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In its latest review of scientific research, the Intergovernmental Panel on Climate Change (IPCC) found that Carbon capture and storage will be needed for emissions that are hard to wipe out.

Image Source: BBC

About Carbon Capture and Storage (CCS):

• It is a climate change mitigation technology where CO2 is captured from power plants and other industrial processes instead of being emitted to the atmosphere. 
• The captured CO2 is then stored in the subsurface with the goal of keeping it out of the atmosphere indefinitely.
• CCS can be seen as a bridge technology, allowing for the continued use of fossil fuels in electricity generation and industry until low-carbon alternatives can be implemented. 
• CCS may also be necessary to achieve the negative CO2 emissions required for the 1.5°C and 2°C climate goals

CCS Operations 

• Three major parts: 
  1. CO2 capture at a large stationary source (e.g., coal-fired power plant)
  2. Transport of the captured CO2 to a storage site
  3. Injection of CO2 into the subsurface for permanent storage. 
• Capture occurs either through chemical transformation before the fossil fuel is combusted (precombustion) or through physiochemical processes (e.g., adsorption) from the flue gas.

Applications of CCS: 

• Industrial sectors: CCS can significantly reduce CO2 emissions from large-scale industrial facilities, such as cement factories, and steel mills.
• Enhancing Energy Security: CCS can be applied to fossil fuel power plants, allowing for continued use of these resources while minimising their environmental impact
• Agriculture: Capturing CO2 from biogenic sources such as plants and soil to boost crop growth in a greenhouse.

Limitations of CCS:

• Cost and Energy Intensity: It requires significant upfront investments for capturing, compressing, transporting, and storing CO2. 
  • CCS consumes a portion of the energy produced by power plants, leading to reduced efficiency and higher costs of electricity generation.
• Leakage Risk: It is crucial to identify suitable storage sites and ensure the integrity of storage reservoirs to prevent any leakage.
• Limited Scope: CCS is primarily designed for point-source emissions, limiting its applicability to diffuse sources like transportation or residential sectors.

Difference with Carbon Dioxide Removal (CDR):

• In this, carbon is sucked out of the atmosphere.
• CDR brings down the level of carbon dioxide in the atmosphere, cooling the planet, while CCS in fossil fuel plants and factories prevents the gas from getting out in the first place.

How well does CCS work?

• For decades, engineers have captured carbon from concentrated streams of gas — pushing it into tanks, scrubbing it clean and using it in industry or storing it underground. 
• Some bioethanol plants, where the gas stream is pure, already report capturing more than 95% of the carbon emissions.
• While capturing carbon from dirtier gas streams, like those from factories and power plants, CCS projects have repeatedly overpromised and underdelivered.
• Some kind of chemical is needed to grab CO2. This technology has been successfully demonstrated — but it hasn’t been fully commercialised at scale.

News Source: Indian Express

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Under the Namami Gange Programme, turtles are introduced to clean the Ganga and rejuvenate the nearly 2,600­km river network. 

Key points

• Turtles play a role in clearing rotten or half burnt human bodies as well as flowers dumped into the river.
• During the assessment of the river’s pH levels (i.e. acidic nature) at various locations, the water quality was found suitable for bathing. 
• Improvements in biochemical oxygen de­mand, faecal coliform and dissolved oxygen  levels were seen during river water quality checks.

About Namami Gange Programme:

• It is an Integrated Conservation Mission, approved as ‘Flagship Programme’ by the Union Government in 2014
• Budget outlay: Rs.20,000 Crore 
• Twin objectives: 
  1. Effective abatement of pollution 
  2. Conservation and rejuvenation of national river Ganga.
• Nodal Department and Ministry: Department of Water Resources, River Development and Ganga Rejuvenation, Ministry of Jal Shakti.
• Implementing agency: National Mission for Clean Ganga (NMCG)
• Pillars of the Programme:
  1. Sewerage Treatment Infrastructure
  2. River-Surface Cleaning
  3. Afforestation
  4. Industrial Effluent Monitoring
  5. River-Front Development
  6. Biodiversity
  7. Public Awareness
  8. Ganga Gram

News Source: The Hindu 

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In 2022, the Central Research Institute for Dryland Agriculture (CRIDA), initiated the development of an early warning system known as the “Farmer’s Distress Index.”                                                           

About Farmers’ Distress Index:

• Aim: To minimise the agrarian distress in the form of crop loss / failure and income shock.
• The Index will have values from 0-1 for distress. 
• A value between 0-0.5 will indicate ‘low distress’, 0.5-0.7 will indicate ‘moderate’ distress and above 0.7 will indicate ‘severe’ distress. 

