CURRENT EVENTS

AND
ANALYSIS
( January 2021)
INDIAN ECONOMY

Editor
R.C. R eddy

R.C. REDDY IAS STUDY CIRCLE

H.No. 3-6-275, Opp. Telangana Tourism Development Corporation,
Near Telugu Academy, Himayatnagar, Hyderabad - 500 029.
Phone No. : 040-23228513; 040-27668513; 040-27612673;
9346882593; 9573462587
Email : rcreddyiasstudycircle1989@gmail.com
 CURRENT EVENTS AND ANALYSIS
CONTENTS
JANUARY 2021 CURRENT AFFAIRS: Economy section
Index PageNo:

Index of Eight Core Industries (Base: 2011-12=100) for November, 2020 1

Reserve Bank of India introduces the RBI-Digital Payments Index 3

Development of Blue Economy in India 5

Government approves Central Sector Scheme for Industrial Development of Jammu 6
& Kashmir
Pradhan Mantri Kaushal VikasYojana (PMKVY 3.0) 9
Seventh Trade Policy Review of India at the WTO 10

New Foreign Trade Policy 2021-26 11

UK invites PM Modi for G7 Summit 13
 ECONOMY
Index of Eight Core Industries (Base: 2011-12=100) for November, 2020
- The index of eight core industries (ICI) has been released by the Office of Economic Advisor,
Department for Promotion of Industry and Internal Trade on 31st December, 2020.
- It provides an indication of the production performance of the 'core sector' industries included
in the index.
Index Value for November
- The value of the index for the month of November, 2020 stood at 125.9. This value has
declined by 2.6% in comparison to the index of November, 2019.
The cumulative growth of the index from April-November, 2020 has fallen by 11.4%.
What is the Index of Eight Core Industries?
- The index of eight core industries is a production volume index and is released on a monthly
basis.
- ICI measures collective and individual performance of production in selected eight core
industries viz. Coal, Crude Oil, Natural Gas, Petroleum Refinery Products, Fertilizers, Steel,
Cement and Electricity.
- Weights of the eight core sectors in ICI are given below:
Sector Weight (in %)
Coal 10.3335
Crude Oil 8.9833
Natural Gas 6.8768
Refinery Products 28.0376
Fertilizers 2.6276
Steel 17.9166
Cement 5.3720
RC
Electricity
REDDY IAS STUDY CIRCLE
19.8530
Overall Index 100.00
- The ICI is calculated using fixed basket approach.
What is fixed basket approach?
This means that a fixed number of eight core industries are defined as a basket and their
individual as well as cumulative prices are monitored regularly. Moreover, the items in the
basket are not variable and cannot be changed. This basket is used for the calculation of the
index.

R.C. Reddy IAS Study Circle 1

- The base year of the ICI has been recently revised to 2011-12 from 2004-05.
- ICI for a reference month is released with a time lag of one month on the last day of the next
month
Objective of the Index
- The objective of the ICI is to provide an advance indication on production performance of
industries of 'core' nature before the release of Index of Industrial Production (IIP) by Central
Statistics Office (CSO).
What is the Index of Industrial Production (IIP)?
The Index of Industrial Production (IIP) is an index which shows the growth rates in different
industry groups of the economy in a stipulated period of time. The IIP index is computed and
published by the Central Statistical Organisation (CSO) on a monthly basis.
Combined weight of the eight core industries of the ICI is 40.27 percent of IIP with base 2011-
12.
- The eight core sectors included in the index are likely to impact on general economic activities
as well as industrial activities of the country.
- The ICI data is widely used by several policymakers in the various Ministries and Departments,
for banks looking to financing Infrastructure projects and the Reserve Bank of India to formulate
future policy decisions.
The summary of the Eight Core Industries included in the index for the month of November,
2020 is given below:
- Coal: Coal production increased by 2.9 per cent in November, 2020 over November, 2019.
- Crude Oil: Crude Oil production declined by 4.9 per cent in November, 2020, over November,
2019.
- Natural Gas: The Natural Gas production declined by 9.3 per cent in November, 2020 over
November, 2019.
- Refinery Products- Petroleum Refinery production declined by 4.8 per cent in November,
2020 over November, 2019.

