PYQ Relevance:
Q) Quadrilateral Security Dialogue (Quad) is transforming itself into a trade bloc from a military alliance, in present times Discuss. (UPSC CSE 2020) |
Mentor’s Comment: UPSC mains have always focused on the Quadrilateral Security Dialogue (Quad) is transforming itself into a trade bloc (2020) and WTO has to survive in the present context of ‘Trade War’ (2018).
During Prime Minister Narendra Modi’s U.S. visit on February 13, 2025, India and the U.S. agreed to begin talks on a multi-sector Bilateral Trade Agreement (BTA) by fall 2025. As both countries are WTO members, the agreement must follow WTO rules. While details remain unclear, the agreement’s content matters more than its label.
Today’s editorial discusses how the ongoing Bilateral Trade Agreement (BTA) negotiations may affect both countries. This information is useful for GS Paper 3 in the UPSC Mains exam.
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Let’s learn!
Why in the News?
Since both the U.S. and India are members of the World Trade Organization, their trade agreements must follow WTO rules.
What are the key legal challenges India and the U.S. may face while negotiating a Bilateral Trade Agreement (BTA) under WTO law?
- Violation of the Most Favoured Nation (MFN) Principle: WTO law mandates that any trade advantage granted to one member must be extended to all members (Article I of GATT). A BTA providing preferential tariffs only to India or the U.S. may violate this principle.
- Example: If the U.S. lowers tariffs on Indian textiles under the BTA without extending the same benefit to other WTO members like China, it breaches the MFN principle.
- Meeting the “Substantially All Trade” Requirement: Article XXIV.8(b) of GATT requires that Free Trade Agreements (FTAs) must cover “substantially all trade.” A limited-scope BTA focusing only on select sectors (e.g., pharmaceuticals or agriculture) may not satisfy this condition.
- Example: If the India-U.S. BTA only includes technology and defense products while excluding key areas like agriculture, it may not qualify as a valid FTA under WTO law.
- Notification and Transparency Obligations: WTO members must notify the organization of any new regional trade agreements (RTAs) or BTAs and demonstrate compliance with Article XXIV of GATT. Failure to provide transparent schedules may lead to legal disputes.
- Example: If India and the U.S. do not submit a clear implementation timeline for tariff reductions under an interim BTA, other WTO members could challenge the agreement.
- Bound Tariff Commitments: Both countries have pre-committed to maximum tariff limits (bound tariffs) under WTO rules. Any preferential treatment exceeding these limits may violate their commitments.
- Example: If India agrees to reduce tariffs on American agricultural imports below its bound tariff rates, it could be accused of breaching its WTO commitments.
- Misuse of the “Interim Agreement” Clause: Article XXIV.5 allows “interim agreements” only if they lead to a full FTA within a reasonable period (usually 10 years). Using an interim BTA to delay full liberalization may face legal scrutiny.
- Example: If the India-U.S. BTA remains a partial agreement for an extended period without progressing toward an FTA, it could be deemed a violation of WTO norms.
Why is the “most favoured nation” (MFN) principle significant in evaluating the legality of the proposed India-U.S. BTA?
- Prevents Discrimination Between Trading Partners: The MFN principle under Article I of GATT ensures that any trade advantage (e.g., lower tariffs) given to one WTO member must be extended to all members. A BTA offering exclusive benefits violates this core principle.
- Example: If the U.S. reduces tariffs on Indian pharmaceuticals but does not extend the same reduction to other countries like Vietnam, it breaches the MFN rule.
- Limits Preferential Bilateral Deals: WTO law only allows exceptions to the MFN rule through comprehensive trade agreements covering “substantially all trade” under Article XXIV of GATT. A narrowly focused BTA risks legal challenges.
- Example: If India and the U.S. sign a BTA that only includes high-tech products while excluding major sectors like agriculture, it may not qualify for an MFN exemption.
- Ensures Transparency and Fair Competition: The MFN principle promotes a transparent, rule-based trading system where no country receives hidden advantages, ensuring fair market access for all WTO members.
