India-Malaysia trade-dispute

Syllabus subtopic: India and its neighbourhood- relations.

Prelims and Mains focus: on the move to curb imports from Malaysia and its impact on trade relations between the two countries

News: Trade tensions between India and Malaysia have aggravated with the Narendra Modi government’s latest move to restrict palm oil imports from the latter.

Context:

India has a trade deficit of $4.4 billion with Malaysia in FY19. Malaysia’s palm oil exports to India grew 73% in January-November 2019.

What’s the backdrop for the stand-off?

• India-Malaysia ties turned bitter as the latter gave shelter in 2016 to radical Islamic preacher Zakir Naik, who is wanted by Indian counterterrorism agencies.

• On 4 September, India decided to raise customs duty on the import of refined palm oil from Malaysia to 50% from 45% for six months.

• On 27 September, speaking at the UN, Malaysian prime minister Mahathir Mohamad alleged that India had “invaded and occupied” Kashmir and asked it to resolve the issue with Pakistan. On 20 December, he said that India’s Citizenship Amendment Act would deprive some Muslims of their citizenship.

What measures has India taken so far?

• In October, India’s top vegetable oil trade body, Solvent Extractors’ Association of India, told members to stop buying Malaysian palm oil at the behest of the government. Indian refiners resumed buying palm oil from Malaysia after a one-month suspension as it began offering a $5 a tonne discount over supplies from Indonesia.

• India’s move on 8 January to put refined palm oil on the restricted list was a tacit signal to Malaysia. It means India will have more control over the source of import of the item as the importer will need a licence for the inbound shipment. Reports say the curbs could extend to the import of electronic items from Malaysia.

How do India’s import curbs impact Malaysia?

Palm oil is crucial for the Malaysian economy as it accounts for 2.8% of gross domestic product and 4.5% of total exports. State-owned and private Malaysian refineries will likely have to scramble to find new buyers for their refined products. Malaysia is the world’s second-largest producer of palm oil after Indonesia.

Where does Malaysia stand on trade ties?

• India and Malaysia signed the Comprehensive Economic Cooperation Agreement (CECA) in 2011 building upon the 2009 India-ASEAN free trade pact.

• Malaysia is India’s third-largest trading partner in ASEAN. India’s exports and imports with Malaysia stood at $6.4 billion and $10.8 billion, respectively in FY19.

• Palm oil imports from Malaysia jumped in recent months as it has a duty advantage over Indonesia under CECA. Malaysia has thus overtaken Indonesia as India’s biggest palm oil supplier in 2019.

How has Malaysia reacted to the curbs?

Mahathir has expressed concern over India’s move to restrict the import of palm oil from his country while insisting that he would continue to speak up. Meanwhile, the Malaysian Trades Union Congress, members of which include palm workers, has urged the two countries to resolve the matter through talks.

Syllabus subtopic: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Prelims and Mains focus: about the bills and heir significance; concerns raised by various stakeholders

News: The government has hinted it will go slow on big-ticket labour reforms and will encourage a larger debate on proposed labour codes after a nationwide strike by workers drew millions last week.

Background

The Industrial Relations Code 2019 and the Code on Social Security 2019, introduced in Parliament last month, have been forwarded to the standing committee on labour by the Lok Sabha Speaker for evaluation and suggestion, the ministry of labour and employment announced on Wednesday.

Why is govt. wary of going ahead with the reforms

• Resistance from several quarters: Central trade unions went on a nationwide strike on 8 January and have warned of an intensified agitation at the state level and in industrial belts.

• The Bharatiya Mazdoor Sangh, which is linked to the ruling Bharatiya Janata Party, stayed out of the strike but had written on 28 November to the labour ministry accusing it of taking a “casual approach” to labour reforms.

• Opposition political parties and trade unions have said that the government should not hurry in pushing its labour reform bills without a wide enough debate and discussion in the standing committee.

What next?

• With Industrial Relations Code and the Code on Social Security now going to the standing committee, three of the proposed four labour codes are up for discussion at the Bhartruhari Mahtab-led parliamentary standing committee.

• The other bill already with the committee is the Occupational Safety, Health and Working Conditions Code. The government has merged 44 central laws into four labour codes.

• Apart from these three, there is a code on wages that has already got parliamentary approval.

• The standing committee is expected to submit the report in three months but is not bound to do so and can thus take more time to complete its consultations and give suggestions on what changes can be made in both the laws, said the official mentioned above.

Syllabus subtopic:

• Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
• Important aspects of governance, transparency and accountability.

Prelims and Mains focus: about the details of OALP-V; HELP and OALP: their significance

News: India’s Directorate General of Hydrocarbons (DGH) on Wednesday opened the fifth round of bidding for oil and gas blocks, offering 11 areas up for grabs.