RC REDDY IAS STUDY CIRCLE

- Fertilizers: Fertilizers production increased by 1.6 per cent in November,2020 over
November,2019.
- Steel: Steel production declined by 4.4 per cent in November, 2020 over November, 2019.
- Cement: Cement production declined by 7.1 per cent in November, 2020 over November,
2019.
- Electricity: Electricity generation increased by 2.2 per cent in November, 2020 over
November, 2019.
From the above data, it is evident that production of only Coal, fertilisers, and electricity increased
while the production of the remaining five parameters declined from April-November, 2020.

2 R.C. Reddy IAS Study Circle

Comparative Value of Index at a Glance:
Sector April-Nov 2019-20 April-Nov 2020-21
Coal 113.1 110.2
Crude Oil 85.6 80.4
Natural Gas 66.5 58.4
Refinery Products 128.0 108.9
Fertilizers 109.4 113.5
Steel 153.1 123.3
Cement 141.8 114.2
Electricity 161.7 154.1
Overall Index 129.9 115.0
Reserve Bank of India introduces the RBI-Digital Payments Index
The Reserve Bank of India has launched a composite Digital Payments Index (DPI) on
January1, 2021, to track growth of Cashless Economy, and capture the extent of digitisation
of payments across the country.
What is Digital Payment?
- Digital Payment is an electronic transfer of money from one bank account to another bank
account through computer based systems without the intervention of bank staff.
Background
- Digital Payments in India have seen a rapid rise in the last four years due to demonetisation of
Rs 500 and Rs 1,000 notes in November 2016
- Hence, to track the extent of digital payments, RBI has launched Digital Payments Index
(DPI), based on multiple parameters (mentioned below) and shall reflect accurately the
penetration and deepening of various digital payment modes like debit cards, internet banking,
ATMs, use of QR codes etc.

RC REDDY IAS STUDY CIRCLE

- This index was stated in the 'Statement on Developmental and Regulatory Policies' as part of
the Sixth Bi-monthly Monetary Policy Statement for 2019-20.
Parameters included in the Digital Payment Index:
- The RBI-DPI comprises of 5 broad parameters that enable measurement of penetration of
digital payments in the country over different time periods.
- Each of these parameters has sub-parameters which, in turn, consist of various measurable
indicators.
- The parameters and sub-parameters included in the index are given below:

R.C. Reddy IAS Study Circle 3

 S. No. Parameter Weight of the Para Sub-Parameter
meter in the Index
1. Payment Enablers 25% Internet, Mobile, Aadhaar, Bank
Accounts, Participants, Merchants
2. Payment Infrastructure 10% Debit Cards, Credit Cards,
- Demand-side factors Prepaid Payment Instruments,
Customers Registered- Mobile
& Internet Banking, FASTags
3. Payment Infrastructure 15% Bank Branches, Business
- Supply-side factors Correspondents, ATMs, PoS
terminals, QR Codes, Inter
mediaries
4. Payment Performance 45% Digital Payment Systems-
-Digital Payments Volume, Digital Payment System-
System Value, Unique Users, Paper
Clearing, Currency in Circulation,
Cash Withdrawals
5. Consumer Centricity 5% Awareness and Education,
Declines, Complaints, Frauds,
System Downtime
Additional Information on the Index:
- The RBI-DPI has been constructed with March 2018 as the base period, i.e. DPI score for
March 2018 is set at 100.
- The DPI for March 2019 and March 2020 work out to 153.47 and 207.84 respectively,
indicating appreciable growth.
- These figures imply that there has been a 53.47% increase in digital payments in March 2019
and 107.84% rise in digital payments in March 2020 in comparison to March 2018.
- Going forward, RBI-DPI shall be published on RBI's website on a semi-annual basis from
March 2021 onwards with a lag of 4 months.
RC REDDY IAS STUDY CIRCLE
Significance of improving digital payments
- Transparency brought by technology minimised corruption.
- The emergence of the digital payments sector has provided a huge opportunity for companies
to grow and take the lead. A lot of big players such as SBI's Yono wallet, Paytm have already
entered the space and are eyeing to grow exponentially.
- Boost to E-Commerce: Digital payments and UPI have been instrumental in the rise of E-
commerce in India and they will continue to provide a boost to the e-commerce sector. The
rising trend of online shopping will get even stronger as the digital payment and use of smart
phones continue to surge.