- Example: If India provides exclusive tariff cuts on American dairy products without offering similar terms to New Zealand, it would violate WTO transparency obligations.
- Prevents Trade Fragmentation: Upholding the MFN principle avoids trade fragmentation by ensuring consistent rules for all members. Bilateral deals that bypass MFN could undermine the multilateral trade system.
- Example: If the U.S. grants Indian textiles preferential access through a BTA but not to countries like Bangladesh, it could distort global supply chains.
- Requires WTO Notification and Review: Any departure from the MFN principle through a BTA must be notified to the WTO and subjected to legal scrutiny under Article XXIV to confirm its compliance.
- Example: If the India-U.S. BTA is not notified to the WTO or lacks a clear transition plan toward an FTA, it may be legally contested by other members like China or the EU.
How can the proposed BTA be structured as an “interim agreement” under Article XXIV of the GATT without violating WTO norms?
- Commitment to Full Free Trade Area (FTA) or Customs Union: The BTA must outline a clear plan to eventually form a Free Trade Area (FTA) or Customs Union within a reasonable time frame (generally within 10 years).
- Example: The India-Mauritius Comprehensive Economic Cooperation and Partnership Agreement (CECPA) started as an interim agreement with the goal of expanding into a broader trade framework.
- Transparency and Notification to WTO: The parties must notify the WTO of the interim agreement and submit detailed information on trade coverage, timelines, and implementation steps for review by the Committee on Regional Trade Agreements (CRTA).
- Example: The European Union (EU)-UK Trade and Cooperation Agreement was notified to the WTO during the Brexit transition, ensuring compliance with Article XXIV.
- Non-Discriminatory Transition: The interim agreement must not create unjustifiable discrimination against other WTO members, and the removal of trade barriers should cover substantially all trade between the parties.
- Example: The US-Mexico-Canada Agreement (USMCA) complies with this by covering a broad range of goods and services, ensuring that trade barriers are progressively reduced.
Way forward:
- Ensure Comprehensive Coverage and Timely Transition: Design the BTA to cover substantially all trade sectors with a clear roadmap toward a full Free Trade Area (FTA) within the 10-year WTO guideline to comply with Article XXIV.
- Enhance Transparency and Legal Compliance: Notify the WTO promptly, providing detailed schedules on tariff reductions and implementation timelines, ensuring non-discrimination and regular compliance reviews by the Committee on Regional Trade Agreements (CRTA).
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Note4Students
From UPSC perspective, the following things are important :
Mains level: Regulation in education institutions;
Why in the News?
Various groups have raised concerns about the Draft UGC Regulations, 2025, which outline qualifications for appointing and promoting university teachers and aim to maintain standards in higher education.
What are the primary reservations expressed regarding the Draft UGC Regulations, 2025?
- Reduced Role of State Executives in V-C Appointments: The draft regulations limit the State government’s involvement in the search-cum-selection process, despite State universities being funded and established by State legislatures. Example: In the Gambhirdan K. Gadhvi vs State of Gujarat (2019) case, the Supreme Court ruled that State executive members cannot be part of the V-C selection committee, reducing their influence.
- Broadening of Eligibility Criteria for Vice-Chancellors: Expanding the eligibility to include individuals from public policy, government, and private sectors may dilute academic rigor and expertise. Example: Between 2010 and 2018, the UGC regulations required 10 years of professorship or equivalent academic experience, ensuring a focus on research-based qualifications.
Why has the Supreme Court of India ruled against the involvement of the State executive in the selection process of Vice-Chancellors?
- Ensuring Compliance with UGC Regulations: The Court upheld the UGC’s 2018 regulations, which specify that only a UGC representative, not a State executive member, should be included in the search-cum-selection committee. Example: In Professor (Dr.) Sreejith P.S vs Dr. Rajasree M.S. (2022), the Court invalidated the V-C’s appointment because the selection process did not follow UGC norms.
