INTERNATIONAL RELATIONS

1. INDIA TO HOST “NO MONEY FOR TERROR” CONFERENCE

THE CONTEXT: The 3rd Ministerial “No Money for Terror” Conference will set to be held on November 18 and 19 this year in New Delhi, India.

THE EXPLANATION:

What is the NMFT conference?

• The Ministerial No Money for Terror (NMFT) Conference aims to create platform for international discussions on countering terror financing.
• The conference includes discussions on technical, legal, regulatory and cooperative aspects of the terrorism financing.
• It aims to set pace for other high-level official and political discussions focusing on terror finance.
• The inaugural edition of this conference was held in Paris, France, in 2018. The second edition of the NMFT took place in Melbourne, Australia, in 2019.
• The third edition was set to take place in India in 2020 but was postponed because of COVID-19 pandemic that caused the global-level restrictions on travel.

3rd Ministerial ‘No Money for Terror’ Conference

• The third edition will be organized by the Ministry of Home Affairs.
• The event will witness participation from over 75 countries.
• This is the second major conference hosted by India this year.
• It earlier hosted the meeting of the United Nations Security Council’s Counter-Terrorism Committee (CTC). This is the first time that the UNSC CTC met in India and only seventh time that it was held outside New York.

What are the focus areas of the 3rd NMFT conference?

• Discussions at the 3rd NMFT conference will focus on global trends of terrorism and terrorist financing, emerging technologies’ role in terrorism financing and importance of global cooperation to address related challenges.
• The meeting will seek global cooperation in addressing the challenges in countering terror funding obtained via formal and informal channels.
• It will focus on the role of cryptocurrency in funding terrorist activities. It will deliberate on the concerns related the decentralized nature and the lack of regulation of cryptocurrencies.
• The focus will also be given to dark web’s role in promoting transfer or crowdsourcing of funds for terrorism.
• It also aims to strengthen the role of Financial Action Task Force (FATF) in setting global standards that can create an effective mechanism to combat terror funding.

ENVIRONMENT, ECOLOGY AND CLIMATE CHANGE

2. E-WASTE (MANAGEMENT) RULES, 2022

THE CONTEXT: The Indian Government issued notification on E-Waste (Management) Rules, 2022, which will come to effect from next financial year.

THE EXPLANATION:

What is E-Waste (Management) Rules, 2022?

• The E-Waste (Management) Rules, 2022 was published by the Ministry of Environment, forest and climate change on November 2, 2022.
• They will apply to all businesses and individuals involved in manufacturing, sales, transfer, purchase, refurbishing, dismantling, recycling and processing of e-waste or electrical and electronic equipment.
• Under the new rules, the number of items that have been categorized as e-waste has been increased from 21 to 106.
• It includes all electrical devices and radiotherapy equipment, nuclear medicine equipment and accessories, Magnetic Resonance Imaging (MRI), electric toys, air conditioners, microwaves, tablets, washing machine, refrigerator, iPad and others.
• This includes electronic components, consumables, parts and spares that make the electronic products operational.
• The new rules are not applicable for waste batteries, which are covered under the Battery Waste Management Rules, 2022.
• It is also not applicable for packaging plastics, which are covered under the Plastic Waste Management Rules, 2016.
• It also does not apply for micro enterprises and radio-active wastes, which are covered under the Micro, Small and Medium Enterprises Development Act, 2006 and Atomic Energy Act, 1962 respectively.

What are the key features of the rules?