4 R.C. Reddy IAS Study Circle

- Geographic Freedom: Gone are the days when people found it difficult to send payment or
money to their vendors or loved ones. The conventional methods were not only time consuming
but had limitations in terms of reach also. With the rise in digital payment systems, money can
be sent within seconds even to the remotest areas.
- SpendingDiscipline: On record digital transactions help in keeping tabs on the level of
spending. Various apps and tools will help people analyse their spending patterns.
Development of Blue Economy in India
- On date 5th January 2021, at the inauguration of Kochi-Mangaluru Natural Gas Pipeline,
Prime Minister Narendra Modi stated that the development of the blue economy which
encompasses coastal areas and welfare of hard working fishermen constitutes an important
source of AatamaNirbar Bharat.
- He outlined a multi-pronged plan for coastal area development comprising transforming the
blue economy, improvement of coastal infrastructure, and protecting the marine ecosystem.
What is Blue Economy?
Blue economy in India is the sum total of economic activities sourced from marine
resources. It is defined by the World Bank as the "sustainable use of ocean resources
for economic growth, improved livelihood and jobs, and ocean ecosystem health. It is
also referred to as 'marine economy', 'coastal economy', or 'ocean economy'.
Blue Economy in India
- India has a coastline of above 7,500 km, spanning into nine maritime States and two Union
Territories (UTs) in the mainland, and two islands with 12 major and 187 non-major ports,
which play a crucial role in sustaining growth of trade and commerce.
RC REDDY IAS STUDY CIRCLE
- India's Exclusive Economic Zone (EEZ) extends to 2.02 million sq. km and the continental
shelf area to 0.18 million sq. km (NSSO data). This provides an important source for
development of this sector.
What is an Exclusive Economic Zone?
The 1982 United Nations Convention on the Law of the Sea (UNCLOS) defined the EEZ
as a zone in the sea over which a sovereign nation has certain special rights with
respect to the exploration and usage of marine resources, which includes the
generation of energy from wind and water, and also oil and natural gas extraction.
Steps taken by the Indian government for the development of Blue Economy
- The Government has taken many steps to protect and enrich the coastal ecosystem like
improvement of coastal infrastructure like setting up ports to meet the rising needs and
aspirations of people.
- Steps like helping fishermen in deep sea fishing with boats, providing affordable loans and
Kisan Credit Cards to the people engaged in aquaculture, and setting up a separate Fisheries
Department are helping both entrepreneurs and general fishermen

