups to reduce burn whilst accelerating growth of new start-up hubs.

    Article Source

    Read Also :upsc current affairs

  • Government approves new scheme for Industrial Development of Jammu & Kashmir

    News: Cabinet Committee on Economic Affairs has approved the Central Sector Scheme for Industrial Development of Jammu & Kashmir.


    • Aim: To develop development of Manufacturing as well as Service Sector Units in J&K which will generate employment and leads to the socio economic development of the area.
    • Incentives: The following incentives would be available under the scheme:
      • Capital Investment Incentive at the rate of 30% in Zone A and 50% in Zone B on investment made in Plant & Machinery (in manufacturing) or construction of buildings and other durable physical assets(in service sector) is available.Units with an investment upto Rs. 50 crore will be eligible to avail this incentive. Maximum limit of incentive is Rs 5 crore and Rs 7.5 crore in Zone A & Zone B respectively
      • Capital Interest subvention: At the annual rate of 6% for maximum 7 years on loan amount up to Rs. 500 crore for investment in plant and machinery (in manufacturing) or construction of building and all other durable physical assets(in service sector).
      • GST Linked Incentive: 300% of the eligible value of actual investment made in plant and machinery (in manufacturing) or construction in building and all other durable physical assets(in service sector) for 10 years. The amount of incentive in a financial year will not exceed one-tenth of the total eligible amount of incentive.
      • Working Capital Interest Incentive: All existing units at the annual rate of 5% for maximum 5 years. Maximum limit of incentive is Rs 1 crore.
    • Other Key Features of the Scheme:
      • Scheme is made attractive for both smaller and larger units. Smaller units with an investment in plant & machinery upto Rs. 50 crore will get a capital incentive upto Rs. 7.5 crore and get capital interest subvention at the rate of 6% for maximum 7 years
      • The scheme aims to take industrial development to the block level in UT of J&K, which is first time in any Industrial Incentive Scheme of the Government of India and attempts for a more sustained and balanced industrial growth in the entire UT
      • Scheme has been simplified on the lines of ease of doing business by bringing one major incentive- GST Linked Incentive- that will ensure less compliance burden without compromising on transparency.
    • Expenditure involved: The financial outlay of the proposed scheme is Rs.28,400 crore for the scheme period 2020-21 to 2036-37.
    • Impact:
      • Scheme will bring radical transformation in the existing industrial ecosystem of J&K with emphasis on job creation, skill development and sustainable development.
      • The scheme is likely to attract unprecedented investment and give direct and indirect employment to about 4.5 lakh persons. Additionally, because of the working capital interest subvention the scheme is likely to give indirect support to about 35,000 persons.

    Article Source


  • Government launched virtual toy hackathon ‘Toycathon 2021’

    News: Union Education Minister and Union Minister for Textiles and Women & Child Development jointly launched the Toycathon 2021.


    • Toycathon 2021: It’s a kind of hackathon for the toy industry. It has been organized by the Ministry of Education, Ministry of Women and Child Development (MWCD), Ministry of Textile, Ministry of Commerce and Industries, Ministry of MSME, Ministry of I&B and All India Council for Technical Education(AICTE).
    • Aim: To conceptualize innovative toys based on the Indian value system which will inculcate the positive behavior and good value among the children.
    • Themes: It is based on nine themes viz. Indian Culture, History, Knowledge of India and Ethos; Learning, Education and Schooling; Social and human values; Occupations & specific fields; Environment; Divyang ; Fitness and sport; Out of the box, creative and logical thinking and Rediscovering/redesigning traditional Indian toys.

    Why is Toycathon being organized?

    • Toycathon is being organized to develop India as the global Toy manufacturing hub.
    • India is home to 25% of global children belongs to the age group of 0 to 12 years.
    • India is home to several toy clusters and thousands of artisans produce indigenous toys which not only have cultural connect but also helps in building life-skills and psychomotor skills among children especially at an early age.
    • India’s share in the global toy market is estimated to be at $90 billion, which is just 0.5 per cent of the global share. Apart from that 80 per cent of the toys sold in India are imported from China.

    Article Source

  • National Startup Awards 2021

    Source: DPIIT

    News: Department for Promotion of Industry and Internal Trade(DPIIT) has invited applications for the National Startup Awards(NSA) 2021.


    • National Startup Awards: It was set up by the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry.
    • Aim: To recognize and reward outstanding Startups and ecosystem enablers that are building innovative products or solutions and scalable enterprises, with high potential of employment generation or wealth creation, demonstrating measurable social impact.
    • Sectors: The awards for startups will be given in 49 areas classified into 15 broad sectors. The 15 sectors are Agriculture, Animal Husbandry, Drinking Water, Education, and Skill Development, Energy, Enterprise Systems, Environment, FinTech, Food Processing, Health and Wellness, Industry 4.0, Security, Space, Transport and Travel.
    • Eligibility Criteria for Startups awards: Only those DPIIT recognized Startups were eligible to participate who:
      • Have a product in the market
      • Have all trade-specific registrations
      • Have no defaults in audited financial statements.
  • The Wistron Dispute and China’s lessons.

    Synopsis: Wistron case shows that hasty labour laws violating labour rights is economically suicidal and damaging to India. 


    Recently, contract workers attacked the Wistron’s iPhone assembly that resulted in property damage of worth ₹50 crore. 

    • According to a preliminary inquiry report by the State labour department into the incident Wistron and its labour contractors violated many provisions of the laws that resulted in sacking of its vice-president for its India operations.  
    • Also, The Apple Corporation has put further business on hold until Wistron addresses the labour dispute. 
    • The violence at Wistron unit will negatively affect India’s efforts, to attract foreign direct investment through production-linked incentive (PLI) scheme, to boost domestic production (‘Make in India’) and India’s step towards Atmanirbhar Bharat. 

    What are the reasons for such violence? 

    • First, non-payment or delay in payment of wages along with violation of labour laws, such as non-issuance of the wage contract, employing women workers in night shift without providing adequate safety etc has led to the violence. 
    • Second, the anti-labour reforms brought by Karnataka government’s ordinances to amend Factories Act 1948, to attract foreign companies seeking to relocate from China, brought deep discontent among workers in the State.  
    • For example, it repealed the rule of standard eight-hour working day with a 12-hour working day and also brought overtime related changes. 
    • Third, low living wages. For example, the average daily earnings of casual workers in urban India in 2018-19, as per the official Periodic Labour Force Survey is well below the official living wage as defined by the Seventh Pay Commission for central government employees. 

    What India can learn from China?  

    Although some of the states might be following the labour policies of China, but there are few positives in China’s labour policy that need a consideration  

    • China mandates employers to provide dormitory accommodation for workers close to factories. Factory-provided dormitory accommodation is the principal reason for slum-free Chinese industrial cities, unlike in India. 
    • Apart from this, to subsidise production costs, China’s local governments compete with each other to offer excellent physical infrastructure and ensure adequate credit to industrial enterprises through the national development banks. They also act as midwives for Industrial promotion. 

    Indian government policy to emulate only china’s stringent labour policies such as long working days and flexible use of labour, while ignoring the social benefits offered by china to its labours are bound to face resistance. 

  • Prime Minister Formalisation of Micro food processing Enterprises (PM-FME) Scheme

    Source: PIB

    News: Tribal Cooperative Marketing Federation of India(TRIFED) has signed an MoU with Ministry of Food Processing Industries(MOFPI) For Upliftment of Tribal Lives Through the Implementation of PM-FME Scheme. 


    • PM-FME Scheme: It is a centrally sponsored scheme launched by the Ministry of Food Processing Industries(MOFPI). 

    What is the aim of PM-FME scheme? 

    • To modernize and enhance the competitiveness of the existing individual micro enterprises and ensure their transition to formal sector 
    • To provide support to Farmer Producer Organizations, Self Help Groups, and Producers Cooperatives along their entire value chain. 
    • Duration: The PM-FME scheme will be implemented over a period of five years from 2020-21 to 2024-25 with an outlay of Rs 10,000 crore.  
    • Funding: The expenditure under the PM-FME scheme would be shared in 60:40 ratio between Central and State Governments, in 90:10 ratio with North Eastern and Himalayan States, 60:40 ratio with UTs with legislature and 100% by Centre for other UTs. 
    • Coverage: Under the PM-FME scheme, 2,00,000 micro food processing units will be directly assisted with credit linked subsidy. Adequate supportive common infrastructure and institutional architecture will be supported to accelerate growth of the sector. 

    What are the Key Features of PM-FME scheme? 

