Answers: Mains Marathon – UPSC Mains Current Affairs Questions – October 31

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Q.1) Logistics Data Bank’s (LDB) services will soon be extended to all major ports in India. In this context highlight the objectives of Logistic Data Bank’s (LDB) project. What are the advantages of this project for logistic sector in India? What are the government initiatives to boost this sector? (GS-3)

Ans.

The Logistics Data Bank’s (LDB) services will soon be extended to all major ports in India

The discussions in this regard have begun between the Government and the Indian Port Association (IPA). The IPA is the apex body for India’s major ports under the shipping ministry’s supervisory contro

Till now, the LDB project covered only the India’s western logistics corridor

Objectives of LDB Project:

• The LDB project’s objective is to ensure greater efficiency in the country’s logistics sector through the use of information technology.
• To boost foreign trade: The LDB project was unveiled in July 2016 as an important ‘ease of doing business’ initiative to boost the country’s foreign trade and bring about greater transparency.
• It helps in reducing the overall lead time of container movement, besides bringing down transaction costs that consignees and shippers incur.

Advantages of LDB project:

• The LDB project covers “the entire movement through rail or road till the Inland Container Depot and Container Freight Station”.
• The services include providing users the ‘average delivery time’ as well as notifications through SMS and email.
• The project also provides other services such as ‘congestion and bottleneck analysis’ as well as ‘performance bench-marking’ that aids the users to pinpoint supply chain inefficiencies, and in turn help improve the system.
• The project will help in cutting down the overall lead time of container movement as well as reduced transaction costs that consignee and shippers incur
• It is billed as a major ‘ease of doing business’ initiative aimed at boosting India’s foreign trade and ensuring greater transparency.
• The service integrates information available with the agencies across the supply chain to provide detailed, real-time information within a single window.
• The services include providing users the ‘average delivery time’ as well as notification through SMS and email
• LDB will generate visibility for containers during their transition.
• The visibility would bring in more transparency and open up competition among each logistics operators to provide better services to end-customers i.e. export/import related companies.
• Competitive environment would help reducing lead-time and transaction cost for export/import process

Government initiatives:

• The government’s ambitious Sagar Mala project would transform the logistic sector and change the lives of those living along the 7,500 km coastline in the country.
• The industry anticipates more schemes under Make in India, Skill India, and Digital India initiatives, which would help in the boost of the upstream and downstream economic activities.
• The Road Ministry has initiated a project for the development of Multimodal Logistic Parks at 15 identified locations at a cost of about Rs 30,000 crore, about one-third of which would be for land acquisition.
• Another major development in the infrastructure sector is the enactment of the law on inland waterways, and the declared intention to promote cargo movement on these waterways.
• The Central government has reiterated its commitment to promote coastal shipping. The Foreign Trade Policy 2015-2020 consolidated and/or modified several schemes and simplified the procedures for export.

Conclusion:

Logistics is regarded as the backbone of the economy, providing efficient and cost effective flow of goods on which other commercial sector depends. Therefore, there is urgent need for reduction in logistics costs in order to increase the international competitiveness and to promote the expansion of export. Focus has to be on research in process excellence which can help to eliminate inefficiencies and bring Indian logistics on part with global practices.

Q.2) The US Secretary of State, Rex Tillerson’s, recent visit to India has drawn attention to an enduring paradox that marks the relationship between India and America. In the light of the statement highlight the important areas of cooperation between the two countries? What are the various challenges to further improvement of relations?(GS 2)

Ans.

The US Secretary of State, Rex Tillerson, has drawn attention to an enduring paradox that marks the relationship between India and America.

Two paradoxes:

1. One such paradox is about the gap between expert expectations and actual outcomes.
2. The relationship remains very below potential. Neither side has taken full advantage of all the possibilities that have emerged.