• The rules restrict the use of hazardous substances for manufacturing electrical and electronic equipment. This comes in response to the deaths caused by exposure to radioactive materials.
• Manufacturers of electronic equipment are mandated to reduce the use of lead, mercury, cadmium and other others that can harm human health and environment.
• These materials can adversely affect brain, heart, liver, kidneys and skeletal system. It also causes harmful effects on neurological and reproductive systems.
• Under the new rules, the Central Pollution Control Board (CPCB) will conduct random sampling of electrical and electronic equipment placed in the market to monitor and verify compliance of reduced use of hazardous substances.
• Manufacturers are required to use technologies and methods that make the end product recyclable. They are also required to ensure the compatibility of components or parts developed by different manufacturers. This will minimise the generation of e-wastes.
• Imports or sales of new electrical and electronic equipment are allowed only if they comply with the government regulations. If the product does not comply with the rules, the manufacturer must withdraw all samples from the market.
• It is the responsibility of the manufacturer to collect e-wastes generated during the manufacturing process and ensure that they are recycled or disposed as per the rules.

3. THE GLOBAL CARBON BUDGET 2022

THE CONTEXT: The Global Climate Budget 2022, released at The 2022 United Nations Climate Change Conference or COP27, indicates that India will record a higher rise in carbon emissions this year than other major countries.

THE EXPLANATION:

What are the key findings of the Global Carbon Budget, 2022?

• The global carbon emissions are expected to reach 40.6 billion tonnes of carbon dioxide into the atmosphere in 2022.
• This projection is close to the highest-ever annual total of 40.9 billion tonnes of CO2 emitted in 2019.
• There is no sign of carbon emission decline required for limiting the global warming to 1.5 degree Celsius.
• If the current emission levels continue, there is a 50 per change that the warming of 1.5°C exceed in the next 9 years.
• Record level droughts, wildfires and flooding across is world is caused because the Earth’s global surface temperature has risen by around 1.1°C when compared with the average in pre-industrial levels.
• In 2021, China (31 per cent), the United States (14 per cent) and the European Union (8 per cent) are the major contributors of the global carbon emissions. India accounted to 7 per cent of the global carbon emissions.
• The report estimates a decrease in the carbon emissions in 2022 in China (0.9 percent) and the EU (0.8 per cent). However, there will be a 1.5 per cent increase in the US and a 6 per cent increase in India.
• India is expected to witness the highest increase in carbon emissions in the world in 2022 when compared with the previous year. The United States is estimated to record the second-highest increase in the carbon emissions.
• The 2022 carbon emissions will increase in India due to coal emissions (5% increase) and oil emissions (10% increase). This returns the carbon emission back to the 2019 levels. The country is already responsible for around a twelfth of global emissions. It is ranked third globally in terms of gross emission volume and ranked very low in per capita emissions.

ECONOMIC DEVELOPMENTS

4. AMENDMENT IN ELECTORAL BONDS SCHEME

THE CONTEXT: The Government of India has approved the issuance of the 23rd tranche of electoral bonds for sale from November 9-15 following an amendment.

THE EXPLANATION:

• According to the finance ministry, State Bank of India (SBI) has been authorised to issue and encash electoral bonds through 29 of its authorised branches, which would be valid for 15 days from the date of issuance.
• As per the law, no payment would be made to any political party if the bond is deposited after expiry of the validity period.

What are the changes made in the scheme?

• The Union Finance Ministry issued a notification amending the Electoral Bonds Scheme to allow the sale of electoral bonds for extra 15 days in the year of general elections to the Legislative Assembly of States and UTs with legislature.
• The notification allows the Central Government to open additional one-week window for issuing electoral bond starting from November 9, 2022.
• Prior to this notification, these bonds can be bought by any individual in a period of 10 days each in the months of January, April, July and October as specified by the Central Government.
• Since assembly elections to various states and union territories are held each year, the amendment allows additional 15 days of bond sales annually.
• The changes came days before the Himachal Pradesh Assembly Elections (November 12) and weeks before Gujarat assembly elections that are set to be held in early December 2022.

Value Addition:

What are electoral bonds?