    • One District One Product:  
    • The PM-FME Scheme adopts One District One Product (ODOP) approach to reap the benefit of scale in terms of procurement of inputs, availing common services and marketing of products. 
    • The States would identify food products for a district keeping in view the existing clusters and availability of raw material.  
    • The ODOP product could be a perishable produce based product or cereal based products or a food product widely produced in a district and their allied sectors. 
    • Other Focus Areas:  
    • The PM-FME scheme focuses on Waste to wealth products, minor forest products and Aspirational Districts. 
    • The Scheme also places special focus on capacity building and research. NIFTEM and IIFPT, two academic and research institutions under MOFPI along with State Level Technical Institutions selected by the States would be provided support for training of units, product development, appropriate packaging and machinery for micro units. 
    • Financial Support: 
    • Existing individual micro food processing units desirous of upgrading their units can avail credit-linked capital subsidy at 35% of the eligible project cost with a maximum ceiling of Rs.10 lakh per unit. 
    • Support would be provided through credit linked grants at 35% for development of common infrastructure including common processing facility, lab, warehouse through FPOs/SHGs/cooperatives or state owned agencies or private enterprise. 
    • A seed capital (initial funding) of Rs. 40,000- per Self Help Group (SHG) member would be provided for working capital and purchase of small tools. 
  • Why violence happened at Wistron-Apple Facility?

    Wistron Violence and issue of contract workers

    Synopsis: The recent case of violence at Wistron’s iPhone manufacturing plant also highlights the challenges faced by contract workers in India.

    Why Wistron Violence happened?

    • Recently, Wistron’s iPhone manufacturing plant was attacked by thousands of contract workers over alleged non-payment of wages, resulting in theft and loss of goods worth hundreds of crores.
    • Whereas, Wistron stated that it had deposited the money in the account of the contractor (staffing firms) and the action will be taken against that firm.
    • In response, Apple has put Wistron Corp. on probation by not giving new orders after an audit of the serious lapses in labour practices.

    As per the initial findings, some serious lapses have been found out in labour practices.

    • Wistron became fully operational in August 2020, with around 5,000 employees and rapidly scaled up its contractual employee strength from around 3,000 to nearly 8,500, due to rising demand.
    • It was followed by increase in shift timing from eight-hour to 12-hour shifts. On the other hand, contractors were not paying the workers their full wages as per their contract. Wages were being paid very late and in some cases slashed from Rs 22,000 to Rs 8,000 in some cases.
    • There was no employee grievance redressal system in place. Final argument which triggered violence was broke out over the attendance system not capturing the exact work hours of workers.  

    Who are contract workers?

    • Contract workers are hired by the contractors’ company and paid by them only, they are not on the payrolls of the company on whose shop floors they work.
    • Company transfers payments to contractor companies as per the agreements and contractor companies make payment to the contract workers. Principal employers/companies are responsible for the welfare facilities of the workers.
    • As per the data of the Annual Survey of Industries (2017-18), 36.4 percent of total production workers in the registered factory sector, are contract workers.

    What are the issues faced by the contract workers?

    • Firstly, Contract workers are often tasked with the same jobs as regularly employed workers but have limited social security benefits, receive lower wages, and operate under poor working conditions.
    • Secondly, Sub-contracting itself has become multi-layered. In many cases, Subcontractors themselves are Hiring labor from multiple subcontractors/third party work supply firms. Setting accountability in this case becomes very difficult.  
    • Third, Despite providing the provision of Fixed-term employees in the Code on Industrial Relations, firms continue to rely on contract workers, because
      • The cost of hiring contract workers continues to remain lower compared to cost of hiring fixed-term employees, who are required to be paid pro-rata wages and social security including gratuity. 
      • In the case of contract workers monitoring, legal compliance and litigation costs are shifted onto the contractors.
    Code on Industrial Relations (2020)

    • Under the code, government introduced the option of fixed-term employment, in a bid to discourage the use of contract workers.
    • Such employees can be employed without mediation of contractors. These employees are though assured of benefits same as permanent workers in the establishment, but are not entitled to any advance termination notice or any payment in lieu of termination.
    • Fourth, Code on Industrial Relations is itself vague regarding major aspects of contract workers
        • The basic issue is that the provisions of fixed-term employment in India are open-ended i.e. does not specify a minimum or maximum tenure for hiring fixed-term employees or the number of times the contract can be renewed.
        • Workers may find themselves moving from one fixed-term contract to another, without any assurance of being absorbed as permanent workers by their employer.
    • Fifth, Labour Code on Occupational Safety and Health provides exceptions by allowing the use of contract workers in core activities under certain conditions such as a sudden increase of volume of work in the core activity which needs to be accomplished in a specified time.

    What should be done?

    • Firstly, the use of contract labour in core activities excluding services such as security, catering and sanitation, should be completely prohibited by government.
    • Second, Conflict between the Code on Occupational Safety and Health and Code on Industrial Relations regarding contractual labours should be resolved immediately. Former allows contract labor in some exceptions.
    • Third, it is notable that Wistron increased the no. of contractual workers after the launch of Production Linked Incentive (PLI) Scheme, which is limited for 5 years and on the incremental sales. Such employment generating schemes should have a provision that the jobs generated should be on the firms’ payroll and not the contractors’.
    • Fourth, As Atmanirbhar Bharat Rozgar Yojana, is offering provident fund subsidies to employers for hiring new formal workers. This together with PLI scheme should be leveraged to generate formal employment.
    • Fifth, as an immediate step, a compulsory grievance redressal mechanism for contractual workers should be established.


  • 100% FDI in DTH service

    Source: The Hindu

    News: Union Cabinet has approved revised guidelines for Direct-to-Home (DTH) broadcasting services.


    • Direct to Home(DTH): It enables a broadcasting company to directly beam the signal to your TV set through a receiver that is installed in the house.There is no need for a separate cable connection.
    • Advantages of DTH:
      • One can do away with the cable operator who will give you channels of his choice.
      • The quality of signals in this case is expected to be superior since the signal is not split through a cable.
      • There is a possibility of reducing your monthly cable bill.
    • Disadvantages: Capital cost has to be borne initially. Since this involves setting up of a receiving apparatus at the subscribers end, the cost can be prohibitively high.

    What are the revised guidelines for DTH Services?

    • It allowed 100% Foreign direct Investment(FDI) in the direct-to-home (DTH) broadcasting services sector.Currently, FDI was limited to 49%.
    • License for the DTH will be issued for a period of 20 years in place of present 10 years.Further the period of License may be renewed by 10 years at a time.
    • License fee has been revised from 10% of GR (gross revenue) to 8% of AGR (adjusted gross revenue).License fee will be collected on a quarterly basis against the current annual basis.
    • Sharing of Infrastructure between DTH operators. DTH operators, willing to share DTH platforms and transport streams of TV channels on a voluntary basis will be allowed.
  • Why antitrust lawsuits are being filed repeatedly against tech giants like Facebook?

    The issue of anti-competitive practices by Tech giants has come into the light again as recently, an antitrust lawsuit was filed by the Federal Trade Commission (FTC) and governments of 48 US states against the tech giant Facebook, accusing it of crushing smaller competitors by abusing its dominant market position. Specific instances of acquisitions of WhatsApp and Instagram by it have been cited. 

    In October 2020,  an antitrust lawsuit was filed against Google for misusing its dominant position as a search engine for favouring its own content in search results and entering into agreements with other companies like Apple, to make it the default search engine on devices. 

    What are the anti-competitive activities of tech giants?

    A report from top Democratic congressional lawmakers about the dominance of the four biggest tech giants-Amazon, Apple, Facebook, and Google- talks about antitrust activities by them.

    Tech giants are involved in the wrong means (Like the acquisition or suppression of competition)  in order to make additional profits by gaining too much power over similar businesses resulting in an unequal playing field for other business entities.

    For example, Facebook recently tried to take a competitive edge over Twitter by shutting down its API access for Twitter’s short video app, Vine, and restricting its ability to grow. Tech giants resort to antitrust activities like depriving access to their platform, discriminatory advertisement policies, breaching privacy, and unlawful acquisitions.

    What are the impacts of anti-competitive activities by tech Giants?

    Antitrust activities are in a way anti-competitive practices that have widespread negative impacts not only on competitors but also on the users:

    • For users, antitrust activities may result in the availability of fewer options and weaker privacy controls. 
      • After gaining a dominant position in the market, WhatsApp and Facebook eroded privacy protection by changing the terms of service. It may result in the collection of all the private data and its hoarding that is becoming the biggest source of revenues and profits. Cambridge Analytica case is one such example in which Facebook data of Indian users was ‘stolen’ to allegedly influence the elections.
      • It also results in fewer choices left with the consumers for services. 
    • Anti-competitive practices discourage innovation in the market as it incurs additional costs in surpassing the level of giants and competing with them. 
    • It discourages ethical means by other tech firms as those who are sidelining it are having a competitive edge over them, in absence of proper regulations.
    • A dominant position in the market may create a monopoly, leading to higher prices and low-quality services in the absence of a challenge from any other firm

    Do Anti-competitive practices exist in India?

    The antitrust lawsuits filed against Tech giants are very relevant for India as well, which is the base of 400 million users of WhatsApp and the largest single market for Facebook. Amazon has around one-third of the share of online retail in India. Most smartphones in India are Android-based, dominated by Google.