- Preventing Arbitrary Appointments: The Court held that allowing State executives to influence the selection process could lead to biased or politically motivated appointments, compromising merit-based selection. Example: In Dr. Premachandran Keezhoth vs The Chancellor, Kannur University (2023), the Court declared the V-C appointment void due to the involvement of the State executive, reinforcing the need for an independent selection process.
- Preserving Autonomy and Neutrality: The Court emphasized that the Vice-Chancellor’s appointment process should be free from political or administrative influence to maintain the academic institution’s autonomy and impartiality. Example: In Gambhirdan K. Gadhvi vs State of Gujarat (2019), the Court ruled that State executive members cannot be part of the selection committee to prevent undue influence.
Who are the key stakeholders affected by the proposed changes in the search-cum-selection process?
- State Governments and State Universities: The reduced role of State executives limits their ability to shape the leadership of State-funded universities, affecting regional educational priorities and innovation. Example: State governments argue that universities play a critical role in addressing local development needs, which may be overlooked if the selection process is centralized.
- University Governance Bodies: University executive bodies lose direct influence over the V-C selection, reducing their ability to align leadership with institutional goals and academic vision. Example: Central University statutes follow a similar model where the Chancellor, UGC, and university bodies are key decision-makers, excluding executive government officials.
- Academic and Non-Academic Professionals: The broadened eligibility criteria open leadership positions to individuals from non-academic backgrounds, changing the traditional focus on academic excellence. Example: The draft regulations allow candidates with experience in public policy or industry, which some argue may dilute the focus on academic scholarship.
Which options should be suggested to balance the State executive’s concerns? (Way forward)
- State Nominee with Specific Criteria: Permit the State executive to nominate one member to the search-cum-selection committee, provided the nominee is a distinguished academic with no active government role. Example: Similar to the Union Public Service Commission (UPSC) guidelines, the nominee could be a retired academic leader who is free from political affiliations.
- Increased Consultation Mechanism: Introduce a pre-selection consultation phase where the State executive provides inputs on regional needs without directly influencing the final selection. Example: The university executive could hold formal discussions with the State to ensure the selected V-C aligns with local educational and developmental goals.
Mains PYQ:
Q The quality of higher education in India requires major improvement to make it internationally competitive. Do you think that the entry of foreign educational institutions would help improve the quality of technical and higher education in the country. Discuss. (UPSC IAS/2015)
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Note4Students
From UPSC perspective, the following things are important :
Mains level: Issues related to employment;
Why in the News?
According to PLFS reports, employment in India is increasing, but the real wages of salaried workers have remained unchanged since 2019.
What are the key reasons behind the stagnation of real wages for salaried workers in India since 2019?
- Inflation Outpacing Wage Growth: Rising consumer prices (CPI) have eroded the purchasing power of salaries despite nominal wage increases. For example, Real wages for salaried workers in India were 1.7% lower in the June 2024 quarter compared to the June 2019 quarter (PLFS data).
- Excess Labour Supply and Declining Returns to Education: An oversupply of qualified workers has reduced the premium for higher education, limiting salary growth. For example, the share of self-employed workers increased from 53.5% in 2019-20 to 58.4% in 2023-24, indicating a shift from salaried roles due to a lack of opportunities.
- Depressed Private Sector Investment: Reduced corporate investment leads to slower job creation and wage stagnation. For example, India’s private sector investment-to-GDP ratio declined from 28% in 2011-12 to 21.1% in 2022-23 (Reserve Bank of India).
- Policy Shocks (Demonetisation and GST Impact): Economic disruptions from demonetisation (2016) and GST (2017) weakened small and medium enterprises (SMEs), affecting formal employment. For example, Formal employment fell, and salaried employment as a share of total workers dropped from 22.9% in 2019-20 to 21.7% in 2023-24 (PLFS data).
- Shift Toward Informal and Contractual Work: Companies increasingly rely on temporary and gig workers, offering lower pay and fewer benefits. For example, Casual labour wages increased by 12.3% (real terms) between 2019 and 2024, while salaried wages stagnated, reflecting a rise in informal work.
Why is the increase in wages for casual labour not considered a net positive for the economy?