• The Electoral Bonds Scheme was launched in 2018 to provide an alternative for cash donations to political parties. Electoral bonds are financial instruments through which anyone can donate money to political parties.
• The electoral bonds can be bought by donors from authorized branches of the State Bank of India using cheque or a digital mechanism. The donor can give these bonds to the political party or parties of their choice. The political parties can choose to encash electoral bonds within 15 days of receiving them and fund their electoral expenses. This retains the anonymity of the donor while also ensuring transparency.
• Bonds are issued only to those political parties that are registered under Section 29A of the Representation of the People Act, 1951 and those that secured not less than 1 per cent of votes polled in the last General Elections to the Lok Sabha or the Legislative Assembly of the State.

5. BHIM APP OPEN-SOURCE LICENSE MODEL

THE CONTEXT: Recently, the BHIM App open-source license model was announced by the National Payments Corporation of India (NPCI).

THE EXPLANATION:

What is BHIM App open-source license model?

• Under the BHIM App open-source license model, regulated entities in the UPI ecosystem can get license for accessing source code of the BHIM app. New features that will be included in the application in the future can also be accessed by these licensees.

Why was open-source license model launched?

• Currently, many banks do not have their own mobile banking applications. Therefore, they are unable to provide the benefits of UPI to their customer base. The NPCI aims to address this gap by providing readily available features of UPI to these banks via the BHIM App licensing model. It will act as an economic and quick-to-market solution for these entities.
• The BHIM licensing model will empower the banking entities to provide benefits of the UPI to their customer base with a readily-available UPI application. This will minimise time, efforts and costs incurred for promoting the UPI based transactions.

What is Unified Payments Interface (UPI)?

• Unified Payments Interface (UPI) is an instant real-time payment system that is used on mobile devices to instantly transfer money between two bank accounts. It was developed by the NPCI. The UPI enabled 45.6 billion transactions during Financial Year 2022. It is currently one of the most prominent forms of digital payments in India.
• The NPCI International Payments Ltd (NIPL) – the international arm of the NPCI – announced that the BHIM UPI is live at NEOPAY terminals in the United Arab Emirates. This enables millions of Indians traveling to the UAE to make payments using BHIM UPI. This feat was achieved after NIPL and NEOPAY (payment subsidiary of Mashreq bank) collaborated to create the acceptance infrastructure in the UAE. It allows Indian tourists to make UPI transactions across NEOPAY enabled shops and merchant stores.

VALUE ADDITION:

National Payments Corporation of India (NPCI)

• National Payments Corporation of India (NPCI), an umbrella organisation for operating retail payments and settlement systems in India, is an initiative of Reserve Bank of India (RBI) and Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007, for creating a robust Payment & Settlement Infrastructure in India.
• Considering the utility nature of the objects of NPCI, it has been incorporated as a “Not for Profit” Company under the provisions of Section 25 of Companies Act 1956 (now Section 8 of Companies Act 2013), with an intention to provide infrastructure to the entire Banking system in India for physical as well as electronic payment and settlement systems.

GOVERNMENT SCHEMES AND INTERVENTIONS

6. INDIAN BIOLOGICAL DATA CENTER (IBDC)

THE CONTEXT: Union Minister of state for Science and Technology recently dedicated Indian Biological Data Center (IBDC) to the nation.

THE EXPLANATION:

• The Indian Biological Data Center is India’s first national repository for life science data.
• It will store all life science data generated from publicly funded research in the country.
• It operates with the assistance from the Department of Biotechnology (DBT).
• In long-term, IBDC seeks to become a major data repository for all life science data originating from India.
• It was established at the Regional Centre of Biotechnology (RCB) in Faridabad, Haryana. It has a data “disaster recovery” site in National Informatics Centre (NIC) in Bhubaneshwar.
• It has a data storage capacity of around 4 petabytes.
• It hosts the ‘Brahm’ High Performance Computing (HPC) facility.

What are its objectives?

The objectives of IBDC are:
1. Provide IT platform for archiving of biological data originating from India.
2. Develop standard operating procedures for storing and sharing of life sciences data based on FAIR (Findable, Accessible, Interoperable and Reusable) principle.
3. Perform quality control and curation of data, maintain data backup and manage data life cycle.
4. Develop web-based tools/APIs for data sharing or retrieval
5. Organize training programme for analysing of large data and create awareness about the benefits of data sharing.