    India as a country with a rising industrial base is not untouched by Anti-competitive practices which got amplified after the liberalization of the Indian economy in 1991. It resulted in the formation of the Competition Commission of India in 2003. Since its inception, till 31 March 2019, the CCI has noted 1008 instances of ‘antitrust’ matters. It has imposed penalties amounting to ₹13,381 crores Over the past 10 years.

    Reports suggest that anti-competitive activities have resulted in unhealthy monopolies in the Indian economy. An analysis of 2035 listed companies across 298 industry groups shows that in 33% of all industry groups, there is one single company that controls over 50% of the net sales in the sector. For example; 

    • Bajaj Auto dominates the scooters and three-wheeler industry. 
    • Tata Motors has the most significant presence in light and heavy commercial vehicles. 
    • Oil and Natural Gas Corp. is the country’s largest firm engaged in oil exploration.
    • Facebook and Google together mop up 68%of India’s digital ad market revenues, while Amazon and Flipkart serviced 90% of all e-commerce orders during the 2019 festive season. 


    Thus, business activities plagued by anti-trust activities not only in developed countries like the U.S but also in developing countries like India. Ensuring fair balance, data regulation, and fair digital taxation are ways forwards for the regulating agencies to deal with these activities.

    In India there is a need to give more power and capacity to the largely ineffective Competition Commission of India by enacting the Draft Competition (Amendment) Bill, 2020, to deal with such activities in Indian industries.


    International Trade News

  • Rise of corporate nationalism

    Context: The Rise of ‘corporate nationalism’ empowers Indian companies at expense of consumers.

    Instances where the Sentiments of corporate nationalism has been raised against foreign corporates?

    • Amazon-Reliance Dispute: The counsel for Future Retail accused Amazon of behaving like “the East India Company of the 21st century” and calling it “Big Brother in America.”
    • Whatsapp pay still pending for approval before the Supreme Court: Even though Whatsapp has obtained all requisite approvals. Multiple oppositions claim that permitting foreign entities to launch payment apps would endanger the country’s financial data. This is despite the National Payments Corporation of India’s approval of WhatsApp’s data localisation practices.
    • Severe restrictions on Chinese investments: By mandating prior approval for Chinese FDI, banning several Chinese apps and restricting Chinese bidders from participating in public procurement contracts.

    Why shifting the focus to the foreignness of a company for regulatory assessment is problematic?

    • Foreign investors hold majority stakes in most of these “Indian” startups which make complaints of losing market share to foreign companies. For example, while complaining Amazon as a foreign company, Reliance, too, doesn’t shy away from receiving investments from Google.
    • It alters the legal jurisprudence by placing the foreign identity of a party at the centre of regulatory assessments, ultimately subverting the objective of commercial laws.
    • It increases the risk associated with doing business in India by creating cause uncertainty in an already chaotic legal environment.

    There is no doubt that the practices of many foreign companies are suspect. Not only foreign companies, many domestic conglomerates too have equally deep pockets and more political sway than their foreign counterparts, and a questionable track record of regulatory compliance.

    Indians needs to be protected from its domestic corporate giants as much as any foreign company. This can be guaranteed only if regulators and courts consciously stay true to the statutorily mandated objectives of their respective regimes.

  • Diversity requirements to Indian companies

    Source: Click here

    What are the diversity requirements that Indian companies need to meet?

    News: NASDAQ stock exchange in the US may soon require all companies listed to include at least one female board member as well as one member from a racial minority group or from the LGBTQ community on their board of directors.


    • Diversity requirements Indian companies need to meet? All public companies which are listed on stock exchanges and companies with either a paid-up capital of Rs 100 crore or annual turnover over Rs 300 crore are required to have at least one woman board member under the Companies Act.
    • The Securities and Exchange Board of India(SEBI) further requires, from April 1, 2020, that the top 1000 listed companies by market capitalization have a woman board member who is also an independent director.
    • Level of Compliance: According to the data compiled by Institutional Investor Advisory Services(IiAS), 17% of directors in the Nifty 500 companies were women as of the end of the last fiscal with the exception of several public sector enterprises(PSEs).
  • India’s 1st LGBT+ workplace equality index launched

    Source: Click here

    News: India’s 1st LGBT+ workplace equality index has been launched.


    • India Workplace Equality Index: It is the country’s first comprehensive benchmarking tool for employers to measure their progress on LGBT+ inclusion at the workplace.
    • Launched by: It was launched by non-profit Keshav Suri Foundation, partnered with Pride Circle, Stonewall UK and FICCI.
    • Parameters: The index measures nine areas: policies and benefits, employee lifecycle, employee network group, allies and role models, senior leadership, monitoring, procurement, community engagement and additional work.
    • Winners: Twenty-one firms won under the gold category while 18 were placed under silver and 13 got bronze.
  • What is Quality Council of India?

    The Quality Council of India (QCI) is a pioneering experiment of the
    Government of India in setting up organizations in partnership with the Indian industry.

    •  A committee which included various interested ministries and stakeholders
      including industries were constituted to make suitable recommendations. The work of the committee was coordinated by the then Department of Industries (Department of Industrial Policy and Promotion) and the recommendations were submitted to the Cabinet in 1996.
      Key recommendations:

      • Need for establishing an organization jointly by the Government and the industry and
      • the need for the organization to be selfsustaining and be away from the government.
    • Accepting the recommendations, the government set up
      Quality Council of India(QCI) in 1997 as a non-profit autonomous society registered under Societies Registration Act XXI of 1860.
    • Nodal Ministry: Department for Promotion of Industry and Internal Trade, Ministry of Commerce & Industry is the nodal department for QCI.
    • Chairman: The Chairman of QCI is appointed by the Prime Minister on the recommendation of the industry to the government.
    • Quality Council of India publishes a quarterly magazine known as “Quality India
    • Quality Council of India aims to establish an accreditation structure in the country and to spread quality movement in India by undertaking a National Quality Campaign.
    • Quality Council of India is governed by a Council comprising of 38 members including the Chairman and Secretary General.
    • The Council has an equal representation of Government, Industry and other


  • Issues in Labour codes

    Context: The labour codes will only better India’s ‘ease of doing business’ ranking instead of improving conditions of employment

    What is the Significance of Labour codes?

    • Will generate employment and secure the basic rights of the workers.
    • It will universalise the right to minimum wage of workers and social security entitlements.

    Why, have the labour codes not been universally welcomed by workers?

    • Social Security net is not universal: The codes mandate benefits of Employees’ State Insurance (ESI) and Provident Fund (PF) only for workers belonging to establishments employing 10 workers or more. This leaves out nearly 80% of all Indian workers in the informal sector from the ambit of these benefits.
    • Inadequate hospitals and dispensaries under ESI
      • The ESI employed around six doctors per one lakh beneficiaries in 2016, as against the World Health Organization norm of 100 doctors.
      • With the new codes seeking to cover 20% of all workers, the membership would further increase to around 10 crore workers a three-time increase over the membership in 2019 (3.6 crore). The available capacity of the hospitals and dispensaries would evidently be inadequate.
    • Disparity on ESI coverage between states: The ESI coverage follows the map of industrial growth in the country. Thus, in industrialised States like Karnataka and Tamil Nadu, the ESI covered is around 20% of the population as beneficiaries in 2016 whereas, for Bihar the ESI covered is only 0.7%.
    • Abridgement of cess-based welfare boards: The new labour codes also does away with a number of existing cess-based welfare schemes. For example, the Beedi Workers Welfare Board which covers five lakh home-based women workers.
    • Fixed Minimum wage is meager: The floor wage announced more recently by the Finance Minister of ₹202 is way less compared to the Labour Ministry’s Expert Committee recommendation on Wage in 2019 i.e. is ₹375 per day.

    Labour Rights Codes on wages Bill

  • Initiative to boost domestic manufacturing in India | 26th Nov. 2020

    News: Government has recently approved the Production Linked Incentive (PLI) scheme worth up to Rs 1.46 lakh crores for 10 sectors with an aim to make Indian manufacturers globally competitive, attract investment in India and enhance export.

    The sectors under the scheme include automobiles and auto components, pharmaceuticals, telecom, and networking products, and advanced chemistry cell battery among others.

    PLI scheme worth Rs 50,000 crore for large-scale electronics manufacturing (in particular, mobile phones), medical devices, and pharmaceutical ingredients was launched earlier.

    Production Linked Incentive (PLI) scheme:

    It proposes a financial incentive to boost domestic manufacturing and attract large investments in the electronics value chain.

    Key features of the scheme:

    • The scheme shall extend an incentive of 4% to 6% on incremental sales (over a base year) of goods manufactured in India and covered under target segments, to eligible companies, for a period of five (5) years with financial year (FY) 2019-20 considered as the base year for calculation of incentives.
    • The Scheme will be implemented through a Nodal Agency which shall act as a Project Management Agency (PMA) and be responsible for providing secretarial, managerial, and implementation support and carrying out other responsibilities as assigned by MeitY from time to time.
    • Companies that make mobile phones which sell for Rs 15,000 or more will get an incentive of up to 6 percent on incremental sales of all such mobile phones made in India.
    • In the same category, for companies that are owned by Indian nationals and make such mobile phones, the incentive has been kept at Rs 200 crore for the next four years.