How will the Farmers’ Distress Index help farmers?

• The index will try to anticipate this distress and prevent its spread from a few farmers to the village or block level.
• It will give pre-warning to different stakeholders, including central, state, local and also non-government agencies about the future occurrence of farmers distress in a particular block / district so that they can take timely preventive measures.

What are the suggestions provided to mitigate farmers distress?

• The current solutions that are being thought upon to alleviate farmers distress are direct money transfer, mid-term release of claims under government’s crop insurance scheme (Pradhan Mantri Fasal Bima Yojana, PMFBY) in case of crop failures.

News Source: Down to Earth

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A total of 3,079 complaints against companies and market intermediaries have been disposed of through Sebi’s SCORES platform.

About SCORES Platform:

• It is a web based centralized grievance redress system of SEBI that was launched in June 2011.
• SCORES enables investors to lodge and follow up their complaints and track the status of redressal of such complaints online from the above website from anywhere.
• It doesn’t deal with complaints against companies including Unlisted/delisted companies, sick companies or a company where a moratorium order is passed, or where the company is struck off by the Registrar of Companies (RoC).

News Source: The Economic times

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Punjab Agricultural University Develops PBW RS1 Wheat Variety for Nutritional Security.

About PBW RS1 Wheat Variety:

• The new variety called PBW RS1, with RS being short for resistant starch.
• The variety has been developed over a period of 10 years by a team of wheat breeders led by Dr V S Sohu, head, department of plant breeding and genetics. 
• The high amylose and resistant starch ensure that glucose is released slowly into the bloodstream, preventing an immediate rise in glucose levels and reducing the risk of diabetes and cardiovascular diseases.
• It has a total starch content similar to other wheat varieties but contains 30.3% resistant starch, compared to only 7.5-10% in other varieties.

Concerns: 

• It has lower productivity compared to other wheat varieties, with an average grain yield of 43.18 quintals per hectare, below the average yield in Punjab.

Benefits: 

• Reduce the risks of type-2 diabetes and
• Cardiovascular diseases.
• Tastes and feels like normal wheat, making it a viable alternative
• Completely resistant to “yellow rust” and “moderately resistant” to brown rust fungal diseases.

News Source: The Indian Express

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Amid concerns over fake registrations and fraudulent availment of input tax credit under the Goods and Services Tax (GST) regime, the GST Network (GSTN) made the geocoding functionality live for all states and union territories.

About Geocoding:

• Geocoding  is a process that converts an address or description of a location into geographic coordinates.
• Purpose: To ensure the accuracy of address details in GSTN records and streamline the address location and verification process.
• It is available for normal, composition, SEZ units, SEZ developers, input service distributor and casual taxpayers who are active, cancelled, and suspended.

Goods and Services Tax Network (GSTN)

• It is a non-profit company registered under Section 8 of the Companies act, 2013.
• It is an IT Initiative that provides an Indirect Taxation platform for GST to help taxpayers in India to prepare, file returns, make payments of indirect tax liabilities and do other compliances. 
• It acts as an uniform interface for the taxpayers under indirect taxes through a common and shared IT infrastructure between the Centre and States.
• Shareholding Pattern: 
  1. 51% held by private players 
  2. Centre and State governments together holds 49% equity in GSTN

News Source: Indian Express 

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ISRO will launch its Chandrayaan 3 mission on July 14, 2023 onboard an LVM­3.

About LVM-3

• The Launch Vehicle Mark-III or LVM3, is a three-stage medium-lift launch vehicle developed by the Indian Space Research Organisation (ISRO).
• Previously known as the Geosynchronous Satellite Launch Vehicle (GSLV) Mark–III
• Developed by: Liquid Propulsion Systems Centre of ISRO
• Payload capacity: LVM3 will be capable of placing
  • 4 tonne class satellites of the GSAT series into Geosynchronous Transfer Orbits.
  • 8 tonne heavy payloads into Low Earth Orbits of 600 km altitude.

