1. ‘Reverse GST increase on textiles and apparel or risk job losses’
UPSC Syllabus: Prelims: Economy | Mains – GS Paper III – Economy
Sub Theme: National Technical Textiles Mission | Textile Sector – Challenges | UPSC
Context: GST Council has taken the decision to raise the GST rate on several textile and apparel products to 12% from January 1.
The textile ministry announced it is removing the inverted duty structure in the man-made fibre (MMF) sector and will levy a uniform goods and services tax (GST) at 12 percent on MMF yarn, fabrics, and apparel from January 1, 2022. The existing GST rates on MMF, MMF yarn, and MMF fabrics are 18 percent, 12 percent, and five percent, respectively. According to the government, “taxation of inputs at higher rates than finished products created build-up of credits and cascading costs. It further led to accumulation of taxes at various stages of MMF value chain and blockage of crucial working capital for the industry.”
- As per a study conducted by a national level body of the textile and clothing sector, it was estimated that one lakh small-scale units would be forced to close down and almost 15 lakh people rendered jobless if the GST rate increases took effect.
- Sector employs about 3.9 crore people, excluding farmers associated with growing cotton and jute.
- Moving to 12 % GST for several products meant manufacturers would need more working capital.
- When funds were not available, the units would either shut down or shift to the informal sector.
- The evasion will be more because they can’t afford to pay 12% GST.
- It could also lead to higher imports.
- And, if the prices rose because of higher GST, consumer demand would drop.
- Even the textile units in Surat and Ludhiana, which were major clusters of manmade fibre, had demanded reversal of the decision.
- Centre’s argument for increasing the GST is to correct an inverted duty structure. 15% of the textile industry suffers from the anomaly. The economist said that the Centre proposes to raise ₹7,000 crore but it’s a questionable decision considering the impact it will have on the sector.
- An increase in ‘taxes’ by as much as 7% will lead to a much higher level of job losses — possibly in excess of two million.
Given the inflationary pressure, high unemployment, rise in cotton and apparel prices and the pandemic, there ought to be status quo on the GST rates for the textiles and clothing sector, he added.
- Textiles & garments industry is labour intensive sector that employs 40 mn people in India is second only to the agriculture sector in terms of employment – 21% of total employment.
- One of the oldest industries in the Indian economy – storehouse and carrier of traditional skills, heritage and culture.
- It contributes 2.3% to IndianGross Domestic Product, 7% of Industrial Output and 12% to the export earnings of India.
- India is the 2nd largest producer of MMF Fibre.
- India became the second-largest manufacturer of Personal Protective Equipment (PPE) kits in the world.
- India is the 6th largest producer of Technical Textiles
- Largest producer of cotton & jute in the world.
- India is also the second largest producer of silk in the world.
- 95% of the world’s hand woven fabric comes from India.
Initiative of government of India
- Ministry of Textiles has developed Craft Villages in select Handloom and Handicraft pockets of the country for integrated sustainable development of Handlooms, crafts and tourism with the combined effort of both the State and the Central Governments.
- The Cabinet Committee on Economic Affairs approved the proposal for mandatory packaging of foodgrains and sugar in jute material for the Jute Year 2020-21. It provide for 100% reservation of the foodgrains and 20% of sugar to be compulsorily packed in jute bags.
- The Union Cabinet has given its approval to introduce the Production-Linked Incentive (PLI) Scheme in Textiles Products (Man-Made Fibre Segments and Technical Textiles) for Enhancing India’s Manufacturing Capabilities and Enhancing Exports – Atmanirbhar Bharat.
- National Technical Textiles Mission (NTTM) to be set up: With the four-year implementation period from 2020-21 to 2023-24
- The NTTM will (i) focus on research and innovation and indigenous development of speciality fibres (ii) promote awareness amongst users, bring in large scale investments, and encourage high-end technical textiles products (iii) enhance India’s exports of technical textiles by 2024 through focused attention on the highest traded products (iv) create a robust human resource in the country, both through specialized higher education and skill development of technical manpower of the country.
Upgradation Fund Scheme:
There is a provision of one-time capital subsidy for eligible benchmarked machinery
The Ministry of Textiles is implementing the Integrated Processing Development Scheme (IPDS) to enable the textile processing sector in meeting environmental standards. This will be achieved through appropriate technology including marine, riverine and Zero Liquid Discharge (ZLD).
