GOODS AND SERVICE TAX (GST)
- The Goods and Services Tax (GST) is a value-added tax levied on the supply of goods and services at each stage of the production and distribution chain. It is a comprehensive indirect tax that aims to replace multiple indirect taxes imposed by the central and state governments in India.
- GST is designed to simplify the tax structure, eliminate the cascading effect of taxes, and create a unified national market. Under the GST system, both goods and services are taxed at multiple rates based on the nature of the product or service. The tax is collected at each stage of the supply chain, and businesses are allowed to claim a credit for the taxes paid on their inputs.
- The GST system in India came into effect on July 1, 2017, replacing a complex tax structure that included central excise duty, service tax, and state-level taxes like VAT (Value Added Tax), among others. The GST Council, consisting of representatives from the central and state governments, is responsible for making decisions on various aspects of GST, including tax rates and rules.
- GST is intended to create a more transparent and efficient tax system, reduce tax evasion, and promote economic growth by fostering a seamless flow of goods and services across the country. It has a significant impact on businesses, as they need to comply with the new tax regulations and maintain detailed records of their transactions for GST filing
3.Goods and Services Tax (GST) and 101st Amendment Act, 2016
The Goods and Services Tax (GST) in India was introduced through the 101st Amendment Act of 2016. This constitutional amendment was a crucial step in the implementation of GST, which aimed to create a unified and comprehensive indirect tax system across the country.
Here are some key points related to the 101st Amendment Act and GST:
- The 101st Amendment Act was enacted to amend the Constitution of India to pave the way for the introduction of the Goods and Services Tax.
- It added a new article, Article 246A, which confers concurrent powers to both the central and state governments to levy and collect GST
- The amendment led to the creation of the GST Council, a constitutional body consisting of representatives from the central and state governments. The council is responsible for making recommendations on GST rates, exemptions, and other related issues
- The amendment introduced a dual GST structure, where both the central government and the state governments have the power to levy and collect GST on the supply of goods and services
- For inter-state transactions, the 101st Amendment Act provides that the central government would levy and collect the Integrated Goods and Services Tax (IGST), which would be a sum total of the central and state GST
- The amendment also included a provision for compensating states for any revenue loss they might incur due to the implementation of GST for a period of five years
In India, the Goods and Services Tax (GST) is structured into different tax rates based on the nature of the goods and services. As of my last knowledge update in January 2022, the GST rates are divided into multiple slabs. It's important to note that tax rates may be subject to changes, and new amendments could have been introduced since then. As of my last update, the GST rates are as follows:
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Nil Rate:
- Some goods and services are categorized under the nil rate, meaning they attract a 0% GST. This implies that no tax is levied on the supply of these goods or services.
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5% Rate:
- This is a lower rate, applicable to essential goods such as certain food items, medical supplies, and other basic necessities.
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12% Rate:
- Goods and services falling in this category attract a 12% GST rate. Items such as mobile phones, processed foods, and certain services fall under this slab.
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18% Rate:
- A higher rate of 18% is applicable to goods and services such as electronic items, capital goods, and various services.
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28% Rate:
- The highest GST rate of 28% is applied to luxury items, automobiles, and certain goods and services that are considered non-essential or fall into the luxury category.
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Compensation Cess:
- In addition to the above rates, some specific goods attract a compensation cess, which is levied to compensate the states for any revenue loss during the transition to GST. This is often applied to items like tobacco and luxury cars.
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Zero Rate:
- Certain categories of goods and services may be specified as "zero-rated," which means they are effectively taxed at 0%. This is different from the nil rate, as it allows businesses to claim input tax credit on inputs, capital goods, and input services.