Stages of  LVM­3:

• First (or bottom most) Stage: 
  • It has two S200 boosters strapped to the sides of the rocket body. 
  • Fuel used: Solid fuel called hydroxyl terminated polybutadiene. 
• Second Stage: 
  1. It is powered by two Vikas engines
  2. Fuel used: liquid fuel – either nitrogen tetroxide or unsymmetrical dimethylhydrazine. 
• Uppermost Final Stage: 
  1. It is powered by a cryogenic engine. 
  2. It combusts liquefied hydrogen with liquefied oxygen. 
  3. Hydrogen has a very high specific impulse as rocket fuels go, but using it in an engine requires it to be liquefied first.
  4. Liquified hydrogen must be stored at very low temperature, and with special pumping and transport systems.

News Source: WION

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Tropical areas lost 4.1 million hectares of forest cover – in 2022 as per new research quoted by the World Resources Institute’s (WRI) Global Forest Watch. 

Key Findings of Global Forest Watch

Global Trends:

• Forest Loss and Carbon Emissions in Tropics: 
  • Forest Cover Loss in Tropical Areas: 4.1 Million Hectares Lost in 2022
  • Carbon Dioxide Emissions from Forest Loss: 2.7 Billion Tonnes, Equivalent to India’s Annual Fossil Fuel Emissions
  • Increase in Primary Forest Cover Loss: 10% Higher in 2022 Compared to 2021
  • Global Deforestation Rate: 3.1% Lower than 2018-2020 Baseline in 2022
  • 100 Million Hectares
  • Brazil and Democratic Republic of Congo: Countries with Highest Tropical Forest Cover Loss
  • Indonesia and Malaysia: Record Low Levels of Primary Forest Cover Loss in 2022
• Progress towards achieving forest related goals:
  • The world is not on track to meet most of its forest related commitments like ending deforestation by 2030, and restoring 350 million hectares (mha) of lost and degraded forests by 2030.
  • Global deforestation should be reduced by at least 10% every year to meet the 2030 target. 

India Specific Data:

• Loss of Primary Forest Cover: India lost 43.9 thousand hectares of humid primary forest between 2021 and 2022, which accounts for 17% of the country’s total tree cover loss in the period. 
  • The total tree cover loss in India between 2021 and 2022 was 255, 000 hectares.

About Global Forest Watch:

• It is an online platform that provides data and tools for monitoring forests. 
• It allows anyone to access near real-time information about where and how forests are changing around the world.
• Established in:  1997 by World Resource Institute. 
• It was established as a part of the Forest Frontiers Initiative. 
• It started as a network of NGOs producing up-to-date reports about the state of forests in 4 pilot countries: Cameroon, Canada,  Indonesia,  Gabon

What are Primary forests?

• Primary forests are some of the densest, wildest and most ecologically significant forests on Earth. 
• Characteristics: Primary forests are: 
  • largely undisturbed by industrial-scale land uses and infrastructure such as logging, mining, and dams and roads
  • the result of ecological and evolutionary processes including the full range of successional stages over time and with natural disturbance processes operating within historic bounds
  • more likely to possess the full complement of their evolved, characteristic plant and animal species with few if any exotics
  • dominated by a largely continuous tree canopy cover
  • have unpolluted soil and water
• Global Distribution: They span the globe, from the snow-locked boreal region to the steamy tropics, though 75% of them can be found in just seven countries.
• Importance: 
  • Primary forests are mature, natural forests that have remained undisturbed in recent history. 
  • They often store more carbon than other forests and are rich sources of biodiversity. 
  • Primary forest loss is almost irreversible in nature: even if the green cover regrows, a secondary forest is unlikely to match the extent of biodiversity and carbon sequestering capabilities of a primary forest.

News Source: The Hindu, 

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The government is planning to hire an agency to measure the actual size of the digital economy which is estimated to be around USD 1 trillion by 2025.

More on News:

• The selected agency will be roped in for a period of nine months for the assignment.
• The agency will need to submit the draft report on estimation of the size of the digital economy and projections from the current financial year till 2029-30 to the Ministry of Electronics and IT (MeitY) within 32 weeks from the date of selection.
• The report will also look into state rankings and their share in the digital economy, along with the impact of e-commerce and emerging technology on such an economy.