    Intended benefits of the scheme

    The scheme is aimed at:

    • Incentivizing foreign companies to set up shop in India.
    • Encouraging local manufacturing units to set up or expand manufacturing units.
    • Reducing the dependence on Chinese imports.
    • Attract Investment in cutting edge tech and manufacturing In India.
    • Making India a part of the global supply chain.

    What is the status of imports in India?

    • Analysis of factory-level production data from the Annual Survey of Industries (ASI) shows that value addition for surveyed firms ranged from 1.6% to 17.4%, with most of the firms being below 10%. More than 85% of the inputs were imported for the majority of the surveyed firms in 2017-18.
    • UN data for India, China, Vietnam, Korea, and Singapore (2017-2019), show that except for India, all countries exported more mobile phone parts than imports.
    • India’s imports of mobile phone parts were 25 times the exports in 2019.
    • The PMP policy increased the value of domestic production while improvement in local value addition remains a work-in-progress.

    Why the shift from China is unlikely?

    • India produced around 29 crore units of mobile phones for the year 2018-19; 94% of these were sold in the domestic market and the rest was exported. This means that much of the production and sales under the PLI policy will have to be for the export market.
    • A study by Ernst & Young for the India Cellular & Electronics Association showed that if the cost of production of a mobile phone says 100 then the effective cost of manufacturing a mobile phone in China is 79.55, Vietnam is 89.05, and India is(including PLI), 92.51.
    • It may be early to expect a major chunk of mobile manufacturing to shift from China to India as incentives under the PLI policy may not turn out to be a game-changing move.
    • The PLI policy does not strengthen our current export competitiveness in mobile phones; and markets with a higher average selling price have lower volumes.
    • In September 2019, Chinese Taipei contested the raise in tariffs under the PMP. If the PMP is found to be the World Trade Organization (WTO) non-compliant, then we may be flooded with imports of mobile phones which might make the local assembly of mobile phones unattractive.

    Challenges faced by domestic manufacturers:

    • Less presence of domestic firm: Domestic firms have been nearly wiped out from the Indian market and thus their ability to take advantage of the PLI policy and grab a large domestic market share seems difficult.
    • Cheap imported material: Domestic firms may have the route of exporting cheaper mobile phones to other low-income countries but their performance has not been promising.
    • For example, among the chosen domestic firms, Lava International reported exports of ₹324 crores in 2018, while Optimus Electronics exported ₹83 crores in 2018 and ₹4 lakh in 2019.
    • Low Level of Participation in Global Value Chains (GVCs): India’s participation in GVCs has been low compared to the major exporting nations in East and Southeast Asia. Export growth of capital-intensive products from China has been mainly driven by its participation in the GVCs.
    • Lack of integration: China’s export promotion policies since the 1990s have relied heavily on a strategy of integrating its domestic industries within the GVCs.
    • Lack of competitiveness: India’s mobile phone exports grew from $1.6 billion in 2018-19 to $3.8 billion in 2019-20, but per unit, value declined from $91.1 to $87, respectively.
    • Missing Profits: Despite the impressive growth of electronic products in India, the net value added by production units is very low.
    • Challenges in Set-up of Foundries: Many industry experts also cite the lack of a foundry as contributing to low R&D in this sector in India, which results in poor talent retention and eventually ‘brain drain’.
    • Low R & D: Domestic players have also shown low interest due to their inability to compete with tech giants in research and development (R&D) and investment.

    Steps that were taken to boost manufacturing

    • Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors:
      • Under the scheme, a financial incentive of 25% of capital expenditure has been approved by the Union Cabinet for the manufacturing of goods that constitute the supply chain of an electronic product.
      • The SPECS notified for manufacturing of electronics components and semiconductors has a budget outlay of Rs 3,285 crore spread over a period of eight years.
      • The government estimates that the push for the manufacturing of electronics components and electronic chips will create around 6 lakh direct and indirect jobs.
    • Modified Electronics Manufacturing Clusters Scheme
      • The EMC 2.0 has a total incentive outlay of Rs 3,762.25 crore spread over a period of 8 years with an objective to create 10 lakh direct and indirect jobs under the scheme.
      • The EMC 2.0 scheme will provide financial assistance up to 50% of the project cost subject to a ceiling of Rs 70 crore per 100 acres of land for setting up of Electronics Manufacturing Cluster projects.
      • Electronic manufacturing clusters to be set up under the scheme will be spread in an area of 200 acres across India and 100 acres in the North-East part of the country.

     Way forward:

    • Focus on supply chain co-location: Foreign firms chosen under the PLI policy should be encouraged to co-locate their supply ecosystems in the country as the assemblers and component manufacturers move together.
      • The six-component firms that have been given approval under the ‘specified electronic components segment’ do not complete the mobile manufacturing ecosystem.
      • For example, literature shows that when Samsung set up shop in Vietnam, it relied heavily on its Korean suppliers which co-located with it to produce in-between inputs, so much so that 63 among Samsung’s 67 suppliers then were foreign.
      • Even though Samsung is invested hugely in India, it has not co-located its supply chain in the country.
    • Focus on the value of production:
      • The new PLI policy offers an incentive subject to brinks of incremental investment and sales of manufactured goods; these thresholds vary for foreign and domestic mobile firms.
      • However, the focus remains on increasing the value of domestic production, and not local value addition. If implemented, an additional capacity of 60 crore mobile phones per year may be on stream at the end of the PLI.
    • Profiting from Anti-Chinese Sentiments: USA’s allegations on China for worsening Covid-19 and India-China conflict are golden opportunities for India to act fastly on it and attract outgoing investment.
  • Labour law reforms and Trade unions

    Context- The new labour codes clear attempt to diminish the role trade unions.

    What are the new labour laws?

    The current government has introduced new versions of three labour codes in Lok Sabha which are-

    1. Industrial Relations Code.
    2. Code on Occupational Safety, Health & Working Conditions Code.
    3. Social Security Code.
    4. Labour code on wages.


    • Central government has excluded trade unions from pre-legislative consultations on drafting the new labour codes.
    • The new Labour codes ignore the recommendations of Parliamentary Standing committee.
    • And the labour reforms bills passed in the absence of the Opposition.
    What are trade unions?

    A trade union can be defined as an organized association of workers in a trade or profession, formed to further their rights and interests. In India, Trade Unions in India are registered under the Trade Union Act (1926).


    1. Protect the interests of workers
    • Trade Unions protect the worker from wages hike, provide job security through peaceful measures.
    • They also help in providing financial and non-financial aid to the workers during lock out or strike or in medical need.
    1. Collective Bargaining– A process of negotiation between employers and a group of employees in respect to working condition. It is the foundation of the movement and it is interest of labour that statury recognition has been accorded to Trade Union.
    What are the key objectives of Trade Union Act (TUA)?
    1. Right to registration– The law provided a mechanism for the registration of trade unions, from which they derived their rights, and a framework governing their functioning.
    • The TUA gave workers the right, through their registered trade union, to take steps to press their claims, and where necessary, as in the case of a malevolent employer, agitate for their claims and advance them before the government and the judiciary.
    1. Immunity from civil suit in certain cases- No suit or other legal proceeding shall be maintainable in any Civil Court against any registered Trade Union in respect of any act done in contemplation or furtherance of a trade dispute.
    What are the key concerns with new labour codes?
    1. In case of deregistration of trade union –
    • The collective decision taken by its members and elected officers can be treated as illegal.
    • Vulnerable against charges of conspiracy– The trade union’s members and elected officers lose their immunity from prosecution for criminal conspiracy for collective decisions and actions.
    • It will lead employment dispute resolution outside the legal framework.
    • The Industrial Relations Code (IRC) widens the grounds under which a trade union may be deregistered.
    1. Against the Interests of Employees– The codes provide the liberty to industrial establishments to hire and fire their employees at will.
    • The new labour codes dilute workers’ rights in favour of employers’ rights.

    Way forward-

    A vibrant and responsible trade union environment is the requisite for inclusive growth to any economy. It checks growing inequality and falling living conditions of the working class.

    If trade union is deregistered then the workers effectively lose their fundamental right to freedom of association.

  • Production-Linked Incentive(PLI) Scheme

    The Union Cabinet chaired by the Prime Minister has given its approval to introduce the Production-Linked Incentive(PLI) Scheme for 10 key sectors.