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Exempt Supplies:
- Some goods and services may be exempt from GST altogether. This means that they are not subject to any GST, and businesses cannot claim input tax credit on related inputs
Subject | Central GST (CGST) | State GST (SGST) | Union Territory GST (UTGST) | Integrated GST (IGST) |
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Levied by | Central Government | Respective State Governments | Union Territory Administrations | Central Government (on inter-state transactions) |
Applicability | On intra-state supplies (within the same state) | On intra-state supplies (within the same state) | On intra-union territory supplies (within the same union territory) | On inter-state supplies (across states or union territories) |
Rate Determination | Determined by the Central Government | Determined by the Respective State Government | Determined by the Union Territory Administration | IGST rate is a sum of CGST and SGST rates |
Revenue Collection | Collected by the Central Government | Collected by the Respective State Government | Collected by the Union Territory Administration | Collected by the Central Government (on inter-state transactions) |
Utilization of Revenue | Shared between Central and State Governments | Retained by the Respective State Government | Retained by the Union Territory Administration | Shared between Central and State Governments |
Purpose | Part of the dual GST structure, meant to cover central taxes | Part of the dual GST structure, meant to cover state taxes | Applicable in union territories for intra-territory supplies | Applied to regulate and tax inter-state supplies |
Input Tax Credit (ITC) | ITC available for CGST paid on inputs and services | ITC available for SGST paid on inputs and services | ITC available for UTGST paid on inputs and services | ITC available for both CGST and SGST paid on inputs |
Tax Jurisdiction | Applies within a particular state | Applies within a particular state | Applies within a particular union territory | Applies to transactions across states and union territories |
GSTN Portal for Filing Returns | Central GSTN portal | State-specific GSTN portals | UTGSTN portal | Integrated GSTN portal |
- GST replaced multiple indirect taxes levied by the central and state governments, simplifying the tax structure. This streamlined system reduces the complexity of compliance for businesses
- GST eliminates the cascading effect of taxes, where taxes are levied on top of other taxes. With a seamless credit mechanism, businesses can claim input tax credit on the taxes paid on their purchases, leading to a more transparent and efficient system
- GST has facilitated the creation of a common national market by harmonizing tax rates and regulations across states. This has reduced trade barriers and promoted the free flow of goods and services throughout the country
- The GST system has incorporated technology-driven processes, including electronic filing and real-time reporting, making it harder for businesses to evade taxes. This has contributed to increased tax compliance
- The input tax credit mechanism under GST benefits manufacturers, as they can claim credits for taxes paid on raw materials and input services. This has a positive impact on the cost of production and enhances the competitiveness of Indian goods in the international market
- GST brings transparency to the taxation system. The online filing of returns and the availability of transaction-level data make it easier for tax authorities to monitor and track transactions, reducing the scope for corruption
- GST has replaced a complex system of filing multiple tax returns with a more straightforward mechanism. Businesses now need to file fewer returns, reducing the compliance burden
- The implementation of GST has contributed to an improvement in the ease of doing business in India. The unified tax system has made it simpler for businesses to operate across states and has reduced the paperwork and bureaucratic hurdles associated with tax compliance
- GST has led to the harmonization of tax rates across states and union territories, minimizing the tax rate disparities that existed earlier. This creates a more predictable tax environment for businesses
- Despite the intention to simplify the tax structure, the multi-tiered rate system (0%, 5%, 12%, 18%, and 28%) and the inclusion of cess on certain goods have introduced complexity. The classification of goods and services under different tax slabs can be challenging, leading to disputes and confusion
- The successful implementation of GST relies heavily on technology. Issues such as technical glitches on the GSTN (Goods and Services Tax Network) portal, especially during the initial phases, have caused difficulties for businesses in filing returns and complying with regulations
- The compliance requirements for businesses under GST, including multiple returns filing, have been perceived as burdensome. Smaller businesses, in particular, may find it challenging to adapt to the new system and comply with the various provisions
- The transition from the previous tax regime to GST posed challenges, especially for businesses in terms of understanding the new tax structure, reconfiguring accounting systems, and ensuring a smooth transition of credits from the old tax system to the GST system
- The classification of certain goods and services into specific tax slabs has been a source of contention. Ambiguities in classification have led to disputes and litigations, with businesses seeking clarity on the applicable tax rates
- The implementation of GST has increased compliance costs for businesses due to the need for sophisticated IT infrastructure, the hiring of tax professionals, and efforts to ensure accurate reporting and filing
- Challenges related to availing and matching input tax credits have been reported. Timely matching of credits and resolving discrepancies can be cumbersome, leading to concerns about the seamless flow of credit across the supply chain
- The anti-profiteering provisions were introduced to ensure that businesses pass on the benefits of reduced tax rates to consumers. However, the implementation of anti-profiteering measures has been criticized for its complexity and potential for disputes
- The periodic changes in the GST return filing system have created challenges for businesses in adapting their processes. Delays and complexities in return filing can affect working capital management
The GST Council consists of the following members:
- The Union Finance Minister, who is the Chairperson of the Council.