What are the current tasks of the IBDC?

• Since life science data is highly complex and heterogeneous, IDBC is being developed in a modular fashion. This means that different sections deal with different types of data sets. Therefore, the IBDC had initiated nucleotide data submission services via two different data portals – the Indian Nucleotide Data Archive (INDA) and the Indian Nucleotide Data Archive – Controlled Access (INDA-CA).
• The IBDC also hosts an online “Dashboard” to archive the genomic surveillance data generated by the INSACOG labs. This online dashboard facilitates customized data submission, access, data analysis, surveillance and real-time monitoring of SARS-CoV-2 variants across India.
• The computational infrastructure at the IBDC can be accessed by interested researchers who are involved in computational-intensive analysis. The IBDC will also conduct frequent workshops and orientations to help users submit the data they collected.

1. In EWS verdict, a discrimination antithetical to equality READ MORE
2. The curious case of EWS READ MORE
3. Welcome move for transparency READ MORE
4. Need for Electoral Reforms (Part I) READ MORE

1. Is freedom from karma possible? READ MORE
2. Education that helps uncover hidden potential READ MORE
3. Why is it so difficult to forgive? READ MORE
4. THE ART OF PROBLEM SOLVING AND ITS USES READ MORE

1. Preserving the precious: On ground water use READ MORE
2. Mangrove Alliance READ MORE
3. Explainer: Reducing pollution in North India will require more than a curb on farm stubble burning READ MORE

1. Identifying SCs among Dalit Muslims, Christians challenging. Lack of data biggest roadblock READ MORE
2. Equality in marriage: Legal age for both men, women should be 18 years READ MORE
3. Education sans employability READ MORE  
4. GHI oversimplifies, magnifies hunger; is misguided READ MORE

(Newspapers, PIB and other important sources)

Prelim and Main

1. Former CJI Lalit defends Collegium system: ‘Perfect the way it stands today’ READ MORE
2. S. President Joe Biden to seek red lines in talks with Xi Jinping READ MORE
3. Jharkhand wants new quota Bill placed in Ninth Schedule: What this section of Constitution is READ MORE
4. A satellite data system will help detect, act on methane emissions READ MORE
5. Cameroon can set path to climate-resilient economy with prompt reforms: World Bank READ MORE
6. Reliance to build India’s first multimodal logistics park in Chennai READ MORE
7. Vikram-S: India’s first private rocket all set for launch tomorrow READ MORE
8. Everyday Explained: What is ASEAN, the 10-member grouping of Southeast Asian nations? READ MORE

Main Exam

GS Paper- 1

1. Identifying SCs among Dalit Muslims, Christians challenging. Lack of data biggest roadblock READ MORE
2. Equality in marriage: Legal age for both men, women should be 18 years READ MORE

GS Paper- 2

POLITY AND GOVERNANCE

1. In EWS verdict, a discrimination antithetical to equality READ MORE
2. The curious case of EWS READ MORE
3. Welcome move for transparency READ MORE
4. Need for Electoral Reforms (Part I) READ MORE

SOCIAL ISSUES

1. Education sans employability READ MORE  
2. GHI oversimplifies, magnifies hunger; is misguided READ MORE

INTERNATIONAL ISSUES

1. India-Russia bonhomie: Delhi prioritising national interests amid US pressure READ MORE
2. The US-led global order is tottering. It is India’s time to shine as a balancing ‘third pole’ READ MORE

GS Paper- 3

ECONOMIC DEVELOPMENT

1. Importance of agri exports — and what Govt can do to boost India’s farm trade surplus READ MORE
2. Why India cannot afford to ignore the GM crop revolution READ MORE
3. Grey areas. GM mustard, not a great idea READ MORE
4. Inland waterways will reshape transportation READ MORE