Infrastructure Development Scheme:
- Scheme for Integrated Textile Park (SITP)
- Integrated Processing Development Scheme (IPDS)
- Scheme for Additional Grant for Apparel Manufacturing Units under SITP (SAGAM)
- Scheme for Incubation in Apparel Manufacturing (SIAM)
- Scheme for Textile Industry Workers’ Accommodation (STIWA)
Skill Development Scheme:
The Government has approved a skill development scheme titled SAMARTH, a Scheme for Capacity Building in Textile Sector, covering the entire value chain of the textile sector, excluding Spinning and Weaving in the organized sector, on pan India basis, including the state of Tripura, for a period of three years from 2017-18 to 2019-20, with an outlay of INR 1300 cr to train 10 lakh, persons.
A total of 242.5 cr has been allocated for the SAMARTH scheme.
Challenges of the Textiles Sector
- Highly fragmented:The Indian textile industry is highly fragmented and is being dominated by the unorganized sector and small and medium industries.
- Outdated Technology: failures to meet global standards in the highly competitive market.
- Tax Structure Issues:The tax structure GST makes the garments expensive and uncompetitive in domestic as well as international markets.
- Rising labour wages and workers’ salaries.
- Stagnant Exports:The export from the sector has been stagnating and remained at the USD 40-billion level for the last six years.
- Lack of Scale:The apparel units in India have an average size of 100 machines which is very less in comparison with Bangladesh, which has on an average of at least 500 machines per factory.
- Lack of Foreign Investment:Due to challenges given above the foreign investors are not very enthusiastic about investing in the textile sector which is also one of the areas of concern.
- Though the sector has witnessed a spurt in investment during the last five years, the industry attractedForeign Direct Investment (FDI) of only USD 3.41 billion from April 2000 to December 2019.
- All levels of textile value chain i.e. from fibre/ filament to garment/speciality fabrics manufacturing at large scale are available.
- India has an extensive custom of textile and apparel manufacturing with infrastructure spread across the country in numerous clusters.
- Fabric processing set-ups are for all kind of natural, synthetic and speciality textiles.
- Opportunities for investments in retail brands are immense.
- Need for scale:Scale is important to bring down the cost of production, improve productivity levels to match global benchmarks and, thereby, cater to large orders from markets like the US.
- Need For Environment Friendly Manufacturing Process:With growing awareness on social and environmental issues, global buyers are looking for more compliant, sustainable and large factories to place bulk orders; these are available in China and Vietnam. Such facilities need to be created in India too.
- Specialisation:India has built a strong ecosystem in cotton apparels, but is lagging in man-made fiber (MMF) apparel manufacturing. Global fashion is moving towards blends.
- The US annually imports around Rs. 3-lakh crore worth of MMF apparels. In this mega market, India has a share of just 2.5%.
- PLI incentivises the manufacturing of MMF apparel and fabrics.
- Integrated companies can invest in greenfield projects to make MMF apparel and compete with strong players like China and Vietnam in cost.
- Competitiveness:To compete with low-cost competitors, India needs to be ultra-efficient in pricing. With assured production incentives in the PLI scheme, entrepreneurs with growth aspirations will boldly invest in integrated smart factories. This can help achieve world-class productivity and manufacturing efficiency.
- Attracting capital:Only 10% of the Indian textile sector is listed on the stock exchange.
2. No UAPA in Haridwar hate speech case
UPSC Syllabus: Mains: GS Paper-II – Polity & Governance | GS Paper IV – Ethics, Integrity & Aptitude
Sub Theme: Hate Speech & Violence| Concerns – Hate Speech | UPSC
The relation between speech and violence
- There is considerable agreement amongst scholars that speech play a critical role in the path of escalation towards violence. Speech features prominently in the jurisprudence of the U.N. war crimes tribunal for Rwanda, for example, and in historical accounts of the months and years preceding many other genocides.
- According to Jonathan Maynard hate speech can become an important catalyst for mass violence. Speech features prominently in the jurisprudence of the U.N. war crimes tribunal for Rwanda.
Our behaviour is rooted in the information that we hold.
Concerns due to Hate Speech
- Violates right to life with dignity of others.
- Violation of one’s duty
- Threaten constitutional fraternity; loss of social capital and unity in diversity
- Communal violence; riots
- Marginalization of vulnerable section.
- Violation of dignity of women..