- The Union Minister of State in charge of revenue or any other Minister of State nominated by the Union Government.
- One Minister from each state, nominated by the Governor of that state.
- The Chief Secretary of each state, ex-officio.
- If the President, on the recommendation of the Council, so directs, one representative of each Union territory which has a legislature, to be nominated by the Lieutenant Governor of that Union territory.
- Three to seven members (other than Ministers) to be nominated by the Union Government, of whom at least one member shall be from the field of economics and another from the field of chartered accountancy, legal affairs or public finance
For Prelims: Economic and Social Development and Indian Polity and Governance
For Mains: General Studies II: 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
General Studies III: Inclusive growth and issues arising from it |
Previous Year Questions
1.Which of the following are true of the Goods and Services Tax (GST) introduced in India in recent times? (UGC Paper II 2020)
A. It is a destination tax
B. It benefits producing states more
C. It benefits consuming states more
D. It is a progressive taxation
E. It is an umbrella tax to improve ease of doing business
Choose the most appropriate answer from the options given below:
A.B, D and E only
B.A, C and D only
C.A, D and E only
D.A, C and E only
Answer (D)
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CYBERCRIME
2. About cybercrime
Cybercrime is essentially any illegal activity that involves computers, networks, or digital devices. Criminals can use these tools to steal data, commit fraud, disrupt computer systems, or cause other harm. Some common types of cybercrime include:
- Stealing someone's personal information like their name, Social Security number, or credit card details to impersonate them and commit fraud.
- Tricking people into giving up their personal information or clicking on malicious links by disguising emails or websites as legitimate ones.
- Malicious software that can be installed on a computer to steal data, damage files, or disrupt operations.
- Gaining unauthorized access to a computer system or network to steal data, install malware, or cause damage.
3. What is NCRP?
The National Cybercrime Reporting Portal is an online platform established by the government of India to facilitate the reporting of cybercrimes by citizens. The portal allows individuals to report incidents of cybercrime in a streamlined and accessible manner.
Key features and functions of the National Cybercrime Reporting Portal include
- Individuals can report various types of cybercrimes such as online harassment, financial fraud, ransomware attacks, and identity theft. The portal provides specific categories for different types of cyber incidents to ensure proper documentation and handling.
- The portal places a special emphasis on crimes related to women and children, providing a dedicated section to report cases of online harassment, child pornography, and other related offences.
- The portal allows users to report crimes anonymously if they choose, ensuring the confidentiality and privacy of the complainant.
- Once a complaint is filed, the portal provides a tracking number which can be used to follow up on the status of the complaint.
- The portal offers resources and guidelines on how to protect oneself from cybercrime, as well as information on legal recourse and support available for victims.
The Indian Cyber Crime Coordination Centre (I4C), established by the Ministry of Home Affairs (MHA), is essentially India's central command centre for combating cybercrime.
Functions
- The I4C serves as a focal point for coordinating efforts between various Law Enforcement Agencies (LEAs) across the country to tackle cybercrime effectively.
- It facilitates the exchange of information on cybercrime investigations, cyber threat intelligence, and best practices among LEAs. This allows for a more unified approach to combating cyber threats.
- The I4C is citizen-centric. It played a role in launching the National Cybercrime Reporting Portal (NCRP) which allows people to report cybercrime complaints online. There's also a National Cybercrime Helpline (1930) to report incidents and get assistance.
- The I4C identifies the need for adapting cyber laws to keep pace with evolving technology. They recommend amendments to existing laws and suggest the creation of new ones if necessary.
- The I4C works with academia and research institutes to develop new technologies and forensic tools to aid in cybercrime investigations.
- They promote collaboration between the government, industry, and academia to raise awareness about cybercrime and develop standard operating procedures (SOPs) for containing and responding to cyberattacks.