Various Reports on India’s Digital Economy:

About Digital Economy:

• The digital economy is the economic activity that results from billions of everyday online connections among people, businesses, devices, data, and processes. 
• The backbone of the digital economy is hyperconnectivity which means growing interconnectedness of people, organisations, and machines that results from the Internet, mobile technology and the internet of things (IoT).

Major Digital Initiatives in India:

• Digital Connectivity Initiatives:
  • BharatNet Project: Connecting all villages in India with high-speed broadband by 2023.
  • Centre for Excellence for Internet of Things (CoE-IT): Creating domain capability and innovative applications.
  • Common Services Centres (CSCS): Delivery of public utility services.
  • Cyber Swachhta Kendra: Detecting and securing systems from botnet infections.
• Digital Literacy and Identity Initiatives:
  • Digital Saksharta Abhiyan (DISHA) Program: Ensuring digital literacy in households.
  • Aadhar: Unique identity number for residents of India.
• Entrepreneurship and Business Initiatives:
  • Startup India Program: Promoting entrepreneurship and startup ecosystem.
  • DigiLocker: Digital wallet for citizens.
  • Digitize India Platform: Digitizing scanned or physical documents.
• Services and Accessibility Initiatives:
  • Accessible India Campaign and Mobile App: Ensuring accessibility for people with disabilities.
  • Agrimarket App: Providing crop price information to farmers.
  • BHIM (Bharat Interface For Money): Enabling quick and easy payments using UPI.
• Security and Governance Initiatives:
  • Crime and Criminal Tracking Network & Systems (CCTNS): Nationwide tracking system for crime investigation.

Advantages of Digital Economy:

• Rise in E-commerce: The growth of e-commerce transactions in recent years can be attributed to the digitalization of commercial activities. This digitalization has made developing, buying, distributing, selling, and tracking products and services easier, more competitive, and more profitable.
• Digital Delivery of Goods and Services: The digital economy has enabled the digital delivery of goods and services across various sectors. From aviation to banking, entertainment to education, and insurance to hotel booking, people can easily access and obtain the goods and services they need online.
• Transparency: With major commercial transactions taking place online in the digital economy, cash transactions are reduced, leading to increased transparency and a reduction in corruption. Online transactions leave digital footprints, allowing for better tracking, auditing, and accountability.
• Expanding Business Opportunities: Digitalization has opened up opportunities for small firms and businesses to actively participate in international trade. 
  • Through e-commerce platforms, they can engage in buying and selling goods and services globally, expanding their market reach and potential customer base.
• Demographic Advantage: Proficient English-speaking and technology-savvy population in countries like India facilitate adoption of digital systems.
  • Positive effects on the economy, such as the widespread use of Unified Payments Interface (UPI) and Direct Benefit Transfer (DBT) systems.
  • Providing digital content and services in vernacular languages enhances accessibility and inclusivity.
• Extension of Various Services: Digital economy enables re-evaluation and expansion of services sector, both domestically and globally.
  • Facilitates extension of services like medical and educational services.
  • Mobile apps like UMANG offer a single platform for various government services.
• Other Significant Impacts: Creation of jobs and increased productivity at the local level.
  • Improved access to services and opportunities for a larger population.
  • Emergence of new business models and industries, such as e-commerce and digital payments.

Limitation of Digital Economy:

• Importance of Skilled Manpower: Developing a skilled workforce in the digital domain is crucial for maximizing the potential of digital public infrastructure.
  • Strengthening educational institutions to produce digitally literate workers is necessary to fully leverage the advantages of digital infrastructure.
• Technological Backwardness and Inequality: The digital divide remains a significant challenge, particularly in rural areas where access to digital services is limited.
  • The digital economy has resulted in new forms of inequality, with some individuals benefiting more than others.
• Cybercrime: The increased reliance on technology has led to a rise in cybercrime, including identity theft, fraud, and money laundering, posing significant risks to individuals and businesses.
• Data Security: With businesses collecting large amounts of customer data, there is a higher risk of data breaches and unauthorized access, compromising customer privacy and trust.
• Unemployment: Automation and technology advancements have resulted in job losses in certain sectors, leading to increased unemployment and the need for workforce adaptation.
• Privacy Concerns: The extensive collection and use of personal data by businesses raise concerns about the misuse and unauthorized sharing of sensitive information, compromising individual privacy.
• Heavy Investments: Digitization requires substantial investments in technology infrastructure and resources, which can be challenging for small businesses with limited financial capabilities.
• Monopoly: The digital economy has facilitated the emergence of dominant companies with significant market power, creating monopolies and limiting competition in certain sectors.
• Potential Environmental Impact: The rapid growth of the digital economy contributes to an increase in electronic waste and energy consumption, resulting in a heavy carbon footprint and potential environmental consequences.