ENVIRONMENT AND ECOLOGY

1. Preserving the precious: On ground water use READ MORE
2. Mangrove Alliance READ MORE
3. Explainer: Reducing pollution in North India will require more than a curb on farm stubble burning READ MORE

GS Paper- 4

ETHICS EXAMPLES AND CASE STUDY

1. Is freedom from karma possible? READ MORE
2. Education that helps uncover hidden potential READ MORE
3. Why is it so difficult to forgive? READ MORE
4. THE ART OF PROBLEM SOLVING AND ITS USES READ MORE

Questions for the MAIN exam

1. ‘The EWS quota is unfair because it twists the idea of social justice by bequeathing further privilege to communities who are historically situated to benefit from the caste system’. How far do you agree with this view? Analyse your views.
2. ‘The agriculture of tomorrow is going to be science-based, and the winners will be those who adopt it and develop it further today’. In the light of this statement, discuss whether India should start genetically modified cropping?
3. ‘The US is welcome to cement its partnership with India in various sectors, but it is well advised not to dictate terms to the latter with regard to Russia’. Comment on the statement in the light of recent developments in International politics.

QUOTATIONS AND CAPTIONS

• Don’t confuse visibility with credibility.
• The Supreme Court’s judgment upholding the 103rd Amendment which introduced 10% reservation for EWS to the Constitution seeks to undo the existing logic of affirmative action.
• The EWS quota is unfair because it twists the idea of social justice by bequeathing further privilege to communities who are historically situated to benefit from the caste system.
• While water remains a politically contentious subject in India, the climate crisis should inspire consensus across the political spectrum on disincentivising wasteful consumption of this precious resource.
• The agriculture of tomorrow is going to be science-based, and the winners will be those who adopt it and develop it further today.
• With India’s burgeoning population and increasing traffic, the development of inland waterways will not only reduce travel time but ensure a seamless journey for people and goods.
• India has rightly gone all out to safeguard its interests rather than toeing the line of western powers during the ongoing energy crisis.
• The US is welcome to cement its partnership with India in various sectors, but it is well advised not to dictate terms to the latter with regard to Russia.
• In order to keep the high office of the Governor insulated from unnecessary public controversies, both Punchhi and Sarkaria Commissions had recommended that the Governors should not be burdened with the positions and powers which were beyond their constitutional domain.
• ‘We have fought for social justice. We have fought for economic justice… Now we must  fight for electoral justice’- Barbara Boxer

50-WORD TALK

• The Supreme Court’s acquittal of three men sentenced to death for the rape and murder of a Delhi woman puts India’s criminal justice system in the dock. Ever-tougher laws won’t compensate for incompetent police and dysfunctional courts. Political leaders must acknowledge responsibility, and rebuild these slothful pillars of our republic.
• Most political parties can’t afford to criticise the Supreme Court’s 3:2 verdict upholding EWS quota. Therein lies the problem with this hot-button issue. The minority view by two judges, including the outgoing CJI UU Lalit, gives much fodder and can become the subject of another round of litigation in review.

Things to Remember:

• For prelims-related news try to understand the context of the news and relate with its concepts so that it will be easier for you to answer (or eliminate) from given options.
• Whenever any international place will be in news, you should do map work (marking those areas in maps and exploring other geographical locations nearby including mountains, rivers, etc. same applies to the national places.)
• For economy-related news (banking, agriculture, etc.) you should focus on terms and how these are related to various economic aspects, for example, if inflation has been mentioned, try to relate with prevailing price rises, shortage of essential supplies, banking rates, etc.
• For main exam-related topics, you should focus on the various dimensions of the given topic, the most important topics which occur frequently and are important from the mains point of view will be covered in ED.
• Try to use the given content in your answer. Regular use of this content will bring more enrichment to your writing.

[WpProQuiz 366]

[WpProQuiz 365]

THE CONTEXT: In June 2021, the Group of Seven (G7) major developed economies held their first in-person summit since 2019 in Cornwall, UK. The discussion focused on addressing the Covid-19 crisis, climate change, global taxation, etc. This article analyses the tax-related outcome in detail.

