Daily Current Affairs 24 February 2024 – IAS Current Affairs

Current Affairs 24 February 2024 focuses on the Prelims-Mains perspective. Major events are :

WTO Investment Facilitation For Development

Source: Business Line
GS II: Important International institutions, agencies and fora- their structure, mandate

Overview

1. News in Brief
2. About WTO Investment Facilitation For Development
3. World Trade Organisation
4. Way Forward

Why in the News?

The Department of Economic Affairs (DEA) is not in favour of India supporting a China-led informal initiative at the WTO on investment facilitation for development (IFD).

News in Brief

• The DEA is very careful about any agreement related to investments with other countries. Even at the bilateral level, it weighs the details carefully, especially rules related to dispute settlement.
• At the WTO, the stakes are higher as there are many countries and it does not want to lose policy space.
• With the 13th WTO Ministerial Conference starting in Abu Dhabi next week, the proponents of IFD, which includes several developed countries, are trying to bring it in formally.
• Although as part of Annexure 4 of the WTO, the pact would be binding on only signatories, India is apprehensive that it would change the scope and structure of the WTO if allowed.

About WTO Investment Facilitation For Development

• The World Trade Organization (WTO) has been exploring the potential benefits of an Investment Facilitation for Development (IFD) initiative.
• This initiative aims to streamline and enhance the process of foreign investment, particularly in developing countries, by reducing barriers and improving transparency

Key points to consider

• Need for Investment Facilitation: Foreign direct investment (FDI) plays a crucial role in the economic development of countries, especially in developing economies. However, the process of attracting and retaining foreign investment can be complex and cumbersome due to various administrative and regulatory hurdles.
• Potential Benefits
  • Increased FDI inflows: By simplifying administrative procedures and enhancing transparency, countries may attract higher levels of foreign investment.
  • Economic development: FDI can stimulate economic growth, create jobs, transfer technology, and contribute to infrastructure development.
  • Enhanced competitiveness: Streamlining investment processes can improve the overall business environment, making countries more competitive in the global market.
• Current Status
  • As of now, discussions on an IFD initiative at the WTO are ongoing.
  • While there is broad support for the idea, negotiations are still underway to determine the scope, objectives, and modalities of such an initiative.
• Challenges and Concerns
  • Sovereignty concerns: Some countries are wary of relinquishing control over their investment policies and fear that international standards may undermine their sovereignty.
  • Capacity constraints: Developing countries may lack the institutional capacity to effectively implement and enforce investment facilitation measures.
  • Equity considerations: There is a risk that investment facilitation measures may primarily benefit large multinational corporations, exacerbating income inequality.
• Examples of Investment Facilitation Measures: Several countries have already implemented investment facilitation measures to attract foreign investment. These measures include:
  • One-stop shops for investment registration and approval.
  • Simplified visa and work permit procedures for foreign investors and skilled workers.
  • Investor-friendly legal frameworks with clear and transparent regulations.
  • Special economic zones offer incentives and preferential treatment to foreign investors.
• It is backed by 130 member countries, as it could encroach on the country’s policy space.

India’s Stand

• India refused to participate in the IFD talks at the WTO because the agenda falls outside the mandate of the global trade body.
• India is also of the view that the proposed IFAD’s appeal and review mechanism is problematic which may put the burden on the government to consult investors on policy matters.
• India believes that if the countries supporting IFD want to negotiate the subject, they should do it outside the WTO at a dierent forum.

World Trade Organisation

• It is the only intergovernmental organisation which regulates international trade.
• The WTO officially commenced under the Marrakesh Agreement, replacing the General Agreement on Tariffs and Trade (GATT).
• It is the largest international economic organisation in the world.

• The WTO Members
  • 164 members
  • 22 observer governments with Afghanistan the latest to join. 
• WTO members do not have to be fully independent states; they need only be a customs territory with full autonomy in the conduct of their external commercial relations.
• The highest decision-making body of the WTO is the Ministerial Conference, which usually meets every two years. 
• Five principles which WTO follows are
  • Non-discrimination
  • Reciprocity
  • Binding and enforceable commitments
  • Transparency
  • Safety values. 

Way Forward

• Investment facilitation has the potential to contribute significantly to the economic development of countries, particularly in the developing world.
• However, it is essential to strike a balance between facilitating investment and safeguarding national interests. Moving forward, stakeholders must continue to engage in constructive dialogue and negotiations at the WTO to develop an IFD initiative that addresses the needs and concerns of all member states.

Piracy Armed Robbery in Indian Ocean

Source: Business Line
GS II:  Security challenges and their management in border areas; linkages of organized crime with terrorism

Overview

1. News in Brief
2. What are the reported incidents?
3. Indian Ocean

Why in the News?

Piracy and armed robbery in the Indian Ocean jumped 20% in 2023.

News in Brief

• The ongoing months-long turbulence in oceans has been captured in a report the Indian Navy released.+
• The monthly average incidents also rose from 13 in 2022 to about 16 in 2023, pointed out the report compiled by the Information Fusion Centre – Indian Ocean Region (IFC-IOR), a regional maritime security centre hosted by the Indian Navy in Gurugram.
• It stated piracy and armed robbery in the Indian Ocean Region (IOR) witnessed a 20 per cent jump in 2023.
• It has 194 incidents recorded last year in comparison to 161 in 2022.

What are the reported incidents?