- Lower Productivity Contribution: Casual labour typically involves low-skilled, irregular work with limited productivity gains. While wages may rise, the overall economic output does not grow proportionately.
- For example, the agriculture sector, which employs a large share of casual labour, contributed only 16% to India’s GDP in 2023-24 despite employing over 45% of the workforce (Economic Survey 2023-24).
- Informal Nature of Work: Casual jobs lack social security, health benefits, and job stability, leading to long-term economic insecurity despite wage increases.
- In India, 93% of the workforce remains in the informal sector with minimal social protection, contributing to economic vulnerability (ILO report, 2023).
- Wage-Price Spiral Risk: Rising wages in low-skilled sectors can increase the cost of goods and services, driving inflation without improving living standards.
- For instance, wage increases for casual farm labour contribute to higher food prices, intensifying retail inflation (CPI rose by 7.44% in July 2024, RBI).
- Limited Skill Development and Upward Mobility: Casual work offers fewer opportunities for training or career advancement, trapping workers in low-wage cycles despite nominal wage growth.
- The Periodic Labour Force Survey (2023-24) shows that only 2.4% of India’s workforce received formal vocational training, limiting skill-based upward mobility.
- Depressed Consumption and Savings Rates: Casual labourers typically earn subsistence-level wages, leaving little room for savings or significant consumption, which hampers long-term economic growth.
- Household savings as a share of GDP declined from 23.6% in 2011-12 to 18.1% in 2022-23, reflecting weak wage-driven consumption (RBI report).
When did real wages for self-employed workers begin to recover after the pandemic?
Real wages for self-employed workers in India began to recover after the pandemic in the quarters. Despite this recovery, as of the June 2024 quarter, real wages remained 1.5% lower than in the June 2019 quarter.
- Rural vs. Urban Disparities:
- Rural Areas: In rural regions, self-employed workers experienced a 3.02% increase in real wages during the same period.
- Urban Areas: Conversely, urban self-employed workers saw a decline of 5.2% in real wages compared to pre-pandemic levels.
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How have policy decisions like demonetization and the implementation of GST affected wage growth and employment patterns?
- Disruption of Informal and Small-Scale Enterprises: Both demonetisation and GST disrupted cash-dependent small and medium enterprises (SMEs), leading to job losses and reduced wage growth in the informal sector. Example: The share of salaried workers declined from 22.9% in 2019-20 to 21.7% in 2023-24 (PLFS data), indicating a shift away from formal employment.
- Shift Toward Informal and Gig Work: Policy shocks accelerated the transition from stable salaried jobs to informal, gig-based, and self-employed work, which generally offers lower pay and fewer benefits. Example: The share of self-employed workers increased from 53.5% in 2019-20 to 58.4% in 2023-24, reflecting a rise in informal employment (PLFS data).
- Slower Wage Growth and Employment Stagnation: Compliance burdens from GST and cash shortages from demonetisation constrained business operations, leading to slower wage increases across sectors. Example: Real wages for salaried workers were 1.7% lower in June 2024 compared to June 2019 (PLFS data), indicating stagnant wage growth despite economic recovery.
Way forward:
- Enhance Formal Employment and Skill Development: Promote labour-intensive sectors and incentivize formal job creation through targeted tax benefits and reduced compliance burdens.
- Strengthen Social Security and Wage Policies: Implement comprehensive social protection schemes for informal workers to ensure income stability and healthcare benefits.
Mains PYQ:
Q Besides the welfare schemes, India needs deft management of inflation and unemployment to serve the poor and the underprivileged sections of the society. Discuss. (UPSC IAS/2022)
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: India's Arms Imports, Make in India
Why in the News?
India remained the second-largest arms importer, despite a 9.3% decline in imports between 2015-19 and 2020-24 a/c to the Stockholm International Peace Research Institute (SIPRI) Report.
About SIPRI
- The SIPRI is an independent organization established in 1966, based in Stockholm, Sweden, conducting research on conflict, arms control, and disarmament.
- SIPRI provides comprehensive data on global arms imports, exports, and military expenditures, tracking defense trends and geopolitical conflicts worldwide.