R.C. Reddy IAS Study Circle 5

- The Prime Minister has also launched MatasyaSamapadaYojna which will directly benefit
lacs of fishermen in Kerala and Karnataka
What is MatsyaSampada Yojana (PMMSY)?
Hon'ble PM digitally launched the MatsyaSampada Yojana on 10th September, 2020. It
is a flagship scheme for focused and sustainable development of fisheries sector in
the country with an estimated investment of Rs. 20,050 crores for its implementation
during a period of 5 years from FY 2020-21 to FY 2024-25 in all States/Union Territories,
as a part of AatmaNirbhar Bharat Package. The investment of Rs. 20,050 crores under
PMMSY is the highest ever in the fisheries sector.
PMMSY is designed to address critical gaps in fish production and productivity, quality,
technology, post-harvest infrastructure and management, modernization and
strengthening of value chain and establishing a robust fisheries sector.
- India is progressing rapidly in fishery related exports. For example, as per Ministry of
Commerce and Industry data, fishery exports account for 2% of India's total exports.
- Steps are being taken to turn India into a quality processed sea-food hub. One of the prominent
ones being allocation of Rs 637 crores in July, 2020 under the MatsyaSampada Yojana as
subsidy support to this sector.
- Further, there has been formation of a new ministry 'Ministry of Fisheries', on 5.2.2019,
especially dedicated to the development of this sector. India can play a major role in fulfilling
the growing demand of seaweed, as farmers are being encouraged for seaweed farming.
- For developing country's oil and gas imports through the sea, Sagarmala project was also
launched by the Ministry of Shipping, for port-led development through the extensive use of
IT enabled services.
What is Sagarmala project?
The Sagarmalaprogramme is the flagship programme of the Ministry of Shipping to
promote port-led development in the country. As part of SagarmalaProgramme, more
than 574 projects (Cost: Rs. 6.01 Lacs Cr.) have been identified for implementation,
during 2015-2035, across the areas of port modernization & new port development,
port connectivity enhancement, port-linked industrialization and coastal community
development.
RC REDDY IAS STUDY CIRCLE
Government approves Central Sector Scheme for Industrial Development of
Jammu & Kashmir
- The Cabinet Committee on Economic Affairs chaired by Prime Minister Shri Narendra Modi
in its meeting on 6th January, 2021, considered and approved the proposal for Central Sector
Scheme for Industrial Development of Jammu & Kashmir (J&K IDS, 2021).
What is a Central Sector Scheme?
Central sector schemes are 100% funded by the Union government and implemented
by the Central Government machinery. Central sector schemes are mainly formulated
on subjects from the Union List.

6 R.C. Reddy IAS Study Circle

 In addition, the Central Ministries also implement some schemes directly in States/
UTs which are called Central Sector Schemes but resources under these Schemes are
not generally transferred to States.
- Considering the historic development of reorganisation of Jammu & Kashmir with effect from
31.10.2019 into UT of Jammu & Kashmir under the J&K Reorganisation Act, 2019, the present
scheme has been implemented with the vision that industry and service led development of
J&K needs to be given a fresh thrust with emphasis on job creation, skill development, and
sustainable development by attracting new investment and nurturing the existing ones.
- The scheme visualises a larger role for the Union Territory of J&K and aims at developing
both manufacturing as well as services units.
What is J&K reorganisation Act, 2019?
On 9th August, 2019 two new Union territories known as the Union territory of Jammu
and Kashmir as well as Union territory of Ladakh were formed. This bifurcation was
done under the J&K reorganisation Act. The Union territory of Jammu and Kashmir
comprises of the territories of the existing State of Jammu and Kashmir other than
Kargil and Leh districts.
The following incentives would be available under the scheme:
- Capital Investment Incentive at the rate of 30% in Zone A and 50% in Zone B on investment
made in Plant & Machinery (in manufacturing) or construction of building and other durable
physical assets (in service sector) is available.
- Capital Interest subvention at the annual rate of 6% for maximum 7 years on loan amount
up to Rs. 500 crore for investment in plant and machinery (in manufacturing) or construction
of building and all other durable physical assets (in service sector).
- GST Linked Incentive: 300% of the eligible value of actual investment made in plant and
machinery (in manufacturing) or construction in building and all other durable physical assets(in
service sector) for 10 years.
What is GST linked incentive?
It is the tax incentive granted by the government to companies making investments in Jammu
& Kashmir. The main purpose of such incentives is to attract investments in the State for
RC REDDY IAS STUDY CIRCLE
industrial development and to promote employment generation. These benefits are generally
granted by states as subsidies based on the quantum of GST paid by companies to the
Government on their manufacturing activities and that too, over a specified time period. Such
incentives are subject to a maximum ceiling limit based on total capital investments made by
these companies.
Key Features of the Scheme:
The financial outlay of the proposed scheme is Rs 28,400 crore for the scheme period 2020-
21 to 2036-37. So far, the amount disbursed under various special package schemes is Rs.
1,123.84 crore.