• Hijacking, kidnapping, illegal boarding, attack, sea robbery, and theft attempted incidents have been put together.
• 78 per cent of reported incidents involved no violence.
• Isolated instances of violence resulted in severe injuries and death of a person.
• While piracy and armed robbery remained suppressed in most regions, South East Asia saw a surge, accounting for 103 incidents.
• East Africa experienced a significant increase, notably in hijacking of dhows off the coast of Somalia and petty thefts off Mauritius.
• Sea theft is the most reported at 43 per cent of total incidents.
• Bulk carriers, tankers, and pleasure crafts are the most targeted vessels.
• Most incidents occurred at night (83 per cent) and involved small groups of perpetrators.

Challenges in the Gulf of Eden

• Ongoing conflicts, hinting between Russia and Ukraine, Israel and Hamas, and recent developments in the Red Sea, indicating Iran-backed Houthi’s attacks on commercial vessels, coupled with the removal of High-Risk Area with effect from January 1, 2023.
• Depleting fishing stocks due to increased illegal, unreported and unregulated (IUU) fishing activities is likely to pose challenges.

Indian Ocean

• The Indian Ocean is a vast body of water bounded by Africa to the west, Asia to the north, Australia to the east, and the Southern Ocean to the south.
• It covers an area of approximately 70.56 million square kilometres, making it the third-largest ocean in the world.

About the Indian Ocean

• Geography
  • The Indian Ocean is characterized by its unique geography, including numerous islands, archipelagos, and important maritime chokepoints.
  • Major features include the Arabian Sea, the Bay of Bengal, the Andaman Sea, and the Red Sea.
• Trade and Commerce
  • The Indian Ocean has historically been a vital maritime trade route, connecting the economies of Africa, the Middle East, South Asia, Southeast Asia, and Australia.
  • It facilitates the transportation of goods, energy resources, and raw materials, with over 80% of global trade by volume and 70% by value being conducted via maritime routes.
• Resource Wealth
  • The Indian Ocean is rich in natural resources, including fish stocks, oil, natural gas, minerals, and marine biodiversity.
  • Countries bordering the Indian Ocean rely on these resources for economic development, food security, and energy production.
• Strategic Importance
  • Due to its strategic location, the Indian Ocean has geopolitical significance for both regional and global powers.
  • Major maritime powers, including India, China, the United States, and various Indian Ocean littoral states, have strategic interests in maintaining security, stability, and freedom of navigation in the region.
• Maritime Security Challenges
  • The Indian Ocean faces various maritime security challenges, including piracy, maritime terrorism, illegal fishing, human trafficking, and environmental degradation.
  • Efforts to address these challenges require cooperation among regional and international stakeholders through initiatives such as joint patrols, information sharing, capacity building, and legal frameworks.
• Regional Cooperation
  • There are several regional organizations and initiatives aimed at promoting cooperation and dialogue among Indian Ocean littoral states.
  • Examples include the Indian Ocean Rim Association (IORA), the Indian Ocean Naval Symposium (IONS), and the Djibouti Code of Conduct.
• Environmental Concerns
  • The Indian Ocean is increasingly vulnerable to environmental threats, including climate change, ocean acidification, pollution, and habitat destruction.
  • These issues pose risks to marine ecosystems, coastal communities, and biodiversity, necessitating concerted efforts to mitigate and adapt to environmental change.

FDI in the Space Sector

Source: PIB
GS III: Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth

Overview

1. News in Brief
2. What is the proposed three-stage FDI for the space sector?
3. What are the advantages of liberalised FDI for the space sector?

Why in the News?

There is no 100 per cent blanket approval for Foreign Direct Investment (FDI) in the space sector.

News in Brief

• The process has been split into three stages to comply with military requirements, said industry veteran JD Patil, founder and chairperson of the Indian Space Association (ISpA). Patil is also a board member of the regulatory body Indian National Space Promotion & Authorisation Centre (IN-SPACe).
• The liberalisation process in the space domain was long overdue and should have happened two decades ago when the US did so to take early advantage.
• India will be able to achieve milestones faster, maybe in 10 to 15 years, due to innovation and an existing ecosystem due to the presence of the Indian Space Research Organisation (ISRO).

What is the proposed three-stage FDI for the space sector?

• There are three clear sorts of stages in the case of this FDI.
• Satellite operations were always available under 100 per cent FDI.
• For manufacturing and operating an entire satellite, up to 74 per cent, investment will be allowed under the automatic route.
  • Anything beyond the limit will have to go through a government approval process.
  • Under the current policy, foreign investment in manufacturing and operating satellites is allowed only with government approval.
• Launch vehicles and their systems and subsystems or the creation of a spaceport, up to 49 per cent FDI will be allowed through the automatic route under the new policy.
  • The cap applies to the building of new spaceports in the country.
  • At present, there is only one spaceport, the one operated by ISRO in Sriharikota.
• Regions from which investment can come would be the USA, Europe, Middle East and Southeast Asia.

What are the advantages of liberalised FDI for the space sector?

• Currently, India’s space industry contributes approximately $7 billion to the national GDP and employs over 100,000 skilled professionals across various disciplines.
• With the implementation of liberalised FDI policies, experts predict a substantial uptick in these figures, with projections suggesting a potential GDP contribution of $50 billion by 2030 and the creation of over 500,000 new jobs in the space sector.

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