5. What is the Budapest Convention?
The Budapest Convention, also known as the Council of Europe Convention on Cybercrime, is the world's first international treaty specifically designed to address cybercrime. It came into effect in 2004 with three main objectives:
- The convention aims to improve how countries investigate cybercrime by setting standards for collecting electronic evidence and fostering cooperation between law enforcement agencies.
- It facilitates cooperation among member states in tackling cybercrime. This includes sharing information, assisting with investigations, and extraditing cybercriminals.
- The convention encourages member countries to harmonize their national laws related to cybercrime. This creates a more unified approach to defining and prosecuting cyber offences.
India's Stand: India is not currently a party to the Budapest Convention. There are concerns that some provisions, like data sharing with foreign law enforcement agencies, might infringe on India's national sovereignty. India has also argued that it wasn't involved in drafting the initial convention.
6. What is the Global Cybersecurity Index?
The Global Cybersecurity Index (GCI) is an initiative by the International Telecommunication Union (ITU) to measure and rank the cybersecurity capabilities of countries around the world. The index provides insights into the commitment of countries to cybersecurity at a global level, assessing their strengths and identifying areas for improvement. The key aspects of the Global Cybersecurity Index
Purpose
- To promote cybersecurity awareness and foster a global culture of cybersecurity.
- To encourage countries to enhance their cybersecurity infrastructure and strategies.
- To facilitate knowledge sharing and cooperation among nations.
Assessment Criteria
The GCI evaluates countries based on five main pillars:
- Examines the existence of cybersecurity legislation and regulatory frameworks.
- Assesses the implementation of cybersecurity technologies and technical institutions.
- Looks at national cybersecurity strategies, policies, and dedicated agencies.
- Evaluate the availability of cybersecurity education, training, and awareness programs.
- Measures the extent of international and national cooperation in cybersecurity efforts.
Impact
The GCI serves several important functions:
- Provides a benchmarking tool for countries to assess their cybersecurity maturity.
- Helps policymakers identify gaps and prioritize areas for improvement.
- Encourages international cooperation and collaboration to tackle global cyber threats.
7. The challenges related to cyber security in India
India faces numerous challenges related to cybersecurity, reflecting its rapidly growing digital economy and increasing reliance on technology.
Increasing Cyber Threats:
- India has seen a significant rise in cybercrimes, including hacking, phishing, ransomware attacks, and identity theft. Sophisticated, state-sponsored attacks targeting critical infrastructure and sensitive data are becoming more common.
- Many public and private sector systems rely on outdated technology, making them vulnerable to attacks. Inadequate implementation of robust cybersecurity measures and protocols leaves systems exposed.
- There is a significant gap in the number of trained cybersecurity experts needed to protect against and respond to cyber threats. Ongoing education and training programs are insufficient to keep pace with evolving cyber threats.
- The absence of a unified regulatory framework complicates cybersecurity management. While laws like the IT Act 2000 exist, enforcement and implementation remain inconsistent and weak.
- Many individuals and small businesses lack awareness of basic cybersecurity practices. Practices like using weak passwords, not updating software, and falling for phishing scams are common.
- The absence of robust data protection legislation makes it difficult to safeguard personal and sensitive data. Ensuring privacy and protection of personal information remains a significant challenge.
- Effective cybersecurity often requires international cooperation, which is currently limited and inconsistent. Cross-border cyber threats and geopolitical tensions complicate collaboration and response efforts.
- The rapid adoption of IoT devices, often with minimal security features, increases vulnerabilities. While AI can enhance security, it also introduces new risks and attack vectors.
- Sectors like banking, healthcare, and energy are increasingly targeted, requiring enhanced protection measures. Ensuring coordinated efforts among various governmental and private entities involved in critical infrastructure protection is challenging.
- Limited financial resources allocated for cybersecurity initiatives hinder the development and implementation of comprehensive security measures.
- Staying abreast of the latest cybersecurity technologies and tools is difficult due to financial and logistical constraints.