Background

• The OALP round-four was the first round of bidding conducted under tweaked norms, where blocks in little or unexplored Category-II and III basins are awarded to firms offering to do maximum exploration programme. Earlier, licenses were awarded to companies who offered a maximum share of oil and gas to the Centre.

• The last bidding round under which seven blocks were put up on offer saw only eight bids coming in, with state-run oil explorer ONGC bagging all seven on land blocks offered under the Open Acreage Licensing Policy (OALP). So far, the government has awarded 94 blocks under the Hydrocarbon Exploration & Licensing Policy (HELP) regime in just two-and-a-half years.

About the move

• In continuation of its aggressive acceleration of exploration and production activities and adhering to prescribed timelines, the government has now launched the Bid Round-V for International Competitive Bidding. In this bid, 11 blocks with an area of around 19,800 sq km are on offer for bidding to the investor community.

• The 11 blocks under OALP Round-V are spread across eight Sedimentary Basins and include eight on land blocks (six in Category-I Basin and one each in Category II and III Basins), two Shallow Water blocks (one each in Category-I and II Basins) and one Ultra Deep Water block (Category I Basin).

• OALP-V comes with attractive and liberal terms like no oil cess, reduced royalty rates, marketing and pricing freedom, round the year bidding, freedom to investors for carving out blocks of their interest, a single licence to cover both conventional and unconventional hydrocarbon resources, exploration permission during the entire contract period, and an easy, transparent and swift bidding and awarding process.

About Open Acreage Licensing Policy (OALP)

• The OALP, a critical part of the Hydrocarbon Exploration and Licensing Policy, provides uniform licences for exploration and production of all forms of hydrocarbons, enabling contractors to explore conventional as well as unconventional oil and gas resources.

• Fields are offered under a revenue-sharing model and throw up marketing and pricing freedom for crude oil and natural gas produced.

• Under the OALP, once an explorer selects areas after evaluating the National Data Repository (NDR) and submits the EoI, it is to be put up for competitive bidding and the entity offering the maximum share of oil and gas to the government is awarded the block.

• NDR has been created to provide explorers’ data on the country’s repositories, allowing them to choose fields according to their capabilities. Data received through the National Seismic Programme, an in-depth study of 26 sedimentary basins, are continuously being added to the NDR.

Syllabus subtopic: Important International institutions, agencies and fora, their structure, mandate.

Prelims and Mains focus: about the China’s move to raise Kashmir issue in UN and its implications; about UNSC; bifurcation of J&K

News: For the third time since August, Beijing raised the issue of Jammu and Kashmir at a closed-door meeting of the United Nations Security Council late Wednesday night. Vietnam, which is the UNSC President for the month of January, allowed the issue to be brought up by China.

Background

• The move by China is third such attempt since August when the special status granted to Jammu and Kashmir under Article 370 of the Constitution was revoked by the government, and the state was bifurcated into two union territories.

• This is the third time, China, Pakistan’s ‘all-weather ally’, has demanded discussion on the Kashmir issue. In August, China had raised it in an informal and closed-door consultations, but the meeting did not lead to any outcomes. In December again, France, US, UK and Russia — the remaining P-5 members — had foiled an attempt by China to discuss Kashmir at a meeting of the UNSC. Beijing withdrew its request.

• In August, China had objected to the formation of Ladakh as Union Territory, saying it undermined its territorial sovereignty. It also expressed “serious concern” about the current situation in the region.

About the meeting

The closed-door meeting of the UNSC was called to discuss issues related to Mali, an African country, and China made a request to discuss the Kashmir issue under the agenda of “Any Other Business Points”.

Was China able to move ahead with the issue?

However, members of the UNSC, including France and the US, blocked the attempt by China for a discussion on the Kashmir issue. Sources said the plan was to tell Beijing that this is not the appropriate forum.

Diplomatic sources said that France has noted the request of a UNSC member to raise the Kashmir issue once again in the powerful body and it is going to oppose it like it did on a previous occasion. French sources said that the Kashmir issue must be settled bilaterally (between India and Pakistan). The sources said this has been stated on several occasions, and it will continued to be reiterated to partners in the UN Security Council

Syllabus subtopic: Functions and responsibilities of the Union and the States, issues and challenges pertaining to the federal structure, devolution of powers and finances up to local levels and challenges therein.

Prelims and Mains focus: about the concerns raised against the NIA act; About Article 131; about NIA: vision and mission

News: A day after Kerala invoked Article 131 of the Constitution to challenge the Citizenship (Amendment) Act in the Supreme Court, the Congress government of Chhattisgarh too cited the same provision to move the top court, challenging the Constitutional validity of the National Investigation Act, 2008.