Way Forward:

• Promote Financial Inclusion and Security: Leverage connectivity advancements, like the JAM Trinity (Jan Dhan Yojana, Aadhaar, Mobile), to improve financial inclusion and access to digital services.
  • Emphasize the importance of secure and vigilant transactions to protect users’ financial interests.
• Focus on Cybersecurity: Prioritise cybersecurity measures to ensure a high level of security in the digital economy.
  • Promote vigilance, proactive measures, and continuous assessment to address challenges associated with the movement of funds in the digital landscape.
• Develop Digital Public Infrastructure and Skilled Workforce: Establish robust digital public infrastructure while simultaneously investing in digital skilling initiatives.
  • Ensure a skilled workforce capable of utilising and benefiting from digital infrastructure to drive the digital economy forward.
• Strengthen Transaction Security: Implement effective measures, such as One-Time Passwords (OTPs), to enhance transaction security and provide users with a verification window.
  • Continuously assess and improve security measures to mitigate risks associated with digital transactions.

News Source: The Economic Times

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The Government’s emphasis on achieving net zero emissions is centred around the adoption of battery electric vehicles. 

• While the transition to electric vehicles (EVs) is widely recognized as the future, the specific path forward is still uncertain.

About E-Vehicles:

•  E-vehicles are vehicles that are powered by electricity instead of internal combustion engines (ICE) that run on fossil fuels. 
• They use electric motors and rechargeable batteries to propel the vehicle and provide power to various components.

Image Credits: The Indian Express

Potential of E-Vehicles Market:

• By 2030, 80% of two and three-wheelers, 40% of buses, and 30 to 70% of cars in India will be electric vehicles,  as per estimates of the NITI Aayog.
• As per a recent study, the electric vehicles (EVs) market is expected to be worth around at least ₹475 billion by 2025. 
• The penetration of electric two-wheelers is projected to reach up to 15% by 2025 from 1% currently.
• The EV industry is expected to create 5 crore direct and indirect jobs by 2030, the Economic Survey 2022-23 stated.
• The domestic electric vehicles (EV) market is expected to grow at a compound annual growth rate (CAGR) of 49% between 2022 and 2030 and is expected to hit one crore units of annual sales by 2030,
• The sector’s importance is gauged by the fact that it contributes 7.1%to the overall GDP and 49% to the manufacturing GDP while generating direct and indirect employment of 3.7 crore at the end of 2021,”

Advantages of Electric Vehicles:

• Environmental Impact: Electric vehicles produce zero tailpipe emissions, meaning they do not release pollutants such as carbon dioxide (CO2), nitrogen oxides (NOx), or particulate matter into the air during operation. 
• Energy Efficiency: Electric motors are more efficient than internal combustion engines, converting a higher percentage of energy from the battery into propulsion. 
• Renewable Energy Integration: Electric vehicles can be charged using electricity from renewable energy sources such as solar or wind power. 
• Government Incentives to consumers: Many governments provide incentives, such as tax credits, rebates, or subsidies, to encourage the adoption of electric vehicles. These incentives can help lower the upfront cost of purchasing an EV and make them more affordable.
• Energy Independence: Widespread adoption of electric vehicles reduces dependence on imported fossil fuels. 