    • Aim: To help encourage domestic manufacturing, reduce imports, and generate employment.
    • Features: Under the Scheme, companies will get incentives on incremental sales from products manufactured in domestic units.
    • Implementation: The scheme will be implemented by the concerned ministries/departments.
    • 10 Key Sectors (and Implementing Ministry/Department):
      • Advance Chemistry Cell (ACC) Battery: NITI Aayog and Department of Heavy Industries.
      • Electronic/Technology Products: Ministry of Electronics and Information Technology
      • Automobiles & Auto Components: Department of Heavy Industries.
      • Pharmaceuticals drugs: Department of Pharmaceuticals
      • Telecom & Networking Products: Department of Telecom
      • Textile Products (MMF segment and technical textiles): Ministry of Textiles
      • Food Products: Ministry of Food Processing Industries.
      • High Efficiency Solar PV Modules: Ministry of New and Renewable Energy.
      • White Goods (ACs & LED): Department for Promotion of Industry and Internal Trade.
      • Speciality Steel: Ministry of Steel.
    • Note: The above sectors will be in addition to the already notified PLI schemes in the following sectors:
      • Mobile Manufacturing and Specified Electronic Components: Ministry of Electronics and Information Technology (MeiTY).
      • Critical Drug Intermediaries, Active Pharmaceutical Ingredients and Manufacturing of Medical Devices: Department of Pharmaceuticals.
  • Reservation for locals in private jobs | 9th Nov. 2020

    News:  Haryana government has passed the bill for 75 percent reservation in private sector jobs for locals having Haryana domicile.

    About Haryana State Employment of Local Candidates Bill, 2020 

    • Bill provides for a 75 per cent job quota for local people in private sector jobs which offer a salary of less than Rs. 50,000 a month.
    • It applies to private companies, societies, trusts, and partnership firms, among others, located in the state.
    • It will be applicable to the new job openings only and won’t affect the outsiders already working on the affected jobs.
    • An exemption can be claimed by employers in the situation where an adequate number of local candidates with the desired skills, qualifications, and proficiency are not available.
    • Penalty for non-compliance ranges from Rs. 10,000 to Rs. 50,000.
    • Domicile certificate would be mandatory for the candidate seeking benefit under the law.

    However, since the bill is against Article 14 and 19 of the Indian Constitution, it will require presidential assent.

    Blue Collar jobs: The term ‘blue-collar job’ is used for the people involving a working-class person who performs manual labor that may involve skilled or unskilled labor.

    White-Collar jobs: The term ‘white-collar job’ is used for tasks involving an office environment and may involve sitting at a computer or desk.

    Pink Collar Jobs: It involved service workers whose labor is related to customer interaction, entertainment, sales, or other service-oriented work.

    Other states with reservation for locals in private jobs

    • MP government in 2018 made it mandatory to give 70% of jobs to locals. But this law was not implemented on the private companies as a whole. It provided for the reservation in companies availing financial and other facilities from the government.
    • Andhra Pradesh became the first state to pass such a law in 2019. It reserved 75% private jobs across all categories in industrial units, factories, joint Ventures as well as Public-Private Projects.
    • Karnataka government also approved a new industrial policy (2020-2025) in 2020. This policy to ensure jobs for locals with a minimum employment of 70 percent to Kannadigas on an overall basis and 100 percent in the case of Group D employees.

    How states are providing reservation to locals?

    States Reserving Jobs for Locals: Some states have been using the loopholes in the laws to reserve government jobs for locals: 

    • Public Employment (Requirement as to Residence) Act: Exercising the powers under Article 16(3), Parliament enacted the act aimed at abolishing all existing residence requirements in the states and enacting exceptions only in the case of the special instances of Andhra Pradesh, Manipur, Tripura, and Himachal Pradesh. 
    • Language: States have gone around the mandate of Article 16(2) by using language. States that conduct official business in their regional languages prescribe knowledge of the language as a criterion.  
      • This ensures that local citizens are preferred for jobs. For example, states including Maharashtra, West Bengal and Tamil Nadu require a language test. 
    • Special protections under Article 371: Some states have special protections under Article 371. Andhra Pradesh under Section 371(d) has powers to have “direct recruitment of local cadre” in specified areas. 
    • Regarding the violation of fundamental rights, the Haryana government states that while Article 16 talks about “public employment”, the Bill only pertains to “private sector employment”.

    Implications of reservation in private jobs

    Although recently many state governments have passed such laws, many states have tried implementing the quotas previously as well. But laws remained on papers only.

    • In 1995, Gujarat introduced an 85% reservation for locals but could not enforce it.
    • In 2008, Maharashtra introduced an 80% reservation for locals in industries that seek state incentives and tax subsidies.

    However, all these steps proved to be unsuccessful due to various reasons:

    Companies: Industry bodies such as Assocham have questioned the effectiveness of such steps due to the absence of talent pool required for skilled jobs. 

    • Moreover, companies look at their profits more than the welfare of locals, there is a likelihood that if such steps result in a reduction of profit of a company, it might consider moving out of that state.
    • Ultimately, this step would discourage capital investment in the implementing state.

    Threat to unity: This step would create friction among locals and non-locals in the implementing states and against the residents of that state in the other states.

    Against constitutional provisions: As mentioned above, these laws are against the spirit of constitutional provisions (Article 16 and 19) that provide fundamental rights to Indian citizens to work anywhere in the country.  

    Constitution and judgments concerning reservation for locals

    What does the Constitution say? Article 16 in the Constitution of India refers to equality of opportunity in government jobs.

    • Article 16(1): It provides for equality of opportunity for all citizens in matters relating to ’employment or appointment’ to any office under the State. 
    • Article 16(2): It provides that there cannot be any discrimination on grounds only of religion, race, caste, sex, descent, place of birth, residence or any of them. 
    • Article 16(3): It provides an exception by saying that Parliament may make a law “prescribing” a requirement of residence for jobs in a particular state. This power vests solely in the Parliament, not state legislatures. 
    • Article 19(g): Article provides the freedom to practise any profession, or to carry on any occupation, trade, or business.

    Supreme Court Judgements: 

    • Dr. Pradeep Jain v Union of India (1984): The Supreme Court discussed the issue of legislation for “sons of the soil”. It expressed an opinion that such policies would be unconstitutional but did not expressly rule on it as the case was on different aspects of the right to equality. 
    • Sunanda Reddy v State of Andhra Pradesh (1995): The Supreme Court affirmed the observation in Pradeep Jain to strike down a state government policy that gave 5% extra weightage to candidates who had studied with Telugu as the medium of instruction. 
    • In 2002, the Supreme Court invalidated appointment of government teachers in Rajasthan in which the state selection board gave preference to “applicants belonging to the district or the rural areas of the district concerned”
    • In 2019, the Allahabad High Court struck down a recruitment notification issued by the Uttar Pradesh Subordinate Service Selection Commission which prescribed preference for women who were original residents of the state. 

    Way forward

    Encouraging employment and thinking of the betterment of the state is the job of state government in power, but it should not be at the cost of the economic development of the state. A country like the US has become a superpower by allowing migrants and talents from other countries to work with equal opportunity, the same rule applies to the states of any country. A state, attracting and encouraging talent from other state, is on the better position to become developed and promote welfare of its people, compared to the one making the process difficult.

    Haryana government must look at the implications of such law on the thriving economy of the state and contribution of the outsiders in it and try to bring an alternative in the form of incentives to companies on skill development of locals.

  • Platform workers and their issues

    Context- The new labour codes passed by Parliament recently acknowledge platform and gig workers as new occupational categories in the making.

    What are the provisions for platform worker in the labour code and issues with them?

    Definition of Platform work according to new law

    • “Platform work” has been defined as a work arrangement outside of a traditional employer employee relationship in which organisations or individuals use an online platform to access other organisations or individuals to solve specific problems or to provide specific services or any such other activities which may be notified by the Central Government, in exchange for payment.
    • Platform worker has been defined as a person engaged in or undertaking Platform Work.

    What are the issues with new labour code ?

    1)There are no guarantees for better and more stable days for platform workers, even though they are meant to be ‘the future of work’.

    2)The Code has drawn criticism from platform workers’ associations for failing to delineate it from gig work and unorganized work.

    3)The code does not state which stakeholder is responsible for delivering what quantum of welfare.

    4)The terms ‘gig worker’, ‘platform worker’ and ‘gig economy’ not defined with in connection with their wages.

    Discuss the role of platform worker amidst the pandemic.

    • platform workers were responsible for delivery of essential services during the pandemic at great personal risk to themselves.
    • They have also been responsible for keeping platform companies afloat despite the pandemic-induced financial crisis.

    Way Forward

    • A tripartite effort by the State, companies, and workers to identify where workers fall on the spectrum of flexibility and dependence on platform companies is critical.
    • The Way forward for platform workers is through a socio-legal acknowledgement of the heterogeneity of work in the gig economy, and the ascription of joint accountability to the State and platform companies for the delivery of social services.


  • Industrial Revolution 4.0: challenges and way forward | 29th October, 2020

    Industrial Revolution 4.0 refers to the fourth industrial revolution related to manufacturing and chain production. It is driven by breakthroughs in digital technologies, such as artificial intelligence, robotics, 3D printing, the IoT, Big Data etc.