For Prelims: Cyber Crime, Artificial Intelligence, Internet of Things, Indian Cyber Crime Coordination Centre, National Cybercrime Reporting Portal, Budapest Convention, Global Cybersecurity Index, International Telecommunication union
For Mains:
1. India witnesses a high number of cybercrimes originating from Southeast Asia. Analyze the challenges this poses for Indian Law Enforcement Agencies and suggest measures to improve cross-border cooperation in tackling cybercrime. (250 words)
2. What are the key functions of the Indian Cyber Crime Coordination Centre (I4C)? Critically evaluate its effectiveness in combating cybercrime in India. (250 words)
3. The rise of Internet of Things (IoT) devices introduces new vulnerabilities in cyberspace. Analyze the cybersecurity challenges posed by IoT and suggest measures to mitigate these risks. (250 words)
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Previous Year Questions
1. In India, under cyber insurance for individuals, which of the following benefits are generally covered, in addition to payment for the loss of funds and other benefits? (UPSC 2020)
1. Cost of restoration of the computer system in case of malware disrupting access to one's computer
2. Cost of a new computer if some miscreant wilfully damages it, if proved so
3. Cost of hiring a specialized consultant to minimize the loss in case of cyber extortion
4. Cost of defence in the Court of Law if any third party files a suit
Select the correct answer using the code given below:
A.1, 2 and 4 only B.1, 3 and 4 only C.2 and 3 only D.1, 2, 3 and 4
2. Global Cyber Security Index (GCI) 2020 is released by which of the following organizations? (RRB Clerk Mains 2021)
A. World Bank
B. United Nations Development Programme
C. International Telecommunication Union
D. World Economic Forum
E. None of these
Answers: 1-D, 2-C
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ONE NATION-ONE ELECTION
1. Context
2. About the ONOE Plan
- The ONOE plan revolves around a core concept synchronizing the timing of Lok Sabha (India's lower house of Parliament) and State Assembly elections across all states.
- The primary objective is to reduce the frequency of elections throughout the country.
3. Historical Perspective on Simultaneous Elections
- Taking a historical glance, the first-ever general elections to Lok Sabha and all State Assemblies occurred simultaneously in 1951-1952, immediately following the enforcement of the Constitution on January 26, 1950.
- This practice persisted through three subsequent Lok Sabha elections until 1967 when it was disrupted.
- The initial disruption took place in 1959 when Article 356 of the Constitution was invoked by the Centre to dismiss the Kerala government.
- Subsequently, due to political defections and counter-defections, several Legislative Assemblies dissolved post-1960, ultimately leading to separate elections for Lok Sabha and State Assemblies.
- Presently, assembly polls in the states of Arunachal Pradesh, Sikkim, Andhra Pradesh, and Odisha are held in conjunction with Lok Sabha elections.
4. Insights from Reports on ONOE
- In August 2018, the Law Commission of India (LCI), chaired by Justice B. S. Chauhan, released a draft report on simultaneous elections.
- This comprehensive report analyzed the constitutional and legal aspects of the ONOE issue.
- Notably, the LCI submitted that simultaneous elections are not feasible within the current framework of the Constitution.
- The LCI emphasized that conducting simultaneous polls would require amendments to the Constitution, the Representation of the People's Act 1951, and the Rules of Procedure of Lok Sabha and State Assemblies.
- Furthermore, the commission recommended that this proposal receive ratification from at least 50% of the states.
- However, in terms of the benefits of simultaneous elections, the commission argued that ONOE would result in substantial cost savings, reduced strain on the administrative setup and security forces, timely implementation of government policies, and a shift of managerial focus towards development activities instead of electioneering.
- Notably, this is not the first time such a proposal has been made, as a similar recommendation was made by the LCI in 1999, headed by Justice B. P. Jeevan Reddy.
5. Concerns Surrounding ONOE
- The feasibility of ONOE is a matter of paramount concern. Articles 83(2) and 172 of the Constitution specify that the tenure of Lok Sabha and State Assemblies, respectively, shall last for five years unless dissolved earlier.
- However, Article 356 provides for circumstances where assemblies can be dissolved earlier.
- Consequently, the ONOE plan raises crucial questions, such as what would happen if the Central or State government collapses mid-tenure.
- Would elections be held again in every state, or would President's rule be imposed
- Amending the Constitution to implement such a significant change would necessitate extensive consideration of various scenarios and provisions and could set a concerning precedent for further constitutional amendments.
- Another critical concern relates to the idea of ONOE not aligning with the concept of 'federalism.'
- Federalism is established on the notion that the entire nation is a "Union of States," which appears to contradict the concept of 'one nation' proposed by ONOE.