R.C. Reddy IAS Study Circle 7

- Scheme is made attractive for both smaller and larger units. Smaller units with an investment
in plant & machinery up to Rs 50 crore will get a capital incentive up to Rs. 7.5 crore and get
capital interest subvention at the rate of 6% for maximum 7 years.
- The scheme aims to take industrial development to the block level in UT of J&K, which is first
time in any Industrial Incentive Scheme of the Government of India and aims at a more
sustained and balanced industrial growth in the entire UT.
- Scheme has been simplified on the lines of ease of doing business by bringing one major
incentive - GST Linked Incentive- that will ensure less compliance burden without compromising
on transparency.
What is Ease of Doing Business?
Ease of doing business is an index published by the World Bank. It is an aggregate
figure that includes different parameters which define the ease of doing business in a
country.
- Scheme envisages greater role for the UT of J&K in registration and implementation of the
scheme while having proper checks and balances by having an independent audit agency
before the claims are approved.
- The concept of gross GST is used in the scheme to measure eligibility for industrial incentive
to offset the disadvantages that the UT of J&K faces.
- Earlier schemes though offered a plethora of incentives (mentioned below). However, the
overall financial outflow was much lesser than the new scheme.
Incentives and Financial outlay under previous Industrial Development Scheme for
Jammu and Kashmir, 2017
(i) Central Capital Investment Incentive (30% of the investment in plant & machinery
with an upper limit of Rs. 5 crore), (ii) Central Interest Incentive (3% interest on working
capital for 5 years) (iii) Central Comprehensive Insurance Incentive, (iv) Income Tax
Reimbursement of centre's share for 5 years, (v) GST reimbursement of Central
Government share of CGST & IGST for 5 years, (vi) Employment Incentive
Moreover, a total of Rs. 430.01 crore was disbursed to the erstwhile State of Jammu &
Kashmir under the earlier Special Package Scheme.
RC REDDY IAS STUDY CIRCLE
Major Impact and employment generation potential:
- Scheme is to bring about radical transformation in the existing industrial ecosystem of J&K
with emphasis on job creation, skill development and sustainable development by attracting
new investment and nurturing the existing ones, thereby enabling J&K to compete with other
leading industrially developed States/UTs of India.
- It is anticipated that the proposed scheme is likely to attract unprecedented investment and
give direct and indirect employment to about 4.5 lakh persons. This is because this scheme
aims to take industrial development to the block level of J&K.