GLOBAL MINIMUM TAX

• The June 4-5 agreement between the G7 Finance Ministers to plug the cross-border tax loopholes used by the giant multinational companies (MNCs) to evade taxes has immense potential to reform and revolutionize the global tax system.
• The reform blueprint is based on two pillars:
• To distribute the profits equitably among countries where these are generated, enabling them to tax such profits
• Adoption of a minimum corporate tax rate of at least 15 percent globally.

The G7 proposal

• Besides proposing a global minimum tax rate of 15 percent, the G7 communique states that multinational companies, which have a 10 percent profit margin, will be taxed on at least 20 percent of the profits which exceed this figure, in countries where they operate.
• It underlines that for the new tax system to take effect, countries like India, which charges a two percent equalization levy on digital companies, will have to abolish their existing taxes on digital services.

WHY THE MOVE

• Using a tax avoidance strategy called Base Erosion and Profit Shifting (BEPS), MNCs have been artificially ‘shifting’ their profits year after year from higher-tax jurisdictions to tax-havens where they pay little or no tax, thus ‘eroding’ the ‘tax bases of the former.
• Countries like Ireland, Luxembourg, Cyprus, Caribbean countries like the British Virgin Islands, Bahamas or Cayman Islands, and Central American countries like Panama have used their tax rate arbitrage to attract the MNCs- About 40 percent of MNCs’ overseas profits are estimated to be shifted to low-tax countries in this way.

LOSS DUE TO PRESENT RULING

• The tax losses are stupendous – estimated to be $50 billion for the USA and over $10 billion for India.
• A global minimum tax rate of 15 percent would preclude countries from undercutting each other, yielding an estimated $50 billion $80 billion in extra tax annually from the MNCs.

RESENT TAX RATES

• The US tax rate was cut down to 21 percent from 35 percent by then President Donald Trump in 2017, which his successor Joe Biden now proposes to increase to 28 percent.
• The average OECD corporate tax rate in 2020 was 21.5 percent, with 18 out of 37 members charging higher rates. Only three countries charge rates lower than 15 percent: Ireland (12.5 percent), Hungary (eight percent), and Switzerland (8.5 percent).
• The average tax rate for Asian countries is around 23 percent; while China and South Korea charge 25 percent, Singapore charges only a 17 percent rate.
• In 2019, India also sharply reduced its corporate tax rates to 22 percent for domestic companies (15 percent for new manufacturing companies) without any deductions, aligning its corporate tax rate to global standards.

WHAT WILL CHANGE AFTER NEW TAX SLABS?

• It can bring to an end the decades-long “race to the bottom” in which some countries compete with each to attract corporate giants with ultra-low tax rates and exemptions, depriving the governments of other countries where the MNCs reap most of their profits of billions of dollars in taxes.
• It will also bring to an end a very lucrative business model of these MNCs that park most of their profits in tax havens, bring to an end the golden era of the heavens themselves.
• The tech giants which operate remotely through digital mediums like Google, Amazon, Facebook, Apple, etc. would start feeling the pinch.

WHAT ARE THE INDIA’S CONCERNS?

SOVEREIGN ISSUE

• The G7 proposal interferes with India’s sovereign right to determine its tax policy. However, in today’s digitally interconnected world, such an approach is anachronistic.

INVESTMENT

• Countries such as Ireland, and Singapore have managed to position themselves as attractive investment destinations by offering low tax rates. This investment, in turn, helps them generate demand by efficiently utilizing resources and creating employment. The Indian government’s decision to slash corporate tax rates in 2019 is a tacit recognition of this larger economic impact of taxation.

TAX COLLECTION REDUCTION

• Since the economic reforms of 1991, the corporate tax rate in India has never come down below 22 percent for domestic companies.
• The tax cuts in 2019 are expected to cost the Indian exchequer Rs 1.45 lakh crore annually. Therefore, the likelihood of the Indian government further reducing the corporate tax rate appears slim as it risks widening the fiscal deficit.

