DPIIT shares a list of 24 key sectors
The DPIIT has shared a list of 24 key sectors including food processing, toys, furniture, agrochemicals, and textiles
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KSG Podcast - Drones at the service | best daily editorial analysis for upsc aspirants
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KSG Podcast - Drones at the service | best daily editorial analysis for upsc aspirants
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India and UAE to promote use of local currencies

GS Paper - 2 (International Relations)

India and the United Arab Emirates (UAE) have signed a pact to establish a framework to promote the use of the rupee and UAE Dirham (AED) for cross-border transactions. The MoU on establishing a framework for the use of local currencies for transactions between India and the UAE aims to put in place a Local Currency Settlement System to promote the use of INR (Indian rupee) and AED (UAE Dirham) bilaterally, the RBI said. The MoU covers all current account transactions and permitted capital account transactions.

More about the mechanism

The framework for the use of local currencies for transactions between India and the UAE aims to put in place a Local Currency Settlement System (LCSS).
The creation of the LCSS would enable exporters and importers to invoice and pay in their respective domestic currencies, which in turn would enable the development of an INR-AED foreign exchange market.
This arrangement would also promote investments and remittances between the two countries.
The use of local currencies would optimise transaction costs and settlement time for transactions, including for remittances from Indians residing in UAE.
New Delhi is likely to use this mechanism to pay for crude oil as well as other imports from the UAE, which is currently made in US dollars. India is the third largest oil importer in the world and the UAE was its fourth biggest supplier of crude last year.
The RBI had last year announced a framework for settling global trade in rupees, primarily targeting trade with Russia. But this is yet to take off in a substantive manner.

Impact of the move

Bilateral trade between India and the UAE was around $85 billion in FY23. New Delhi is looking to work out a way to hedge exchange rate risks in the rupee-based trade to limit losses for Indian exporters.
The move to ink the pact with the UAE is part of a concerted policy effort by India to internationalise the rupee to bring down the dollar demand as a means to insulate the domestic economy from global shocks.
Government had earlier indicated that apart from Russia, countries in Africa, the Gulf region, Sri Lanka and Bangladesh had also expressed interest in trading in rupee terms.
The RBI’s plan to settle international trade in the local currency will let importers make payments in the rupee, which will be credited to the special account of the correspondent bank of the partner country, while exporters will be paid from the balances in the designated special account.
The Central bank is also in the process of issuing a Standard Operating Procedure to all banks so that e-BRC (electronic bank realisation certificate) becomes easy to use.

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Today's Headlines - 29 July 2023
Jan Vishwas Bill passed
GS Paper - 3 (Economy)

The Lok Sabha on 27 July 2023 approved the Jan Vishwas (Amendment of Provisions) Bill, 2023, to enhance ease of doing business, decrease compliance burden for individuals and industry, and alleviate judicial load by decriminalising minor economic offences.

More about the Bill

Spearheaded by the Department for Promotion of Industry and Internal Trade (DPIIT), the Bill proposes to revise 183 provisions across 42 laws under 19 government ministries.
At present, existing laws contain clauses for imprisonment for minor and procedural defaults, as well as lesser fines and penalties.
This resulted in fear and mistrust towards the government. The intended changes of this proposed law aim to avoid unnecessary imprisonments and impose higher penalties and fines where necessary.
According to the Bill, offences will be decriminalised by either eliminating both imprisonment and/or fine; removing imprisonment while retaining or increasing fines; or changing imprisonment and/or fine to penalties.
Conversion of fines and penalties implies that court prosecution can be bypassed for punishment.
The government over the past nine years removed roughly 40,000 provisions and procedures, which had the potential to create problems for people.

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Today's Headlines - 25 August 2023
BRICS currency in BRICS Summit
GS Paper - 2 (International Relations)

Brazil's President called for the BRICS nations to create a common currency for trade and investment between each other, as a means of reducing their vulnerability to dollar exchange rate fluctuations. Luiz Inacio Lula da Silva made the proposal at a BRICS summit in Johannesburg. Officials and economists have pointed out the difficulties involved in such a project, given the economic, political and geographic disparities between Brazil, Russia, India, China and South Africa.

Why does Brazil want a BRICS currency?

Brazil's president doesn't believe nations that don't use the dollar should be forced to trade in the currency, and he has also advocated for a common currency in the Mercosur bloc of South American countries.
A BRICS currency "increases our payment options and reduces our vulnerabilities," he told the summit's opening plenary session.
What do other BRICS Leaders think?