- It analyzes ongoing wars, nuclear proliferation, cybersecurity threats, and environmental security, offering policy recommendations for international peace and stability.
- SIPRI publishes flagship reports such as the SIPRI Yearbook, Arms Transfers Database, and Military Expenditure Database, which are widely used by governments, researchers, and policymakers.
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India’s Arms Imports: Trends and Shifts
- India remained the world’s second-largest arms importer, despite a 9.3% decline in imports from 2015-19 to 2020-24.
- Russia accounted for 36% of India’s arms imports in 2020-24, significantly LOWER than 55% in 2015-19 and 72% in 2010-14.
- India has reduced dependence on Russia and increased arms deals with France, the U.S., and Israel.
- India became France’s largest arms importer (28%), with 36 Rafale fighter jets and six Scorpene submarines already contracted.
- India is finalizing agreements for 26 Rafale-M jets and three additional Scorpene submarines.
Global Arms Trade Highlights
- Ukraine – The Largest Importer: Due to the ongoing war, Ukraine’s arms imports surged nearly 100 times in 2020-24 compared to 2015-19.
- The U.S. accounted for 45% of Ukraine’s imports, followed by Germany (12%) and Poland (11%).
- U.S. dominance in exports: The U.S. expanded its global arms market share to 43%, reinforcing its position as the top exporter.
- Russia’s decline: Russian arms exports fell by 64%, dropping to 7.8% of global exports, behind France (9.6%).
- European rearmament: European arms imports surged by 155% in response to rising security threats from Russia.
- Pakistan’s growing imports: Pakistan’s arms imports grew by 61%, with China supplying 81% of its weapons, up from 74% in 2015-19.
- China’s self-reliance: For the first time since 1990-94, China dropped out of the top 10 arms importers, reflecting its expanding domestic defense industry.
- Italy’s rise in arms exports: Italy climbed from 10th to 6th place, with a 4.8% share of global arms exports.
PYQ:
[2020] What is the significance of Indo-US defence deals over Indo-Russian defence deals? Discuss with reference to stability in the Indo-Pacific region. |
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Preventive Detention
Why in the News?
The Supreme Court recently ruled against the Preventive Detention of a couple in Nagaland, emphasizing that constitutional safeguards must be strictly followed, and preventive detention cannot override fundamental rights.
Court’s Key Observations: Preventive Detention as a ‘Draconian Measure’
- Violation of Rights: The court ruled that depriving individuals of liberty without trial requires strict adherence to legal safeguards.
- Lack of Justification: Authorities failed to prove that the detainees posed a credible future threat, rendering the detention unjustified.
- Language Barrier: Detention orders were in English, a language the detainees did not understand, violating their right to be informed in an accessible manner.
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What is Preventive Detention?
- Preventive detention is the detention of an individual without trial to prevent them from engaging in activities that may threaten national security, public order, or foreign relations.
- Unlike punitive detention, it aims to prevent future crimes rather than punish past offenses.
- Under Article 22 of the Constitution, preventive detention is allowed but with safeguards:
- Time Limit: Maximum three months, extendable only if an Advisory Board (comprising High Court judges) approves.
- Rights of the Detainee: Must be informed of reasons for detention (unless against public interest) and given the right to challenge it.
- Judicial Review: Courts can strike down unjustified detentions.
- Major Preventive Detention Laws:
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- Public Safety Act (PSA), 1978: Used in J&K; detention up to two years.
- National Security Act (NSA), 1980: Up to one year for threats to national security.
- Prevention of Illicit Traffic in Narcotic Drugs and Psychotropic Substances Act (PITNDPS Act), 1988: For drug trafficking cases.
- Conservation of Foreign Exchange and Prevention of Smuggling Activities Act (COFEPOSA), 1974: For economic offenses & smuggling.
Supreme Court’s Landmark Rulings
- Ameena Begum Case (2023): Preventive detention is an exception, not a routine measure.
- Ankul Chandra Pradhan Case (1997): It aims to prevent threats, not punish individuals.