BUT IT CAN BE A GAME-CHANGER FOR INDIA

• The high tax rates in India have meant that corporations devise innovative structures to avoid paying their share. As per the Tax Justice Network, India loses out approximately $10 billion, which is about 0.41 percent of the GDP, on tax revenues annually. As a result, the already-stretched Indian tax administration is engaged in costly litigation with multinationals for decades.
• India is likely to gain in tax revenue on this account, given the size of its market and the growth opportunities it offers. The country has been at the forefront to legislate in her domestic tax laws the concept of ‘significant economic presence (SEP) to create the ability to levy tax on income generated in India (from Indian customers) by foreign digital commerce companies.
• A global minimum corporate tax rate of 15 percent is also expected to be beneficial to India. The Tax Justice Network estimates the country to gain at least $4bn (Rs 300 bn), equivalent to ~6 percent of FY21 corporate tax collections.
• Besides, it would not hurt FDI to India or create any adverse or incremental tax liability in the hands of foreign investors given that the minimum tax rate for new manufacturing business has recently been legislated at 15 percent (plus surcharges).
• At the same time, in respect of outbound investments, it will prevent base erosion of tax in the country as the government will be able to claw back any shortfall in tax paid below 15 percent by an overseas business owned by an Indian resident, once the global threshold rule becomes operational.

ABOUT THE SUMMIT

DATE OF SUMMIT

11-13 June 2021

PARTICIPATION

• Apart from seven G- 7 members (Including UK, USA, Canada, Germany, Japan, Italy, and France), This year the United Kingdom has invited the leaders of four other prominent democracies to the Summit, these are
• Australia
• India
• The Republic of Korea
• South Africa

MAJOR OUTCOMES OF THE SUMMIT

• Climate change: G7 nations are moving closer on their climate strategies, but differences over key details will prevent more concerted action for now.
• Building back better, and greener: G7 countries will channel more international development finance into infrastructure and climate change projects, but they refused to label the initiative as a direct rival to China’s Belt and Road Initiative (BRI).
• Shifting approach towards China: The official communiqué directly mentioned competition with China for the first time—a notable shift from previous summits, although countries differ in their approach.
• Global Covid-19 vaccine rollout: G7 countries are ramping up their vaccine diplomacy efforts. G7 states have lost the public relations battle to China and Russia.
• Global tax agreement remains elusive: Leaders endorsed the 15% global minimum corporate tax plan.

INDIA AT THE SUMMIT

PM took part in two sessions of Summit: ‘Building Back Together—Open Societies and Economies’ and ‘Building Back Greener: Climate and Nature’.

Highlights of PM speech

• India is a natural ally for the G7 countries in defending the shared values from a host of threats stemming from authoritarianism, terrorism and violent extremism, disinformation, and economic coercion.
• Democracy and freedom were a part of India’s civilizations ethos.
• Need to ensure that cyberspace remains an avenue for advancing democratic values and not of subverting them.
• Developing countries need better access to climate finance and emphasized that the planet’s atmosphere, biodiversity, and oceans cannot be protected by countries acting in isolation.
• The planet’s atmosphere, biodiversity, and oceans cannot be protected by countries acting in silos and called for collective action on climate change.
• Indian Railways is committed to achieving Net Zero Emissions by 2030.
• India is the only G-20 country on track to meet its Paris commitments.
• India is increasing the effectiveness of the two major global initiatives nurtured by India i.e. the CDRI and the International Solar Alliance.
• Developing countries need better access to climate finance.
• India’s ‘whole of society’ approach to fighting the pandemic, and also committed support to improve global health governance.

AN ANALYSIS OF THE SUMMIT

ON COVID AND VACCINATION

Positives

• On Covid-19, G7 is right to focus on vaccinating the world. After all, it is now conventional wisdom that no one is safe until everyone is safe.