South African officials had said a BRICS currency was not on the agenda for the summit.
In July, India's foreign minister said, "there is no idea of a BRICS currency". Its foreign secretary said before departing for the summit that boosting trade in national currencies would be discussed.
Russian President Vladimir Putin said the gathering, which he attended via videolink, would discuss switching trade between member countries away from the dollar to national currencies.
China has not commented on the idea. President Xi Jinping spoke at the summit of promoting "the reform of the international financial and monetary system".
Is the US Dollar in trouble?

BRICS leaders have said they want to use their national currencies more instead of the dollar, which strengthened sharply last year as the Federal Reserve raised interest rates and Russia invaded Ukraine, making dollar debt and many imports more expensive.
Russia's sanctions-imposed exile from global financial systems last year also fuelled speculation that non-western allies would shift away from the dollar.
The objective, irreversible process of de-dollarisation of our economic ties is gaining momentum, Putin told the summit.

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Today's Headlines - 11 September 2023
India-Middle East-Europe mega economic corridor
GS Paper - 2 (International Relations)

Prime Minister Narendra Modi announced the launch of the India-Middle East-Europe mega economic corridor. The project includes India, the UAE, Saudi Arabia, the European Union, France, Italy, Germany and the US.

What is the project?

The rail and shipping corridor is part of the Partnership for Global Infrastructure Investment (PGII) — a collaborative effort by G7 nations to fund infrastructure projects in developing nations. PGII is considered to be the bloc’s counter to China’s Belt and Road Initiative.
The project will aim to enable greater trade among the involved countries, including energy products.
It could also be one of the more ambitious counters to China’s massive infrastructure program, through which it has sought to connect more of the world to that country’s economy, AP said.
The corridor will include a rail link as well as an electricity cable, a hydrogen pipeline and a high-speed data cable, according to a document prepared by European Commission President Ursula von der Leyen.
The document also called the project “a green and digital bridge across continents and civilizations.”
Why is the project being proposed?

First, it would increase prosperity among the countries involved through an increased flow of energy and digital communications.
Second, the project would help deal with the lack of infrastructure needed for growth in lower- and middle-income nations.
Third, it could help “turn the temperature down” on “turbulence and insecurity” coming out of the Middle East

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Today's Headlines - 12 September 2023
A new member in G20
GS Paper - 2 (International Relations)

The African Union (AU) was admitted as a new member of the G20, barely three months after India floated the idea of including the organisation. The development took place at the ongoing 18th G20 Heads of State and Government Summit in New Delhi.

What is the AU?

The AU is an intergovernmental organisation of the 55 member states located on the continent of Africa.
The grouping is guided by its vision of “An Integrated, Prosperous and Peaceful Africa, driven by its own citizens and representing a dynamic force in the global arena.
Although the AU was officially launched on 9 July 2002, its roots go back to the 1960s when the Organisation of African Unity (OAU) was established.
The OAU was also an intergovernmental organisation and it aimed to bring African nations together and resolve common issues through collective action.
Its main focus, however, was to help liberate the colonised countries in the continent. To do so, OAU mustered diplomatic support and provided logistical aid to liberation movements across Africa.
Notably, the man spearheading the idea of the AU was the Libyan dictator Colonel Muammar Gaddafi.
He also did more than any other leader to ensure the creation of the African Union (AU) in 2002, hosting several meetings, and forcing Nigeria and South Africa to react to his frantic drive towards creating a federal body, an analysis published in The Guardian said.
What are the objectives of the AU?

Unlike the OAU, the AU concentrates its energy and resources on achieving greater unity and solidarity between African countries and their people.
It seeks to accelerate the process of the political and socio-economic integration of the continent.
Moreover, the AU addresses the multifaceted social, economic and political problems that the African nations have been facing.
Its key objectives also include promoting peace, stability, and security across the region. Protecting and promoting human rights are also part of the agenda.
What are the notable achievements of the AU?

Many of the AU’s peacekeeping missions have helped governments tackle terrorism across Africa, from the Sahel to northern Mozambique. Over the years, the organisation’s interventions have prevented violence in countries like Burundi, the Central African Republic, Comoros, Darfur, Somalia, South Sudan, Sudan, and Mali.
AU’s diplomatic efforts have also resulted in resolving conflicts in Africa. Last year, it brokered a peace deal between the Ethiopian Government and the Tigray People’s Liberation Front (TPLF) in South Africa, almost two years after the two entities began fighting.
The establishment of the African Continental Free Trade Area (AfCFTA), which came into force in 2021, is yet another achievement of the organisation.
With 54 member countries as signatories, AfCFTA is the world’s largest new free trade area since the establishment of the World Trade Organization (WTO) in 1994.

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