Challenges:

• High Purchasing Cost: The electric variants of the 2 and 4 wheelers are often priced much higher than regular fuel options. 
• High Maintenance Cost: The maintenance costs are high mainly due to the lack of necessary amenities. 
  • For Example: There are more than 65,000 petrol bunks in India but only 1640 EV charging stations.
•  Inadequate infrastructure: The lack of adequate charging infrastructure in our country is a huge barrier to increased EV penetration. 
• Lesser Resale Value: Currently, the EV market is fragmented with independent dealerships which make it difficult to create proper infrastructure for second-hand sales.
• Lack of Availability: The EVs in India so far have only been variants of the already available fossil-fuel driven 2 and 4 wheelers. 
  • High performing luxury variants or supercars like the Teslas are yet to hit the Indian markets.
• Limited Resources: It is anticipated that scaling up lithium production would be a challenge, leading to supply shortage that may cause manufacturers to use lower-quality mineral inputs, adversely affecting battery performance of EVs.
• Power Supply: Lack of constant power supply in villages and smaller towns and metros like Delhi and NCR having major breakdowns for hours at a stretch.

Government Initiatives to promote e- vehicles:

• National Mission on Transformative Mobility and Storage: It aims to drive strategies for transformative mobility and Phased Manufacturing Programmes for electric vehicles, electric vehicle Components and Batteries. 
• Tax Exemption: A tax exemption of Rs 1.5 lakh is also given for people buying electric cars on loan. The GST for the purchase of EVs is set at just 5% with zero cess.
• FAME Scheme: Under the FAME or Faster Adoption and Manufacturing of Hybrid and Electric Vehicles Scheme, the government has been trying to improve the infrastructure for electric vehicle manufacturing in the country. 
• Battery Swapping Policy: In the 2022 budget, a battery swapping policy was announced as an easier way to charge EVs.

Image Source: e-vehicleinfo.com

• Production Linked Incentive Scheme: The government also announced a Production Linked Incentive scheme for automakers, a part of which aims to boost electric vehicles manufacturing.
• Make In India: The government introduced a slew of measures in line with the ‘Make in India’ campaign to incentivise manufacturers to produce components locally and build a structured policy framework as India is heavily dependent on China for lithium supply chains constraining the widespread deployment of EVs.

Way Forward:

• Government Policies and Incentives: The Indian government should continue to implement supportive policies which could include offering financial incentives such as subsidies, tax credits, and exemptions and policies that promote EV manufacturing.
• Charging Infrastructure Development: Establishing a robust and widespread charging infrastructure network is crucial to support the growth of EVs. 
• Public Transportation Electrification: Encouraging the adoption of electric buses, taxis, and other forms of public transportation can have a significant impact on reducing emissions and promoting EVs. 
• Domestic Manufacturing and Supply Chain: Promoting domestic manufacturing of EVs and their components can boost the local economy, create job opportunities, and reduce dependence on imports. 
• Research and Development: Investing in research and development initiatives focused on EV technology and collaboration between industry, academia, and research institutions is vital for developing indigenous technologies and addressing specific challenges related to India’s unique conditions.
• Regulatory Reforms: Continuously reviewing and updating regulations and policies related to EVs can help create a favourable ecosystem.

News Source: The Indian Express

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The Finance Ministry has called for actions to support Foreign Direct Investment (FDI) flows, which decreased last year and may continue to be low in the near future.

About Foreign Direct Investment (FDI):

• FDI is when a company or individual invests in business ventures located in another country. 
• FDI involves purchasing a direct ownership stake in a foreign business, and it can be done through methods like establishing a subsidiary, acquiring an existing foreign company, or forming a joint venture partnership. 
• It differs from Foreign Portfolio Investment (FPI) where investors only buy stocks and bonds without gaining control over the business. 

Routes of FDI:

• Automatic Route: Under this route, foreign entities can invest in non-critical sectors without prior approval from the government or the RBI. 
  • In India, FDI up to 100% is allowed in non-critical sectors through the automatic route.
  • Investments from Pakistan and Bangladesh, and sensitive sectors such as defence, media, telecommunication, satellites, private security agencies, civil aviation, and mining require government approval or security clearance from the Ministry of Home Affairs (MHA).
• Government Route: Foreign entities must obtain approval from the government for investments under this route. 
  • The Foreign Investment Facilitation Portal (FIFP) acts as a single window clearance system for applications that require government approval. 
  • It is managed by the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry.