- Majoritarianism -> incitement to violence ->internal security threat
- Erodes the idea of India
How to pre-empt speech from causing violence
- Social Contact: In 1954, Gordon Allport published The Nature of Prejudice, which contained, among other analyses of inter-group behaviour, a theory on prejudice. Specifically, it contained a hypothesis on how to reduce prejudice among majority and minority groups, popularly called the ‘Contact Hypothesis’. The idea was simple: contact (with some caveats) reduces prejudice. Subsequently, decades of social psychology research arrived at a far simpler idea: friendship reduces prejudice.
- Ashutosh Varshney explains in his book Ethnic Conflict and Civic Life, that for peace and social cohesion between majority and minority community that must be civic engagement and redefining the ‘us’.
- Counter Speech – counter speech can counter hate speech
A case study
In Kenya, for example, the cast of the popular television drama Vioja Mahakamani produced four episodes in 2012 on dangerous speech, designed to inoculate audiences against such speech. They were independently evaluated by scholars at the University of Pennsylvania’s Annenberg School of Communications, who found that Kenyans who watched the episodes were more sceptical about inflammatory speech than those who had not watched the episodes.
Previous year UPSC mains Questions
- “Hatred is destructive of a person’s wisdom and conscience that can poison a nation’s spirit.’ Do you agree with this view? Justify your answer. [GS Paper 4, 2020]
- Biased media is a real threat to Indian democracy. [Essay, 2019]
3. Under Modi 2.0, a course-corrected foreign policy
UPSC Syllabus: Mains: GS Paper-II – International Relations.
Sub Theme: Major development around the world | Shift in India’s foreign policy | UPSC
Context: The Ministry of External Affairs appears to have taken back the reins, with an emphasis on substance over style.
Major Developments around the World
- Power Shift in United States – US-Europe Relations
- Leadership change in the United States is unlikely to bring about a major power shift in the international arena.
- Despite Biden’s promise to invigorate the U.S.-Europe axis, Europe has turned its back on the U.S. and revived its China links, by ‘concluding in principle the negotiations for an EU-China Comprehensive Agreement on Investment (CAI).
- About CAI
- It will replace the 25 bilateral investment treaties that individual EU members signed with China before 2009.
- The CAI will ensure that EU investors achieve better access to a fast growing 1.4 billion consumer market, and that they compete on a better level playing field in China.
- The CAI goes beyond market access and investment protection to include provisions on environment and labor rights protection.
- On EU-China Comprehensive Agreement on Investment (CAI), the author says that any hope of United States or India to isolate China has been shattered by Europe through this deal.
- Now U.S. and India seems to be isolated rather than China and this is more problematic for India considering border tensions with China on the eastern Ladakh region.
- Stronger China – (Problem for India)
- The year 2021 begins on a triumphal note for China and China’s Supreme Leader, Xi Jinping. China is about the only major country which had a positive rate of growth at the end of 2020, and its economy is poised to grow even faster in 2021.
- Militarily, China has further strengthened itself, and now seeks to dominate the Indo-Pacific Ocean with its announcement of the launch of its third aircraft carrier in 2021. Simultaneously, China is seeking to strengthen its military coordination with Russia.
- All these developments increase China’s intransigence (refusal to change one’s view) on its domestic (Hong Kong and Uighur) and international issues (Chinese aggression in Ladakh) and China will be ready to apply heavy-handed approach for such matters.
- News emanating from China is that President Xi will further cement his position, both as Party leader and as President during 2021.
- China is, hence, unlikely to concede any ground to its opponents across the world in 2021, a fact that India will need to reckon with. India cannot expect any Chinese concessions in Eastern Ladakh.
- Economy First for Europe
- 2021 will be dominated by strong authoritarian leaders like Xi Jinping in China, Vladimir Putin in Russia, and Recep Tayyip Erdoğan in Turkey. International politics may not be very different from that in 2020, but it is unlikely that the Compact of Democracy would emerge stronger.
- Europe, minus Britain following Brexit, and the retirement of Germany’s Angela Merkel, could become even less relevant in world affairs.
- The China-EU Investment Treaty which saw Europe capitulating to China’s brandishments is an indication that Europe values its economy more than its politics.
- Changes in Eurasia
- Major changes are afoot in Eurasia and West Asia which could lead to significant shifts.
- Russia is beginning to display greater interest in the affairs of countries on its periphery and, together with strengthening ties with China and reaching an entente with Turkey.
- This means reduced interest for countries like India by Russia. This may jeopardise India-Russia relations based on growing Russia-China relations and India-US relations.
- However, there is certain hope for India due to Russia’s Greater Eurasian Partnership which is Russia’s foreign policy to counter China’s BRI.
