IAS Gyan

Daily News Analysis


29th May, 2020


Export blocks

Official trade data:

- Merchandise exports had collapsed by over 60% and imports contracted only slightly less.

- Only Iron ore and Pharmaceuticals clocked positive growth.

- Higher volumes of petroleum exports also did not help due to decline in oil prices.

- Employment-intensive sector such as textiles, garment exports fell 91% in April.

Reason behind trade collapse:

- Lockdowns around the world has dented demand and investment.

- It has disrupted global supply routes and shipping routes.

- Government did not provide any explicit respite for the exporters.


- RBI did provide a special Rs. 15,000 crores liquidity facility for the Exim Bank of India and a six-month extension for importers to complete outward remittances.

- For exporters, the maximum permissible credit period from banks was extended from 12 months to 15 months.


- The World Trade Organization expects trade flows to slip by between 13% and 32% over 2020.

- Countries are becoming inwards and barriers have been raised against medical and food trades.

- There is an increasing trend on focussing to achieve the self- reliance by countries, which will further weaken the exports.

- Exporting units, especially in the engineering sectors, are largely micro, small and medium enterprises and they face an existential crisis.

Way forward:

1. Government has identified that three main things -- reviving manufacturing, diversifying export basket, focusing on newer and accepting markets -- will drive the exports going forward.

2. Government is looking for import substitution especially of non-essential products like AC, furniture, compressor etc.

3. In Pharmaceutical sector, government is working on new policy to promote API formulation in India.

4. Aggressive reduction in cost of capital will make Indian exports competitive with the world as cost declines.

5. Government is working with NASSCOM to enhance IT exports.

6. Government is looking for the exports of non-surgical masks, personal protective kits to enhance merchandise exports.

Reference: https://www.thehindu.com/todays-paper/tp-opinion/export-blocks/article31699634.ece


From a stand-off to a stalemate

Chinese attempt of incursions:

- China has a history of changing lines. In the late 1950s, the lines kept moving westward, and ultimately led to the 1962 war.

- In 2002, China showed a claim line in the western sector, which was different from what existed on the ground since 1962.

- In 2007, China’s perception of the border in Depsang in the Ladakh sector, in Sikkim changed leading to incursion.

- In 2017, China wanted to unilaterally change the boundary and the trijunction with Bhutan and India, which sparked the Doklam stand-off.

- From 2007 onwards, there is a surge in defence infrastructure development along the LAC.

Why Faceoff occur:

- Face-off and stand-off situations occur along the LAC in areas where India and China have overlapping claim lines. The LAC has never been demarcated.

- Differing perceptions are particularly acute in around two dozen spots across the Western (Ladakh), Middle (Himachal Pradesh and Uttarakhand), Sikkim, and Eastern (Arunachal Pradesh) sectors of the India-China border.

- The boundary in the Sikkim sector is broadly agreed, but has not been delineated. Face-offs occur when patrols encounter each other in the contested zones between overlapping claim lines.

- Protocols agreed to in 2005 and 2013 detail rules of engagement to prevent such incidents, but have not always been adhered to.

Agreement and Initiatives to solve border disputes:

1. Shimla Agreement 1914:

- This agreement led to establishment of Macmohan line as Indian boundary. China does not accept this agreement as it argues that Tibet has not locus standi to conduct an agreement.

2. Panchsheel agreement:

This agreement provided for the broader measures to deal with each other country, which involved non-interference and non-incursion.

3. In 1989, India initiated confidence-building measures to peacefully resolve the border disputes.

4. Declaration on Principles for Relations and Comprehensive Cooperation:

- Both Sides agreed to seek a fair, reasonable and mutually acceptable solution through consultations on an equal footing.

- The two sides agreed that pending an ultimate solution, they should work together to maintain peace and tranquillity in the border areas.

- They reiterated their commitment to continue implementation of the agreements signed for this purpose, including the clarification of the Line of Actual Control.

- The two sides agreed to each appoint a Special Representative to explore from the political perspective of the overall bilateral relationship the framework of a boundary settlement.

5. Confidence Building measures in 2005:

- Both sides will avoid holding large-scale military exercises involving more than one Division (approximately 15,000 troops) in close proximity to the Line of Actual Control.

- Holding of the flag meeting in case incursion of an air force plane.

- In case of incursion by the soldiers, soldiers will exercise self-restraint and take necessary steps to avoid the confrontation.

- Conducting regular border meetings to sort out any differences.

Reference: https://www.thehindu.com/todays-paper/tp-opinion/from-a-stand-off-to-a-stalemate/article31699638.ece



Trump ‘order’ to target social media

Trump Order:

- USA cannot allow a limited number of online platforms to hand-pick the speech that Americans may access and convey online.

- The order would make it easier for federal regulators to argue that the companies are “suppressing free speech when they move to suspend users or delete posts.

- The order could see companies such as Twitter, Face book and Google held legally responsible for content posted on their platforms.

Twitter statement:

- Platform’s effort to point out misinformation did not make it an “arbiter of truth.”

- Platform intention is to connect the dots of conflicting statements and show the information in dispute so people can judge for themselves.

Reference: https://www.thehindu.com/todays-paper/tp-international/trump-order-to-target-social-media/article31699656.ece


China passes controversial Hong Kong law

About the draft legislation:

- It essentially empowers the NPC to draft new national security laws for Hong Kong.

- The scope of the laws could cover any activity that “seriously endangers national security”.

- It was aimed at enabling “measures to counter, lawfully prevent, stop and punish foreign and overseas forces’ use of Hong Kong to carry out separatist, subversive, infiltrative, or destructive activities”.

Challenges to the law:

- Violates principle of one nation two systems as Hongkong has been governed until now.

- Law states of respecting one nation two system but also seeks to create institutions governed by Beijing, it is leading to confusion.

- The law could also block foreign judges from sitting on national security cases.

Reference: https://www.thehindu.com/todays-paper/tp-international/china-passes-controversial-hong-kong-law/article31699663.ece



Don’t charge migrants bus or train fare, says SC

Court Judgement on Migrants:

- Forbade the Railways and the State governments from extracting train or bus fares from stranded migrant workers waiting to return home amid the national lockdown.

- The State from where workers started their journey and the State where they were headed should pool their travel expenses between them.

- Workers waiting for transport should be provided shelter, food and water by the State responsible.

- During train journey, Railways would be in charge of providing drinking water and meals.

- In case of bus journey, the State where they started from had to take care of their food and water.

- Those found walking should be escorted to the nearest camps where they should be looked after.

- States should simplify and speed up the process of registration of migrant workers.

- After registration, they should be allowed to board buses or trains at the earliest.

- The receiving State, after the workers reached their native place, shall provide transport, health screening and other facilities free of cost.