8 R.C. Reddy IAS Study Circle

 Pradhan Mantri Kaushal VikasYojana (PMKVY 3.0)
- On 15th January, 2021 the third phase of Pradhan Mantri Kaushal Vikas Yojana (PMKVY
3.0) has been launched in 600 districts across all states of India.
- Spearheaded by the Ministry of Skill Development and Entrepreneurship (MSDE), this phase
will focus on new-age and COVID-related skills.
- Skill India Mission PMKVY 3.0 envisages training of eight lakh candidates over a scheme
period of 2020-2021 with an outlay of Rs. 948.90 crore.
- As per the scheme details, 729 Pradhan Mantri Kaushal Kendras (PMKKs), empanelled non-
PMKK training centres and more than 200 Industrial Training Institutes under Skill India will be
rolling out PMKVY 3.0 training to build a robust pool of skilled professionals.
What is Pradhan Mantri Kaushal Vikas Yojana?
- Pradhan Mantri Kaushal Vikas Yojana (PMKVY) was launched in 2015 to encourage and
promote skill development in the country by providing free short duration skill training and
incentivising this by providing monetary rewards to youth for skill certification. The overall
idea is to boost both industry and employability of youth.
- This scheme was launched to unlock the vision of making India the 'Skill Capital' of the world.
- During its pilot phase in 2015-16, 19.85 lakh candidates were trained, as per the data of
Ministry of Skill Development and Entrepreneurship.
- After the successful implementation of pilot PMKVY (2015-16), PMKVY 2016-20 was launched
by scaling up both in terms of sector and geography and by greater alignment with other
missions of Government of India like Make in India, Digital India, Swachh Bharat, etc.
Objectives of PMKVY
- Enable and mobilise a large number of youth to take up industry designed quality skill training,
become employable and earn their livelihood.
- Increase productivity of the existing workforce, and align skill training with the actual needs of
the country.
Key Components of the Scheme
- Short Term Training (STT) - The Short-Term Training imparted at PMKVY Training Centres
RC REDDY IAS STUDY CIRCLE
(TCs) is aimed towards the candidates who are either school/college dropouts or unemployed.
The training includes aspects like Soft Skills, Entrepreneurship, Financial and Digital Literacy
curriculum. Upon successful completion of their assessment and certification, candidates
are also provided placement assistance.
- Recognition of Prior Learning (RPL) - Individuals with prior learning experience or skills are
assessed and certified under the Recognition of Prior Learning (RPL) component of the
Scheme.
- Special Projects - Special Projects component of PMKVY envisages encouraging trainings
in special areas and premises of Government bodies, corporates / industry bodies and trainings

R.C. Reddy IAS Study Circle 9

 in special job roles. These are the projects which may require some deviation from the terms
and conditions of Short-Term Training under PMKVY.
The scheme is being implemented through two components:
- Centrally Sponsored Centrally Managed (CSCM): This component is implemented by
National Skill Development Corporation. 75% of the PMKVY 2016-20 funds and corresponding
physical targets have been allocated under CSCM.
What is National Skill Development Corporation?
National Skill Development Corporation (NSDC) is a not-for-profit public limited
company incorporated on July 31, 2008. NSDC aims to promote skill development by
catalyzing creation of large, quality and for-profit vocational institutions. Further, the
organisation provides funding to build scalable and profitable vocational training
initiatives. Its mandate is also to enable support system which focuses on quality
assurance, information systems and train the trainer academies either directly or
through partnerships.
- Centrally Sponsored State Managed (CSSM): This component is implemented by State
Governments through State Skill Development Missions (SSDMs). 25% of the PMKVY 2016-
20 funds and corresponding physical targets have been allocated under CSSM.
Seventh Trade Policy Review of India at the WTO
- On January 8, 2021, the final session of India's Trade Policy Review (TPR) was concluded.
- The TPR is an important mechanism under the WTO's monitoring function in which member
countries' trade and related policies are examined by the WTO with an aim to contribute
towards improved adherence to WTO rules, while providing constructive feedback to the
Member under review.
- Significant developments that may have an impact on the global trading system are also
monitored. All WTO members are subject to review, with the frequency of review depending
on the country's size.
- The period from 2015 to mid 2020 has been taken into consideration for India's trade policy
review. Usually, it provides an overview of all the important changes in the economy for the
period under consideration.

RC REDDY IAS STUDY CIRCLE

The following are the summary points which were discussed in the recent Trade Policy
Review (TPR):
- Reform is a continuous and ongoing process, and the Government of India is deeply committed
to pursuing this path to make India an attractive trade and investment partner in the world.
For example, over the years India has liberalised its investment regime.
- Moreover, India is striving to forge greater economic and trade linkages with the world, by
utilising all avenues available.
- It was mentioned in the review that the ongoing pandemic has again brought to the forethe
importance of food and livelihood security and there is a need for a permanent solution to
Public Stock Holding (PSH) for food security.