    The Drivers of Change:

    • Technological breakthroughs: New technological innovations such as Big Data, 3-D printing, artificial intelligence and robotics is bringing transformative impact on the nature work.
    • Demographic Changes: the world’s population is ageing, putting pressure on business, social institutions and economies. The shortage of a human workforce in a number of rapidly-ageing economies has necessitated automation.
    • Rapid urbanisation: The UN projects that by 2050, the world’s urban population will increase by some 72%. Rapidly growing cities have become drivers of a new industrial revolution.
    • Shifts in global economic power: Power shifting between developed and developing countries with a large working-age population will attract investments and become a driving force for the future of work.
    Recent Trends of Employment in India:

    • Continued Presence of Informal Economy: Nearly 90% of India’s workforce belongs to the informal sector.
    • Contractualization of employment: The share of contract workers in total employment in India increased from 15.5% in 2000-01 to 27.9% in 2015-16. The share of directly hired workers fell from 61.2% to 50.4% over the same period.
    • Gig Economy: It is characterised by short-term contracts or freelance work as opposed to permanent jobs. It often involves connecting with customers through an online platform. Example: Delivery boys of app-based food, consultants, bloggers. In India, there are about 3 million gig workers — temporary workers including independent contractors, online platform workers, contract firm workers and on-call workers.
    • Resource scarcity and climate change: According to the report Global Trends 2030, demand for energy and water is forecast to increase by 50% and 40% respectively by 2030. Jobs in alternative energy, new engineering processes, product design and waste management and re-use will be created.

     Challenges to the Future of Work: Industry 4.0

    • Low Job Creation: Job creation has not been sufficient to absorb the growth in the number of people seeking jobs. As of 2016, there were some 198 million jobless people globally who have been actively seeking employment
    • Poor Quality Employment: Globally, nearly 43% of employed people were in own-account or contributing family work which is often characterized by low pay, informality and limited social security.
    • Income inequality: ILO observes that although workers have become increasingly productive, the benefits of their work have increasingly accrued to capital income and to those at the top of the income distribution.
    • Gender Pay gap: Though female labour force participation has increased the gender pay gap remains a major concern with women still being paid 20% less than men.
    • Digital Divide: Only 53.6% of all households have internet access. In emerging countries, the share is only 15%. Given the rapid technological advancements, digital divide remains a key challenge for skill development and employment opportunities.
    • Impact of Technology on Employment: There are fears that technological development will lead to job destruction. Automation could be harmful for labour-intensive industries in India such as textiles, finance, construction, hospitality, travel, tourism, media, electronics, mining, agriculture, transportation and entertainment.
      • The Indian ICT sector is susceptible to AI/robots replacing workers in its major IT export markets.
      • The retail sector, the largest employer of lower skill youth, is job shedding as e-retail accelerates and human jobs in logistics, warehousing and delivery services are being robotised.

    Way Forward:

    • Universal Labour Guarantee: All the countries should pledge to provide a universal labour guarantee that protects fundamental workers’ rights, an adequate living wage, limits on hours of work and safe and healthy workplaces
    • Lifelong Learning: It is important to provide a universal entitlement to lifelong learning that enables people to acquire skills and to reskill and up skill.
    • Investment to support Work Transition: Investments in the institutions, policies and strategies that will support people through future of work transitions should be increased.
    • Agenda for Gender Equality: It is important to strengthen women’s voice and leadership, eliminating violence and harassment at work and implementing pay transparency policies in order to achieve gender equality.
    • Social Protection: A guaranteed social protection from birth to old age that supports people’s needs over the life cycle should be provided
    • Governance for Digital Platforms: An international governance system for digital labour platforms should be established to protect minimum rights of workers
    • Sustainable Work: Incentives are required to promote investments in key areas for decent and sustainable work- in areas of green, rural economy, small and medium enterprises
    • Human centric business and economic Model: Distributional dimensions of growth, the value of unpaid work performed in the service of households and communities and the externalities of economic activity, such as environmental degradation should be taken into account for a human centric business and economic Model
    • Roadmap for India: India should adopt Chard Dham Roadmap for steering technological change.
      • Gyaan Dham: a national observatory for scoping the tech-to-work equation and its trajectory should be established. Databases on existing and future trends, sector by sector, needs to be created.
      • Kaushalya Dham: It means nurturing “human capabilities” for Tech-Economy 4.0 work. To meet labour market needs, potential skill gaps must be closed through the NEP and comprehensive training infrastructure.
      • Suniyojan Dham: It involves transformative investments in multi-stakeholder ecosystems to empower the youth and women through future-of-work transitions.
      • Samajik Nyaya Dham: It means ensuring a just transition through a new social compact among all stakeholders and a universal social protection floor. A human-centred and equity-based approach in future labour market policies and standards is needed.
      • Upakram Dham: It involves taking special initiatives enabling India to leverage the world’s third-largest ICT workforce to pole-vault into Tech4 excellence. India’s diversity, scale for neural net, data richness, huge base of engineers, mathematicians and coders of AI available or trainable at scale, and decent ecosystems in ICT metros are critical assets.
  • What is Industrial Revolution 4.0?

    Industrial Revolution 4.0

    Industry 4.0 refers to the fourth industrial revolution related to manufacturing and chain production. It is driven by breakthroughs in digital technologies, such as artificial intelligence, robotics, 3D printing, the IoT, Big Data etc.

    The Drivers of Change:

    • Technological breakthroughs: New technological innovations such as Big Data, 3-D printing, artificial intelligence and robotics is bringing transformative impact on the nature work.
    • Demographic Changes: the world’s population is ageing, putting pressure on business, social institutions and economies. The shortage of a human workforce in a number of rapidly-ageing economies has necessitated automation.
    • Rapid urbanisation: The UN projects that by 2050, the world’s urban population will increase by some 72%. Rapidly growing cities have become drivers of a new industrial revolution.
    • Shifts in global economic power: Power shifting between developed and developing countries with a large working-age population will attract investments and become a driving force for the future of work.
    • Recent Trends of Employment in India:

      •       Continued Presence of Informal Economy: Nearly 90% of India’s workforce belongs to the informal sector.

      •       Contractualization of employment: The share of contract workers in total employment in India increased from 15.5% in 2000-01 to 27.9% in 2015-16. The share of directly hired workers fell from 61.2% to 50.4% over the same period.

      •       Gig Economy: It is characterised by short-term contracts or freelance work as opposed to permanent jobs. It often involves connecting with customers through an online platform. Example: Delivery boys of app-based food, consultants, bloggers. In India, there are about 3 million gig workers — temporary workers including independent contractors, online platform workers, contract firm workers and on-call workers.


    • Resource scarcity and climate change: According to the report Global Trends 2030, demand for energy and water is forecast to increase by 50% and 40% respectively by 2030. Jobs in alternative energy, new engineering processes, product design and waste management and re-use will be created.


    Challenges to the Future of Work: Industry 4.0

    • Low Job Creation: Job creation has not been sufficient to absorb the growth in the number of people seeking jobs. As of 2016, there were some 198 million jobless people globally who have been actively seeking employment
    • Poor Quality Employment: Globally, nearly 43% of employed people were in own-account or contributing family work which is often characterized by low pay, informality and limited social security.
    • Income inequality: ILO observes that although workers have become increasingly productive, the benefits of their work have increasingly accrued to capital income and to those at the top of the income distribution.
    • Gender Pay gap: Though female labour force participation has increased the gender pay gap remains a major concern with women still being paid 20% less than men.
    • Digital Divide: Only 53.6% of all households have internet access. In emerging countries, the share is only 15%. Given the rapid technological advancements, digital divide remains a key challenge for skill development and employment opportunities.
    • Impact of Technology on Employment: There are fears that technological development will lead to job destruction. Automation could be harmful for labour-intensive industries in India such as textiles, finance, construction, hospitality, travel, tourism, media, electronics, mining, agriculture, transportation and entertainment.
      • The Indian ICT sector is susceptible to AI/robots replacing workers in its major IT export markets.
      • The retail sector, the largest employer of lower skill youth, is job shedding as e-retail accelerates and human jobs in logistics, warehousing and delivery services are being robotised.
  • MSME Udyam Process

    Source: Indian Express

    Syllabus:Gs3: Inclusive Growth and issues arising from it.

    Context: Udyam initiative is promising in terms of capturing reliable and verified information about MSMEs but it can impact some MSME’s from accessing formal finance

    Why the information available on MSME’s are not adequate?

    • Reliable and updated information regarding small businesses in India is absent.
    • Also, a dedicated census for MSME sector was not conducted in last 13 years.
    • Now, basic information available on MSME units is scattered across various databases such as the UAM, MSME Databank, and GSTN.
    • UAM, MSME Databank contain self-certified, voluntary information provided by a fraction of MSMEs
    • Whereas the GSTN has information on businesses with a turnover of more than Rs 40 lakh, the minimum requirement to be registered on it.