- Harikisan vs Maharashtra (1962): Detention orders must be in a language the detainee understands.
- Gold Smuggling Case (2024): Authorities must consider bail conditions before imposing detention.
PYQ:
[2021] With reference to India, consider the following statements:
- Judicial custody means an accused is in the custody of the concerned magistrate and such an accused is locked up in a police station, not in jail.
- During judicial custody, the police officer in charge of the case is not allowed to interrogate the suspect without the approval of the court.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2 |
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Exercise KHANJAR-XII
Why in the News?
The 12th edition of the India-Kyrgyzstan Joint Special Forces Exercise KHANJAR-XII is set to be held in Kyrgyzstan.
About Exercise KHANJAR-XII
- KHANJAR-XII is the 12th edition of the India-Kyrgyzstan Joint Special Forces Exercise, aimed at enhancing counter-terrorism and special operations capabilities.
- It is a bilateral military exercise held annually since 2011, alternately hosted by India and Kyrgyzstan.
- The 2025 edition is being conducted in Kyrgyzstan.
- Participants:
- Indian Contingent: Parachute Regiment (Special Forces).
- Kyrgyzstan Contingent: Kyrgyz Scorpion Brigade.
- The primary objective is to strengthen military cooperation, improve joint operational capabilities, and enhance interoperability between the two nations’ Special Forces.
Key Features:
- Counter-Terrorism Focus: Training in urban and high-altitude warfare to counter modern security threats.
- Special Forces Interoperability: Strengthening coordination in joint military operations.
- Mountain Warfare & Survival Skills: Enhancing operational effectiveness in challenging terrains.
- Military Technology Exchange: Sharing expertise on weapons systems, surveillance, and intelligence gathering.
- Reinforcing India’s Central Asia Outreach: Strengthening India’s engagement with Central Asian nations under its Connect Central Asia policy.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Minimum Dietary Diversity (MDD) Indicator
Why in the News?
The United Nations Statistical Commission has introduced a new global indicator on Minimum Dietary Diversity (MDD) to monitor progress towards Sustainable Development Goal (SDG) 2: Zero Hunger.
About Minimum Dietary Diversity (MDD) Indicator
- The MDD indicator measures whether individuals consume a variety of foods within a 24-hour period to assess dietary quality.
- It tracks progress toward Sustainable Development Goal 2 (Zero Hunger) and helps identify micronutrient deficiencies in populations.
- It was adopted by the United Nations Statistical Commission at its 56th session (March 4-7, 2025, New York) and developed by Switzerland, FAO, UNICEF, and WHO.
- The indicator records whether an individual has consumed at least 5 out of 10 food groups in the last 24 hours.
- It is measured for children (6-23 months old) and women of reproductive age (15-49 years) to ensure adequate nutrition.
- 10 Food Groups: It monitors intake from grains, white roots and tubers, pulses, nuts and seeds, milk products, meat, poultry and fish, eggs, dark green leafy vegetables, vitamin A-rich fruits and vegetables, and other vegetables and fruits.
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- It addresses hidden hunger, malnutrition, and non-communicable diseases by promoting nutrient-rich diets.
- The indicator strengthens long-term diet monitoring and ensures dietary diversity remains a global priority beyond 2030.
SDG 2: Zero Hunger – The Larger Goal
- Adopted in 2015, SDG 2 aims to eliminate hunger and promote sustainable agriculture.
- Recognizes interconnections between food security, rural development, and nutrition.
- Hunger remains a global crisis:
- 757 million people faced hunger in 2023 (nearly 10% of the world population).
- One in nine people worldwide sleeps hungry each night.
- 20 million people are at immediate risk of famine in South Sudan, Somalia, Yemen, and Nigeria.
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PYQ:
[2016] Which of the following is/are the indicator/indicators used by IFPRI to compute the Global Hunger Index Report?
- Undernourishment
- Child stunting
- Child mortality
Select the correct answer using the code given below:
(a) 1 only
(b) 2 and 3 only
(c) 1, 2 and 3
(d) 1 and 3 only |
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