10 R.C. Reddy IAS Study Circle

 What is India's Public Stockholding Issue at WTO?
People are considered "food secure" when they have access to sufficient, safe, nutritious
food to maintain a healthy and active life.
Since 2013, WTO members have agreed to negotiate and find a permanent solution to the
issue of public stockholding programmes for food security purposes. Under these programmes,
developing countries purchase and stockpile food, and distribute it to people in need. However,
some of these programmes involve support to farmers and are therefore considered to distort
trade.
- The Trade Policy Review also mentioned that India has a stable policy environment with
considerably lower applied custom duty rates than its WTO commitments.
What is a Customs Duty?
Customs duty refers to the tax imposed on goods when they are transported across
international borders. In simple terms, it is the tax that is levied on import and export
of goods. The government uses this duty to raise its revenues, safeguard domestic
industries, and regulate movement of goods.
In this respect, a glance at India's Merchandise Trade Statistics for the period under
Trade Policy review is given below:
(Values in USD billion):
Year Exports Imports Trade Deficit (Exports-Imports)
2019-20 313.36 474.71 -161.35
2018-19 330.07 514.07 -184
2017-18 303.52 465.58 -162.06
2016-17 275.85 384.35 -108.5
2015-16 262.29 318 -55.71

New Foreign Trade Policy 2021-26

- Union Ministry of Commerce and Industry announced on12th January, 2021, India's new
RC REDDY IAS STUDY CIRCLE
Foreign Trade Policy 2021-2026, which will come into effect from April 1, 2021, with the
objective of making India one of the leading countries in international trade.
What is a Foreign Trade Policy (FTP)?
Foreign trade policies are government actions, especially tariffs, import quotas, and
export subsidies, designed to increase net exports.
- India's FTP is formulated for five years at a time.
- The FTP 2015-20 came into effect on 1st April 2015 and was extended by one more year till
31 March 2021, due to Covid-19 pandemic.

R.C. Reddy IAS Study Circle 11

India's Merchandise Export and Import Statistics at a Glance
(Values in USD billion):
Year Exports Imports Trade Deficit (Exports-Imports)
2019-20 313.36 474.71 -161.35
2018-19 330.07 514.07 -184
2017-18 303.52 465.58 -162.06
2016-17 275.85 384.35 -108.5
2015-16 262.29 318 -55.71

As can be seen from the table above, India's exports have been less than imports in all the
considered years. Moreover, the extent of merchandise trade deficit which is given by exports
minus imports has been more or less on an increasing trend over the years.
The major countries to which India exports are:
United States of America
UAE
China
Saudi Arabia
Hong Kong
India's top exported commodities are:
Petroleum and its Products
Gems and Jewellery
Organic chemicals
Marine products
Animal meat
India's top exported services are:
Information Technology and business services
RC REDDY IAS STUDY CIRCLE
Travel and tourism services
Transport services
The major objectives of India's new foreign trade policy are the following.
1. To make India a 5 trillion economy by boosting exports from both services and
merchandise sectors.
It will be achieved by addressing various overseas and domestic constraints related to
regulatory, policy, and framework to lower transaction costs and enhance the ease of doing
business.