    What is Udyog Aadhaar Memorandum?

    • An online filing system for MSMEs notified by the government in 2015.
    • The registration process is free, paperless and awarded instant registration.
    • It was based on the self-declaration and self-certification of basic information regarding the enterprise’s existence and functioning.
    • In 2016, the government notified rules under which MSMEs had to furnish information relating to their enterprises, online, in an MSME databank.

    Why Udyam registration process?

    • Compared to UAM, the Udyam registration stress on importance of generating a verified database of MSME units.
    • Under the Udyam registration process, Aadhaar is made mandatory for proprietors
    • Irrespective of the number of manufacturing and service activities provided, every enterprise can have only one Udyam Registration Number,
    • The Income Tax department database and the GSTN is used to verify the self-declared information regarding investment and turnover.
    • The government has integrated the Udyam system with the Trade Receivables Electronic Discounting System (TReDS) and the Government e-Marketplace (GeM), In an attempt to nudge more enterprises.
    • This will significantly benefit MSMEs by offering a free and automatic route to onboard bill discounting mechanisms and the government’s online procurement system.

    How Udyam process can affect MSME’s Financial inclusion?

    • RBI has clarified that all lenders may now obtain the Udyam Registration Certificate from entrepreneurs.
    • It is clear that in future financial institutions can make the Udyam registration mandatory for lending purposes.
    • Whereas most of the MSME has characteristic features of household enterprises and operate with less than five workers.
    • Most of these firms are not formally registered as being invisible benefits these firms from paying income tax or getting registered under the GST, Also the cost of formalisation and compliance are high.
    • With Udyam registration being the only valid proof for an entity to be recognised as an MSME as per the revised definition invisible MSME’s will lack legal backing to source finance from the financial institutions

     Read also Government Schemes

    What is the way forward?

    • In 2018, the International Finance Corporation estimated that the finance from formal sources met only one-third of the credit demand of the MSME sector.
    • Due to their inability to meet documentation protocols, inadequate collateral, disorganised book-keeping etc. these businesses prefer relying on informal sources for financing.
    • So, the government and RBI should consider to exempt registration of units with investment and turnover in the lower end. Such that institutional lending initiatives continue to remain accessible for all businesses, formal and informal.
  • Labour codes reforms

    Source- The Indian Express

    Syllabus- GS 3 – Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment

    Context- The three labor bills will immensely help the country in bringing much needed economic growth and will help in employment generation.

    What are the new labour codes?

    The government has introduced new versions of three labour codes in Lok Sabha which are-

    1. Industrial Relations Code Bill, 2020.
    2. Code on Social Security Bill, 2020.
    3. Occupational Safety, Health and Working Conditions Code Bill, 2020.

    These three bills are part of four labour code envisaged incorporating 29 labour laws. First code on wages has already been enacted.

    What are the benefits of labour codes 2020?

    1. Raised the threshold for requirement of a standing order– The expansion of firms by increasing the threshold for retrenchment/closure or lay-off without requiring government approval, from 100 to 300 workers.
    2. Fixed term employment [FTE] – It is an intervention to enable the hiring of employees directly instead of hiring through contractors, which will ensure flexibility.
    • The code also reduces the time limit for receiving gratuity payment from the continuous service of five years to one year for all kinds of employees, including fixed-term employees, contract labour, daily and monthly wage workers.
    1. Social protection system– The inclusion of the gig and platform workers in the Social Security Code 2020 is a step towards strengthening the formal economy.
    • The provision for insurance coverage has been extended to plantation workers and free annual health check-ups. A bipartite safety committee has been introduced for hazardous factories.
    1. Gender equality and empowers the women workforce– Female labour force participation is a driver of growth and, therefore, participation rates indicate the potential for a country to grow more rapidly.
    • Women will be entitled to be employed in all establishments for all types of work and, with consent can work before 6 am and beyond 7 pm subject to such conditions relating to safety, holidays and working hours.
    1. Inclusion of inter-state migrant workers in the definition of worker: It has been made possible that a migrant, who comes on his own to the destination state, can declare himself a migrant worker by registering on an electronic portal based on self-declaration seeded with Aadhar Card.
    • Registration on the portal has been simplified and there is no requirement of any other document except Aadhaar Crad.
    • For de-licencing/de-registration, it is mandated to notify registering officers about the closure of their establishment and certify payment of dues to all employed workers, which will ensure that workers will not be exploited even during the closure of the concerned establishment.
    1. Reskilling Fund– Industrial Relation code also proposes setting up of a reskilling fund to help skill retrenched workers.
    • To set up a re-skilling fund for training of retrenched workers with contribution of the employer of an amount equal to 15 days last drawn by the worker.
    • The lifelong learning opportunity is provided to match the evolving skill sets required for technology and process changes.
    1. Notice period– Under Industrial Relations Code 2020, the provision for a 14-day notice period before strikes and lock downs would allow both workers and employers to attempt resolving the issues.

    Way forward-

    The reforms introduced in the three labour codes will help to build a future of work that is safer, fairer, greener and more resilient. The reform measures address basic needs – to revive the economy and tackle barriers in the expansion of firms. Moreover, they promote the employment of women as well as reskilling of the workforce for the deployment of migrants.

  • Production Linked Incentive Scheme

    Source: The Hindu

    Syllabus: Gs3: Changes in Industrial Policy and their Effects on Industrial Growth

    Context: The Ministry of Electronics and Information Technology (MeitY) has introduced a Production Linked Incentive Scheme for Large Scale Electronics Manufacturing.

    What is Production Linked Incentive Scheme?

    • Aim is to position India as a global hub for electronics system design and manufacturing.
    • It provides an incentive of 4-6 per cent on incremental sales of mobile phones and specified electronic components manufactured in India, to eligible companies, for a period of five years.
    • Eligible companies are (a) mobile phones manufactured and sold by domestic companies, (b) mobile phones manufactured and sold by other companies (invoice value of ₹15,000 and above) and (c) specified electronic components.
    • The scheme is available to all companies registered in India which meet the threshold requirement of a specified incremental investment between ₹100 crore and ₹1,000 crore in the next four years as well as incremental sales of manufactured goods.
    • Accordingly, the scheme is designed to select only the few top companies. A maximum of five domestic and five global mobile manufacturing companies and 10 electronic component manufacturers will be selected.
    • The scheme also provides for the constitution of Empowered Committee (EC) which has the power to review and revise rate of incentives, ceilings, eligibility criteria, etc.
    • Unlike export linked subsidy schemes such as MEIS, EPCG, and SEZ, the present scheme is investment and production linked and may not violate international trade agreements.

    What are the concerns associated with the scheme?

    • The scheme offers higher incentives for higher production rate. However, the incentives cannot be claimed beyond the financial outlay proposed by the Government, which is ₹40,951 crore.
    • In case of incentives exceeding the annual financial outlay, the incentives will be disbursed to all companies on the basis of their net incremental sales. This implies that an over-performing company may not be reap the benefits under the scheme in absolute terms.

    What is the way forward?

    • The Government should also look to implement similar incentive schemes for other sectors such as automobile, pharmaceuticals, FMCG, etc.
    • Further, the government must also focus on service industry which has rarely got any incentive from the Government.
      The   Production Linked Incentive Scheme has all the necessities required to increase investments, employment generation, domestic value addition, capacity building and innovation to make India ‘Atmanirbhar’ as far as mobile phone manufacturing is concerned.
  • Insolvency and Bankruptcy Code (IBC 2016)

    Source: The Hindu

    Syllabus: Gs3: Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment

    Background: The Prime Minister mentioned that Insolvency and Bankruptcy Code (IBC 2016) would help aid India’s path to self-reliance.

    What are the issues hindering investments in India?

    • Backlog in court cases: nearly four crore matters pending final judgment.
    • The enforceability of contracts: On an average, it takes 1,445 days for a contract to be enforced, and that too at a cost of nearly 31% of the claim value.
    • Criminal penalties: imprisonment for minor offences act as major deterrents for investors.

    What is the importance  of IBC in promoting investment climate in India?

    • Replaced the inefficient bankruptcy law regime.
    • It has transformed insolvency resolution in India by streamlining insolvency processes in a sustainable, efficient, and value retaining manner.
    • It focuses on prioritising resolution rather than liquidation.
    • Relatively short time-bound processes. With IBC in place, the overall time taken in recovery improved nearly three times. (4.3 years in 2018 to 1.6 years in 2019).
    • It has successfully instilled confidence in the corporate resolution methodology.
    • Increased the possibility for the creditors in recovering some of their investments in firms being liquidated. With IBC in place, the recovery rate improved nearly threefold (26.5% in 2018 to 71.6% in 2019).
    • Beside promoting investor and investee confidence it has allowed credit to flow more freely to and within India.
    • IBC reforms improved the ease of doing business in India that resulted in increased Foreign Direct Investment into India during 2019-2020.
    • Instilled greater confidence in both foreign and domestic investors. It will help in enabling India to emerge as a ‘Make for World’ platform.