Background

• Incidentally, the Congress-led UPA was in power at the Centre when the law was enacted by Parliament.
• In January 2019, a month after the Congress came to power in the state after 15 years of BJP rule, it withdrew the general consent granted to the CBI for investigation in the state.

Why is the Chattisgarh govt. against the NIA Act?

• The decision to file the case was taken by the government after reviewing several cases in the state. There are a list of 59 cases that the NIA could have taken up. They also had Naxal involvement and many people died in them. Yet, there was selective picking of cases.
• The state government has already had its fair share of disagreements with the NIA. The agency had been investigating the Jhiram Ghati massacre in which several senior Congress leaders were killed by Naxals in an ambush. While NIA found no foul play, the state government formed an SIT and asked the NIA to share their investigation, which they haven’t yet.

What does the Chattisgarh govt.’s petition contend?

• The Chhattisgarh government’s petition, citing Article 131, contends that the NIA Act is ultra vires the Constitution and beyond the legislative competence of Parliament since the Act empowers the Centre to create an agency for “investigation” which, notwithstanding the NIA, is carried out by the State Police, a subject matter of the State under Entry 2, List II, Schedule 7.

• It said the NIA Act, in its present form, not only takes away the state’s power of conducting investigation through police but also confers unfettered discretionary and arbitrary powers on the Centre. There are no rules governing the exercise of power which, it said, gives ample discretion to the defendant to exercise its power at any juncture without providing any reason or justification for the same.

• It said the provisions of the Act leave no room of coordination and pre-condition of consent, in any form whatsoever, by the Central government from the State government which clearly repudiates the idea of state sovereignty as envisaged under the Constitution of India.

• It said the scheme of NIA Act is such that once brought in motion, it completely takes away the power of a State to investigate the offences which have been categorised as scheduled offence under the NIA Act and which has been committed within the jurisdiction of the State.

• The petition said that its enactment by Parliament and creation of an “investigative” agency, namely the National Investigation Agency, for investigating the scheduled offences committed in any particular State, is clearly an act of colourable legislation. Incidentally, the Kerala petition against the validity of the CAA also calls it a colourable legislation.

• By way of the Act, Parliament has effectively created a ‘National Police’ which, in cases of investigation of scheduled offences, will have overriding control over the State Police and its investigation which is contrary to the scheme and intention of Distribution of Power as provided in Schedule 7 of the Constitution of India.

What does Article 131 of Constitution of India say?

Article 131 of the Constitution states “subject to the provisions of this Constitution, the Supreme Court shall, to the exclusion of any other court, have original jurisdiction in any dispute

(1) between the Government of India and one or more States; or

(2) between the Government of India and any State or States on one side and one or more other States on the other; or

(3) between two or more States, if and in so far as the dispute involves any question (whether of law or fact) on which the existence or extent of a legal right depends: Provided that the said jurisdiction shall not extend to a dispute arising out of any treaty, agreement, covenant, engagements, and or other similar instrument which, having been entered into or executed before the commencement of this Constitution, continues in operation after such commencement, or which provides that the said jurisdiction shall not extend to such a dispute”.

About National Investigation Agency (NIA)

• The National Investigation Agency (NIA) was set up in 2009 under the NIA Act, 2008.
• It was set up in the wake of the Mumbai terror attack.
• At present, NIA is functioning as the Central Counter Terrorism Law Enforcement Agency in India.

Vision

The National Investigation Agency aims to be a thoroughly professional investigative agency matching the best international standards. The NIA aims to set the standards of excellence in counter terrorism and other national security related investigations at the national level by developing into a highly trained, partnership oriented workforce. NIA aims at creating deterrence for existing and potential terrorist groups/individuals. It aims to develop as a storehouse of all terrorist related information.

Mission

• In-depth professional investigation of scheduled offences using the latest scientific methods of investigation and setting up such standards as to ensure that all cases entrusted to the NIA are detected.
• Ensuring effective and speedy trial.
• Developing into a thoroughly professional, result oriented organization, upholding the constitution of India and Laws of the Land giving prime importance to the protection of Human Rights and dignity of the individual.
• Developing a professional work force through regular training and exposure to the best practices and procedures.
• Displaying scientific temper and progressive spirit while discharging the duties assigned.
• Inducting modern methods and latest technology in every sphere of activities of the agency.
• Maintaining professional and cordial relations with the governments of States and Union Territories and other law enforcement agencies in compliance of the legal provisions of the NIA Act.
• Assist all States and other investigating agencies in investigation of terrorist cases.
• Build a data base on all terrorist related information and share the data base available with the States and other agencies.
• Study and analyse laws relating to terrorism in other countries and regularly evaluate the adequacy of existing laws in India and propose changes as and when necessary.
• To win the confidence of the citizens of India through selfless and fearless endeavours.