India-U.S relations:

1-      Economic dimensions:

• India ranks just 130th on the World Bank’s annual survey on the ease of doing business. Yet Tillerson cited the growth of the two countries’ economic partnership, saying 600 American companies work there and that U.S. investment in the country has risen 500 percent in two years.
• Bilateral trade will climb beyond the record $115 billion reached last year, noting that a U.S. shipment of crude oil arrived in India this month for the first time.
• Citing India’s role as the world’s most populous democracy, Tillerson said the two nations “share a vision for the future.” He called for closer defense ties, referring to a range of hardware the U.S. is prepared to sell India

Trade relations:

• The U.S. is India’s second largest trading partner, and India is its 11th largest trading partner.
• In 2015, the US exported $ 21.5 billion worth of goods to India and imported $ 44.8 billion worth of Indian goods.
• Major items imported from India include information services, textiles, machinery, gems, and diamonds, chemicals and iron and steel products, coffee etc.
• Major items imported by India include aircraft, fertilizers, computer hardware, scrap metal and medical equipment.

2-       Civil Nuclear Partnership:

• The bilateral civil nuclear cooperation agreement was finalized in July 2007 and signed in October 2008. During Prime Minister Modi’s visit to the US in September 2014, the two sides set up a Contact Group for advancing the full and timely implementation of the India-US Civil Nuclear Cooperation Agreement, and to resolve pending issues.The India-United States Civil Nuclear Agreement also referred to as the “123 Agreement” signed  in 2008 is a bilateral agreement for peaceful nuclear cooperation which governs civil nuclear trade between American and Indian firms to participate in each other’s civil nuclear energy sector.  For the agreement to be operational, nuclear vendors and operators must comply with India’s 2010 Nuclear Liability  Act which stipulates that nuclear suppliers, contractors and operators must bear financial responsibility in case of an accident.

Counter terrorism:

• Cooperation in counter-terrorism has seen considerable progress with intelligence sharing, information exchange, operational cooperation, counter-terrorism technology and equipment. India-US Counter-Terrorism Cooperation Initiative was signed in 2010 to expand collaboration on counter-terrorism, information sharing and capacity building.

Energy and climate change:

• The U.S.-India Energy Dialogue was launched in May 2005 to promote trade and investment in the energy sector, and held its last meeting in September 2015 in Washington DC. There are six working groups in oil & gas, coal, power and energy efficiency, new technologies & renewable energy, civil nuclear cooperation and sustainable development under the Energy Dialogue.
• Recently, Indian Oil Corp. Ltd received its first crude oil shipment from the US on Monday, after Washington re-entered the export market last year, increasing competition in an already depressed oil market

Recent development on their relations:

• The two countries have now advanced to $115 billion, with the surplus in India’s favour.
• Still there are multiple obstacles remain in boosting two-ways trade to the proclaimed goal of $500 billion.
• America has become a major arms supplier for India.
• The volume of Indian defence imports has grown from near zero at the turn of the century to about $15 billion presently.
• And now, both Trump and Tillerson have signalled renewed strategic enthusiasm for India.
• In the last couple of decades, both the nations made progress by setting aside their differences on Pakistan and China.
• America has begun to clear the path for strategic regional coordination between two nations.

Challenges:

• There are residual issues in Washington about supplying advanced defence technologies to India and Delhi remains reluctant to inject greater political content into the security partnership.
• Under-estimation of the bipartisan political commitment in both countries to build a strong strategic partnership.
• Conflicts related to the IPR regime under the aegis of  WTO.
• Increased Protectionism being brought in by the Trump Regime.
• President George W.Bush invested huge political capital to reconcile America with the reality of India’s nuclear weapons programme and lifted the decade-old domestic and international restrictions on atomic energy cooperation with India.
• President Barack Obama resisted the temptations to connect the problems in Kashmir and Afghanistan, completed the negotiations on the nuclear deal, and elevated India to a central position in America’s strategy towards Asia and the Indo-Pacific.