    What are the other steps taken by government to promote investments?

    • Government of India is working toward decriminalisation of minor offences which will significantly reduce the risk of imprisonment for actions that are not necessary.
    • The rolling out of the commercial courts, commercial divisions and the Commercial Appellate Divisions Act, 2015, to resolve pending cases
    • The removal of over 1,500 obsolete and archaic laws.
  • Parliament and the new labour codes

    Source- The Hindu

    Syllabus- GS 3- Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth.

    Context- Labour Minister Santosh Gangwar told that four new labour codes will become operational before the year ends. In the brief monsoon session of Parliament, three new labour codes were bulldozed into passing and now await the President’s assent.

    What are these new labour codes?

    1. The Industrial Relations Code, 2020
    2. The Social Security Code, 2020
    3. The Occupational Safety, Health and Working Conditions Code, 2020
    4. The Code on Wages, 2019

    What is the Code on Wages, 2019?

    1.One single code- It seeks to consolidate and simplify four pieces of legislation into a single code. The four pieces of legislation are as following-

    • Payment of Wages Act, 1936
    • Minimum Wages Act, 1948
    • Payment of Bonus Act, 1965 and
    • Equal Remuneration Act, 1976

    2.More coverage of workers- The new Code has dispensed with the necessity of having a minimum number of workers and the inclusion of such employment into the schedule.

    • It would expand the coverage of workers in all industries in the unorganised sectors as the old Minimum Wages Act covered only 30% of the total workforce.
    • While there were 10,000 slabs of minimum wages that existed, they would now be reduced to 200 slabs.

    3.Reduction in sections- While the previous four pieces of legislation had a total of 119 sections, the new Code has 69 sections.

    What are the challenges in consolidating four different legislations into a single one?

    The combining of asymmetrical laws into a single code is not an easy task and will only create its own set of new problems. Such as-

    1. Impact on the previous legislation- Considering that the repealed legislations each had a definition section, inspectors, penalties, a competent authority, an appellate authority, and rule-making powers, any consolidation will impact their length.
    2. Framing of rules – Section 67 had authorised the framing of rules relating to as many as 38 provisions of the Act. As a result, the delegated pieces of legislation (Rules) will be bigger than the Code.
    3. Barring a few new concepts– The new Code retains almost all provisions. like the procedure for fixing minimum wage, limit for fines and deductions in wages, minimum and maximum bonus etc.
    4. No difference in definition of worker- The Code will have the same definition of the term “worker”; but, a person employed in a supervisory capacity drawing up to ₹15,000 will also be considered a worker.
    5. State’s power to fix the minimum wage- The central government will have the power to fix a “floor wage”. Once it is fixed, State governments cannot fix any minimum wage less than the “floor wage”.
    6. Provision on penalty-  A new provision (Section 52) has been introduced where an officer (not below the rank of an under-secretary to the government) will be notified with power to impose a penalty in the place of a judicial magistrate.
    1. Compounding of offences– The Code also exempts employers from penal provisions if they were able “to prove that they had used due diligence in enforcing the execution of the code and it was the other person who had committed the offence without his knowledge, consent or connivance”.

    Way forward-

    The Labour rights are of utmost importance as they are fundamental freedoms, which have a struggle of hundred years behind them. In this context, the three bills will bring industrial peace and harmony in the country which will immensely help the country in bringing much needed economic growth and will help in employment generation. They will also help promote investment and will create harmonious industrial relations in the country.

  • Aatmanirbhar bharat in toy making

    Source: The Hindu

    Gs3: Changes in Industrial Policy and their Effects on Industrial Growth

    Context: Prime Minister Narendra Modi wants India to attain ‘aatmanirbhar’ in Toy manufacturing sector and called upon the country to become a global toy hub.


    • High Domestic demand: India is home to 25 per cent of world’s children aged between 0 and 12 years.
    • Inherent capacity: India possess a rich history and culture in the field of toy making.
    • Economic value: India’s share in the global toy is just 0.5 per cent ($500 million) whereas real market, estimation stood at $90 billion.
    • Reduce import dependence: 80 per cent of the toys sold in India are imported from China.
    • Labour intensive:It offers large-scale employment to semi-skilled/unskilled workers and, especially, women.

    Challenges in Toy making Industry

    • Seasonal: Shelf life of a toy is limited. For example, a Transformer Toy sells good during the movie releases and slows down soon thereafter.
    • Inflexible Labour laws: Indian laws do not permit recruitment or retrenchment based on demand thereby reducing the potential of the firms to grow big.
    • Small firms: Hamper the advantage of economies of scale make it less attractive in market.
    • Shying away by big players: Unfriendly business laws prevented large corporate player to emerge in the sector.
    • Inefficient supply chain: Owing to fragmented nature of the sector.
    • Input Dependence:Every time a new toy is to be made it needs different tooling but tooling in India is costly leading to over dependence on China.

    Way forward:

    • Flexible labour laws: Government should allow companies to hire and retrench employees based on demand and to protect workers the government can fix minimum wages.
    • Labour pooling:It can allow women to work at night with adequate safeguards.
    • Leveraging technology: The domestic toy sector needs to tap into India’s expertise in information technology to offer games that capture the imagination of the children.
    • Ensure quality: A large-scale skilling programme is key to ensure of global quality
    • Branding:Producing toys in an eco-friendly manner will help Indian toy making industries to command a premium for their toys

    The ₹5,000-crore toy cluster at Koppal in Karnataka is a step in the right direction. For India to become a toy hub, the government needs to create large scale special economic zones focussed on toys with plug-and-play infrastructure.

  • Future of Work – Industry 4.0

    Source: The Indian Express

    Syllabus: GS-3- S&T

    Context: Technological change need not cause a destruction of productive jobs and that is why a plan is required for industry 4.0

    How will technological change affect the jobs in India?

    • Size of youth: India’s global significance in mastering the future of work and employing the largest global unit of 820 million youth is huge.
    • Government policies and labour markets:They should sustainably manage the Fourth Industrial Revolution which triggered “storm of creative destruction” in employment.
    • The potential of capital-labour substitution and the new ecosystem of software/AI/automation-mediated work will overturn 100-year-old ideas of work and employment.
    • Lack of jobs:The ILO warns that the future may not hold enough jobs for everyone and 428 million workers in low middle-income countries like India may not find new jobs.
    • Change in the nature of jobs: In 5-10 years, 10 per cent of human jobs will be substitutableand 50-70 per cent of jobs could be partially automated.
    • Two-thirds of jobs in developing countries including India are prone to automation.
    • Tech Economy 4.0 “transformers”in India’s world of work include robotics, AI, the Internet of Things, cloud computing, supply chain 4.0, 3D printing, big data, digital payments, retail, health, education and professional services.
    • The most-affected labour-intensive sectorsinclude textiles, finance, construction, hospitality, travel, tourism, media, electronics, mining, agriculture, transportation and entertainment.
      • The Indian ICT sector,another major employer, is susceptible to AI/robots replacing workers in its major IT export markets.
      • The retail sector, the largest employer of lower skill youth, is job shedding as e-retail accelerates and human jobs in logistics, warehousing and delivery services are being robotised.

    Explain the char dham roadmap for steering technological change?

    We could steer technological change to four powers of possible destinations or Char Dhams :

    • Gyaan Dhamis establishing a national observatory for scoping the tech-to-work equation and its trajectory.
    • Databases on existing and future trends, sector by sector, need to be created.
    • India’s future of Tech-Economy 4.0/ employment tie using a human power by 2030 compass and hinge relevant strategies towards that.
    • Kaushalya Dhammeans nurturing “human capabilities” for Tech-Economy 4.0 work. To meet labour market needs, potential skill gaps must be closed through the NEP and comprehensive training infrastructure.
    • Suniyojan Dham involves transformative investments in multi-stakeholder ecosystems to empower the youth and women through future-of-work transitions.
    • It is vital to raise institutions, job-rich sectors and MSMEs, close the rich-poor, rural-urban and gender gap in access to high-quality digital and physical infrastructure and tools.
    • Samajik Nyaya Dhammeans ensuring a just transition through a new social compact among all stakeholders and a universal social protection floor. A human-centred and equity-based approach in future labour market policies and standards is needed.
    • Local and rural production, care and green economies and social and health services must be fostered as job generators.
    • Upakram Dhaminvolves taking special initiatives enabling India to leverage the world’s third-largest ICT workforce to pole-vault into Tech4 excellence.
    • India’s diversity, scale for neural net, data richness, huge base of engineers, mathematicians and coders of AI available or trainable at scale, and decent ecosystems in ICT metros are critical assets.

    Way forward

    • Following this Char Dham roadmap, we could avert the alarming prospect of a job-poor future. India’s ambition of sustainably transitioning to Tech 4.0 future of work is recognised in PM Modi’s Atmanirbhar Bharat.