Government measures to boost Foreign Direct Investment (FDI):

• Relaxing FDI norms: The government has eased FDI regulations across various sectors such as defence, PSU oil refineries, telecom, power exchanges, and stock exchanges, among others. This allows for greater participation of foreign investors in these sectors.
• ‘Make in India’ and ‘Atmanirbhar Bharat’ campaigns: These initiatives, along with efforts to integrate India into global supply chains, have helped attract FDI inflows by promoting domestic manufacturing and self-reliance.
• Launch of investment-attracting schemes: The government has introduced schemes like the National Technical Textile Mission, Production Linked Incentive Scheme, and Pradhan Mantri Kisan SAMPADA Yojana, which aim to attract investments in specific sectors and provide incentives to investors.
• Revised FDI rules for e-commerce: The FDI rules have been revised to allow 100% FDI in the marketplace-based model of e-commerce, attracting more foreign investments.
• Simplified approval process for Real Estate Broking Services: Government approval for FDI up to 100% in Real Estate Broking Services has been eliminated, streamlining the investment process.

Advantages of FDI:

• Economic Growth: FDI leads to job creation and overall improvement in the functioning of the economy, particularly in developing nations.
• Development of Human Capital: FDI encourages investment in developing the necessary skills and knowledge among the workforce.
• Technological advancements: Foreign companies bring in improved technology and operational practices, benefiting the local economy.
• Increase in Exports: FDI often results in the production of goods specifically for global markets, leading to higher exports.
• Exchange Rate Stability: Regular foreign capital inflows through FDI help stabilize the exchange rates and build foreign exchange reserves.
• Competitive Market: FDI facilitates the entry of foreign entities, fostering a healthy competitive environment.

FDI Inflows in India:

• Gross FDI flows decreased by 16% (USD 71 billion in FY23) last year from the record high of $84.8 billion in 2021-22.
• Net inflows fell by a sharper 27.4%.
• Similar decline in net FDI inflows observed in emerging market economies (36% in 2022).
• According to the World Investment Report 2022, India has ranked 7th among the top 20 host economies for 2021.
• Country-wise FDI Equity Inflow FY-2021-22:
  • Singapore (27.01%), USA (17.94%), Mauritius (15.98%), Netherland (7.86%) and Switzerland (7.31%) emerge as top 5 countries for FDI equity inflows

Image Source: The Times of India

Reasons for Dip in FDI inflow:

• Inflationary pressures and tighter monetary policies have contributed to the dip in FDI inflows.
• Political distance has become more influential than geographical distance, impacting FDI flows.
• External factors like 
  • Geopolitical stress, 
  • Volatility in global financial systems, 
  • Sharp price correction in global stock market corrections, 
  • A high magnitude of El-Nino impact, and 
  • Frail global demand poses challenges to India’s growth outlook.
• Fragmentation of FDI flows due to “friend shoring” and investments in geopolitically aligned countries.
  • “Friend shoring” means that countries are investing more in other countries that have similar geopolitical interests.
• Competition from Other Emerging Markets: India faces competition from other emerging markets, such as China, Vietnam, and Indonesia, in attracting FDI.

Way Forward:

• FDI Concentration in Few States: FDI in India is concentrated in a few states, primarily Andhra Pradesh, Delhi, Karnataka, Maharashtra, and Tamil Nadu. These states receive around 60-70% of the total FDI inflows into the country. 
  • To promote more balanced FDI distribution, it is important to focus on bringing other states into the realm of FDI inflows.
• Improve Infrastructure: Addressing last-mile infrastructure issues is crucial to attract foreign investors. Developing transportation networks, power supply, logistics, and digital infrastructure can enhance the investment climate.
• Enhance Labor Availability: Ensuring a skilled and abundant workforce is essential. Investments in education, vocational training, and skill development programs can enhance the availability of skilled workers and attract more FDI.
• Facilitate Large Capacity Creation: Creating an environment conducive to setting up larger factories and production facilities can attract FDI. Streamlining regulations, providing land availability, and offering incentives for capacity expansion can be effective measures.
• Policy Reforms: Continuously monitoring FDI data and implementing favorable policies is important. Regularly reviewing and modifying regulations to create an investor-friendly environment and reducing bureaucratic hurdles can boost FDI inflows.
• Strengthen Geopolitical Alignment: Strengthening relationships with countries that are geopolitically aligned to India can attract FDI through “friend shoring.” 
• Promote Stable and Predictable Economic Environment: Maintaining a stable macroeconomic environment, including inflation control and consistent monetary policies, can instill confidence in foreign investors. This will encourage long-term investments in India.

News Source: The Hindu

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