Conclusion:

• India should resist the temptation for an endless debate on whether America can move away from China and Pakistan and be India’s reliable partner. Delhi should focus, instead, on strengthening practical cooperation wherever possible with Trump’s Washington.
• New Delhi must seek to stiffen America’s resolve to confront the Pakistan Army’s sponsorship of terror, encourage him to discard the residual bureaucratic hesitations in Washington about supporting India’s rise and delineate the pathways for constructing a stable balance of power system in the Indo-Pacific.

Q.3)Electronic commerce is the most emerging discipline in today’s digitalized world. In this context highlight the importance of e-commerce? What are the challenges e-commerce business is facing   in India? (GS-3)

Ans.

Electronic commerce is the most emerging discipline in today’s digitalized world.

Some statistics related to e-commerce:

• With $ 681 billion in online retail sales in 2016, China is the largest market for e-commerce globally, followed by the US, and the fastest growing one is India.
• India has an Internet user base of about 243.2 million as of January 2014.
• Despite being third largest user base in the world, the penetration of Internet is low compared to markets like United States, United Kingdom or France but is growing at a much faster rate, adding around 6 million new entrants every month.
• In India, cash on delivery is the most preferred payment method, accumulating 75% of the e-retail activities.  The retail market in India is expected to rise from 2.5% in 2016 to 5% in 2020.

What is E-Commerce?

• Electronic commerce or e-commerce is a type of business model, or segment of a larger business model, that enables a firm or individual to conduct business over an electronic network, mainly from the internet.
• Electronic commerce operates in all four of the major market segments: business to business, business to consumer, consumer to consumer and consumer to business.
• E-Commerce processes are conducted using applications, such as email, fax, online catalogues and shopping carts, electronic data interchange (EDI), file transfer protocol and web services and e-newsletters to subscribers.
• Electronic commerce emerged in the early 1990’s and its use has increased at a rapid rate. Today the majority of companies have an online presence.

Some of the importance of  e-commerce are given below:

• Faster buying and selling procedure, as well as easy to find products.
• Buying and selling day and night
• More reach to customers, there is no theoretical geographic limitations.
• No need of physical company set-ups
• Easy to start and manage a business.
• Customers can easily select products from different providers without moving around physically.
• E-Commerce helps in creating new job opportunities due to information related services, software app and digital products.
• E-commerce offers the consumer or enterprise various information they need, making information into total transparency, and enterprises are no longer is able to use the mode of space or advertisement to raise their competitive edge.

Challenges e-commerce business facing in India:

• The growth of ecommerce volumes in India is attracting the attention of players around the globe. India, the second most populous country in the world, is home to 1.2 billion people. The combined populations of Germany, UK, France, Italy, Netherlands, Belgium, and Greece equal one-fourth the population of India alone. Despite lower per-capita purchasing power, this still makes India one of the most attractive emerging markets for ecommerce. But India is far from being a bed of roses. Here are some challenges that ecommerce businesses face in India
• Indian customers return much of the merchandise they purchase online.
• Cash on delivery is the preferred payment mode
• E-commerce companies using Indian payment gateways are losing out on business, as several customers do not re attempt payment after a transaction fails.
• Though the total number of mobile phone users in India is very high, a significant majority still use feature phones, not smart phones. So, for all practical purposes this consumer group is unable to make ecommerce purchases on the move.
• The logistics challenge in India is not just about the lack of standardization in postal addresses. Given the large size of the country, there are thousands of towns that are not easily accessible. Metropolitan cities and other major urban centers have a fairly robust logistics infrastructure.
• Overfunded competitors are driving up cost of customer acquisition.
• The vibrancy in the Indian startup ecosystem over the past couple of years has channeled a lot of investment into the ecommerce sector. The long-term prospects for ecommerce companies are so exciting that some investors are willing to spend irrationally high amounts of money to acquire market share today. Naturally the Indian consumer is spoiled for choice.