Negatives

G7 ignores the three immediate actions recommended

1. One billion vaccine doses by September 2021 and two billion doses by end of 2022;
2. Waiving intellectual property rights (IPR)
3. Committing 60% of the $19 billion required for Access to Covid-19 Tools (Act) Accelerator in 2021 for vaccines, therapeutics, diagnostics, and strengthening of health systems.

G7 falls short significantly on all three counts.

• By providing for a paltry one billion vaccine doses over the next year, G7 has effectively indicated that even by the end of 2022, not everyone on this planet will be vaccinated.

ON CLIMATE

• On climate, the question was not whether G7 countries would commit to net zero emissions by 2050. That was the basic minimum that they were expected to do, and which they have done.
• The real question related to climate finance is how will the world’s richest countries meet their Paris Accord commitment of $100 billion every year to finance the energy transition of developing and least developed countries?
• Here again, the communique comes up with the vaguest of language, referring to increasing and improving climate finance to 2025 and reaffirming the developed country’s goal to mobilize $100 billion.

ON CHINA

• While G7 wish to cooperate with China on issues such as climate but called for respect to respect human rights in Xinjiang and autonomy for Hong Kong. Taiwan also gets a mention for the first time.
• G7 has made a valiant attempt to counter the Belt Road Initiative with its Build Back Better for the World (B3W) plan.
• The biggest signal for China is the “Open Societies Statement” signed by G7 and guest countries.
• The statement spells out the unconditional commitment of these countries to human rights for all, democracy, social inclusion, gender equality, freedom of expression, and rule of law.
• This is a welcome move and is perhaps the best sign that democracies can unite based on these universal values.

HOW SHOULD INDIA READ THE G7 SUMMIT?

A TEMPLATE FOR INDIAN ENGAGEMENT WITH THE WEST

• PM Narendra Modi’s statement that India is a natural ally of G7, with an emphasis on its civilizational commitment to democracy, freedom of thought, and liberty, will be welcomed by India’s friends all over the world.
• The PM’s statement should put these doubts about India’s commitment to rest.

ON CLIMATE

• On climate finance, India has a mountain to climb.
• India will come under pressure at the COP 26 meeting in Glasgow to commit to net-zero emissions by 2050.
• Not just this, the communique appears to endorse the idea of “carbon leakage” and hence gives implicit approval to the European Union’s idea of a carbon border tax. This is particularly unwelcome for India.

FAIRTRADE AND FREE TRADE

• The communique harps on “fair trade” much more than it does on “free trade”.
• Fairtrade, by definition, stresses labor and environmental standards and the communique says as much. How these will be implemented without resort to protectionism remains to be seen.
• Similarly, G7 endorses plurilateral initiatives at the World Trade Organization, something India hitherto has studiously avoided. Things will come to a head at the 12th Ministerial Conference of the WTO in December.

WAY FORWARD:

• The Indian government would do well to engage with the multilateral ecosystem to ensure that future multilateral rules do not disadvantage developing economies, instead of outrightly rejecting them.
• India should focus on capacity building and timely resolution of disputes.
• A minimum global tax rate would disincentives corporations to artificially shift their profits to low-tax jurisdictions. It will also reverse the trend of offshore incorporation in Indian entities by eliminating tax arbitrage. The Indian government can consider suggesting carve-outs to the proposal that can mitigate any unintentional adverse impact.
• India’s 2022-23 presidency of the G20 presents an opportunity for the country to articulate a forward-looking vision for fair and comprehensive global tax rules.

CONCLUSION: India’s engagement with the west and the recent tax proposal by G7 is the opportunity for India to overcome the challenge that occurred after Covid-19. Although, India’s concerns are justified, surely, the global minimum tax would be a game-changer for countries like India. The proposal indicates a political momentum and a desire to fast-track structural taxation reforms that could improve India’s economic competitiveness and lower jurisdictional tax arbitrage.