12 R.C. Reddy IAS Study Circle

- A low-cost operating environment will be created with the help of efficient utilities and logistics
infrastructure.
- Improvements in the operations of the domestic manufacturing and services sector in
combination with efficient infrastructure support by the government would result in correcting
the imbalances within India and feed into the trade policy.
2. Implementation of District Hubs Export Initiative
- This will make each district of India to achieve its potential as an Export Hub
- This will be implemented in a phased manner
Prior to this, India's previous foreign trade policy was unveiled by Ms Nirmala Sitharaman,
Minister of State for Commerce & Industry (Independent Charge), Government of India
on April 1, 2015. Following are the highlights of the previous foreign trade policy:
- FTP 2015-20 provided a framework for increasing exports of goods and services as well as
generation of employment and increasing value addition in the country, in line with the 'Make
in India' programme.
- The Policy aimed to enable India to respond to the challenges of the external environment,
keeping in step with a rapidly evolving international trading architecture and make trade a
major contributor to the country's economic growth and development.
- FTP 2015-20 introduced two new schemes, namely 'Merchandise Exports from India Scheme
(MEIS)' for export of specified goods to specified markets and 'Services Exports from India
Scheme (SEIS)' for increasing exports of notified services.
- Trade facilitation and enhancing the ease of doing business were the other major focus
areas of the previous FTP. One of the major objectives of FTP was to move towards paperless
working in 24x7 environments.
- A number of steps were taken for encouraging manufacturing and exports. The steps included
a fast track clearance facility for the manufacturing units, permitting them to share infrastructure
facilities, permitting inter unit transfer of goods and services, permitting them to set up
warehouses near the port of export and to use duty free equipment for training purposes.
- 108 MSME clusters were also identified to boost exports.
UK invites PM Modi for G7 Summit

RC REDDY IAS STUDY CIRCLE

- On 17th January, 2021, Britain has invited India to attend the G7 Summit as a 'guest country'
which will be held in June 2021.(Guest country is that country which is not a part of the G7
group, but is still invited to participate in the summit.)
- UK Prime Minister Boris Johnson envisioned to use the summit to discuss with the heads of
governments from the world's leading democracies about ways to recover from the crisis
caused by the Covid-19 pandemic, climate change, how the world can benefit from open
trade,technological changes, etc.
- Recognising the importance and role of science, technology and innovation, importantscientific
research and innovations are discussed by the Hon'ble Science and Technology Ministers
of respective countries. This includes aspects like advancement of enabling technologies

R.C. Reddy IAS Study Circle 13

 such as Information and Communication Technology (ICT) and Artificial Intelligence (AI);
promotion of research and development in various sectors; clean energy etc.
What is the G7?
- The Group of Seven (G7) is an informal bloc of industrialised democracies-Canada, France,
Germany, Italy, Japan, the United Kingdom, and the United States-that meet annually to
discuss issues such as global economic governance, international security, and energy policy.
- France, Italy, Japan, the United Kingdom, the United States, and West Germany formed the
Group of Six in 1975 (Canada joined the following year leading to Group of Seven) to provide
a venue for the non-communist powers to address pressing economic concerns.
What does it do?
- The initial group of six first met in 1975 "to exchange ideas on possible solutions" to a global
economic crisis. Canada joined this group in 1976.
- Ministers and civil servants from the G7 countries meet throughout the year to discuss matters
of mutual interest.
Is the G7 effective?
- Though some call it ineffective, G7 points to a number of successes, including helping to
launch a global fund to fight AIDS, TB and malaria, which saved 27 million lives since 2002.
- It also claims that G7 was a driving force behind the implementation of the 2016 Paris climate
agreement.
What is the Paris climate agreement?
The Paris Agreement is a legally binding international treaty on climate change. Its
goal is to limit global warming to well below 2, preferably to 1.5 degrees Celsius,
compared to pre-industrial levels.
The Paris Agreement is alandmark in the multilateral climate change process because,
for the first time, a binding agreement brings all nations into a common cause to
undertake ambitious efforts to combat climate change and adapt to its effects.
What challenges does the G7 face?
- Internally the G7 had a number of disagreements, most recently when President Trump clashed
RC REDDY IAS STUDY CIRCLE
with other members over taxes on imports and action on climate change at 44th G7 Summit
in Canada.
- The organisation has also been criticised for not reflecting the current state of global politics
or economics.
- There are no G7 members from Africa, Latin America or the southern hemisphere.And it
faces a challenge from fast-growing emerging economies, lie India and Brazil who, though
represented in the G20 group of economies, are not members of the G7.
- It has been suggested by some global economists that these economies will outstrip some of
the G7 nations by 2050. Hence, they should be included in the G7 group by expanding it.

14 R.C. Reddy IAS Study Circle