- Greater Eurasian Partnership’s main objective is to connect Russia and the EAEU to China’s Belt and Road Initiative & to move beyond China and connect the Eurasian Economic Union Countries with Iran, India, and Southeast Asia.
- India can use this opportunity to improve its ties with Russia and balance China by integrating at an economic level at EAEU, RIC Trilateral & SCO.
- Changes in West Asia
- In West Asia, the Abraham Accords, leading to a realignment of forces in the Arab world, have sharpened the division between the Saudi Bloc and Iran-Turkey.
- Despite the hype surrounding the Abraham Accords (agreement to normalize diplomatic relations of Israel with UAE & Bahrain), risk of confrontation between Iran and Israel has not reduced.
- This does pose problems for India, since both Iran and Israel have cordial relations with India. Meanwhile, China demonstrates a willingness to play a much larger role in the region, including contemplating a 25-year strategic cooperation agreement with Iran.
- This signals that China is willing to play a much larger role in West Asian politics by using the theatre to its economic advantage.
- Saudi Arabia could find the going difficult in 2021, with a Biden Administration taking charge in Washington. The healing of wounds among the Sunni Arab states in the region should be viewed as a pyrrhic victory (victory which inflicts devastating toll on the victor that tantamount to defeat) at best for Saudi Arabia.
- The Abraham Accord could further sharpen hostilities between Sunni and Shia states and this flux might be used by Iran to sharpen and increase its sphere of influence by enhancing its nuclear capabilities.
- Iran may be confident that United States may not be in a position to challenge its nuclear armament at this juncture due to internal problems of United States caused due to Donald Trump’s unwillingness for change in administration despite his defeat in US Presidential elections.
- Problems for an Isolated India
- No breakthrough in Sino-Indian relations has, or is likely to occur, and the confrontation between Indian and Chinese armed forces is expected to continue. India currently plays no significant role in West Asia.
- India-Iran relations today lack warmth. In Afghanistan, India has been marginalised as far as the peace process is concerned.
- While India’s charges against Pakistan of sponsoring terror have had some impact globally, it has further aggravated tensions between the two neighbours. This has overall helped Pakistan to cement its relations with China.
- While hostility between India and Nepal appears to have reduced lately, relations continue to be strained.
- Through a series of diplomatic visits, India has made valiant efforts to improve relations with some of its neighbours such as Bangladesh, Myanmar and Sri Lanka, but as of now worthwhile results is not evident.
- In case conflict between India and China increase, India’s neighbours may not shy away from picking up a side mainly due to economic ties which China has inculcated with India’s neighbours over a period of years.
Shift in India’s foreign policy objectives from Past
India’s foreign policy objectives are to widen its sphere of influence, enhance its role across nations, and make its presence felt as an emerging power in an increasingly disruptive global system and ensure its strategic autonomy. It is a moot point though whether any of these objectives has been achieved. Today, India’s voice and counsel are seldom sought, or listened to and this is a far cry from what used to happen previously. India will serve as the president of the powerful UN Security Council for the month of August, 2021, but if it is to make a real impact, it must be seen to possess substantial weight to shape policies, more so in its traditional areas of influence.
Problems with India’s Diplomatic Relations
- Currently, India remains isolated from two important supranational bodies of which it used to be a founding member, viz., the Non-Aligned Movement (NAM) and the South Asian Association for Regional Cooperation (SAARC).
- Efforts to whip up enthusiasm for newer institutions such as the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), have hardly been successful.
- India has opted out of the Regional Comprehensive Economic Partnership (RCEP) (a majority of Asian countries are members), and failed to take advantage of the RIC, or the Russia, India and China grouping, even as relations with Russia and China have deteriorated.
- On the other hand, India’s foreign policy imperatives, across Asia and South Asia in particular, today seem to be a mixture of misplaced confidence, sometimes verging on hubris (as in the case of Nepal), a lack of understanding of the sensitivities of neighbours such as Bangladesh and long-time friends (such as Vietnam and Iran), and according excessive importance to the policy needs and pressures of nations such as the U.S.
- There is possibly a misplaced perception in much of Asia that the India of today is not unwilling to sacrifice its strategic autonomy under U.S. pressure.
Way Forward for India’s Diplomatic and International Relations
What is needed for India is to adopt workable and prudent policies without sacrificing strategic autonomy, pursuit of realistically achievable objectives, and above all, demonstration of continuity of policy, irrespective of changes in the nature of the Administration. The author says that these may be time consuming, but are a surer recipe for success in attaining foreign policy objectives.