6. Benefits of Recurrent Elections
- The present system of recurrent elections is viewed by some as beneficial in a democracy.
- It allows voters to have their voices heard more frequently and ensures that issues at the national and state levels remain distinct.
- This separation of issues promotes greater accountability among elected officials.
- The Central government has highlighted the substantial costs associated with frequent elections as a key motivator for ONOE.
- The Election Commission's expenditure of ₹8,000 crore over five years, equivalent to ₹1,500 crore annually or ₹27 per voter per year, can truly be considered a 'massive' expense for maintaining India's status as the world's largest electoral democracy.
8. The Way Forward
- The 'One Nation, One Election' plan presents both advantages and challenges that warrant careful consideration and debate.
- It is essential to weigh the benefits of reduced election frequency against the potential disruption to the democratic process and the fundamental principles of federalism and accountability.
For Prelims: One Nation-One Election, Article 356, Law Commission of India, Representation of the People's Act 1951, Article 83(2), Article 172, federalism,
For Mains:
1. What is One Nation-One Election? Explain how having simultaneous elections across Lok Sabha and State assemblies counter federalism. (250 Words)
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Previous Year Questions
1. If the President of India exercises his power as provided under Article 356 of the Constitution in respect of a particular State, then (UPSC 2018)
A. the Assembly of the State is automatically dissolved.
B. the powers of the Legislature of that State shall be exercisable by or under the authority of the Parliament.
C. Article 19 is suspended in that State.
D. the President can make laws relating to that State.
Answer: B
2. What is the provision in Article 356 of Indian Constitution? (Soldier Technical Paper 2021)
A. For jobs in reservation of backward classes
B. To impose President's rule in the states
C. For the protection of religious monument
D. To give special status to Jammu and kashmir
Answer: B
3. According to the Representation of the People Act, 1951, in the event of a person being elected to both houses of Parliament, he has to notify within ______ days in which house he intends to function. (Delhi Police Constable 2020)
A. 22 B. 10 C. 20 D. 15
Answer: B
4. Under what Article of the Constitution of India can the President take over the administration of a state in case its constitutional machinery breaks down? (MP Police Constable 2016)
A. Article 83 B. Article 352 C. Article 356 D. Article 343
Answer: C
5. Which one of the following in Indian Polity is an essential feature that indicates that it is federal in character? (UPSC 2021)
A. The independence of judiciary is safeguarded
B. The Union Legislature has elected representatives from constituent units
C. The Union Cabinet can have elected representatives from regional parties
D. The Fundamental Rights are enforceable by Courts of Law
Answer: A
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MINERALS SECURITY PARTNERSHIP (MSP)
The partnership includes major economies and resource-rich nations, typically led by countries such as the United States, Canada, Australia, and Japan, among others. These nations collaborate to identify and develop alternative sources of critical minerals and secure reliable supply chains.
Importance of Critical Minerals:
Critical minerals like lithium, cobalt, nickel, rare earth elements, and graphite are vital for:
- Clean Energy Transition: Supporting technologies like wind turbines, solar panels, and batteries.
- Defense and Aerospace: Enabling advanced weaponry, satellites, and aviation systems.
- Technological Advancements: Powering semiconductors, smartphones, and electric vehicles
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In June 2023, India became part of the MSP, a US-led alliance of 14 countries focused on fostering public and private investments to enhance global supply chains for critical minerals. A joint statement released by India and the US on June 23, 2023, highlighted their shared commitment to ensuring adequate supplies of essential critical minerals for their respective markets. It also emphasized accelerating bilateral efforts to establish resilient supply chains, marking India's formal entry into the partnership.
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The MSP member countries include Australia, Canada, Estonia, Finland, France, Germany, India, Italy, Japan, Norway, South Korea, Sweden, the United Kingdom, the United States, and the European Union, represented by the European Commission.
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The partnership focuses on minerals such as cobalt, nickel, lithium, and the 17 rare earth elements. Its objective is to create an alternative to China's dominance in rare earth processing and its acquisition of cobalt mines in Africa.
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Current collaborative efforts within the MSP involve establishing a forum for expertise sharing, building a robust battery material supply chain, and working on the development of a minerals processing facility in South America.
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The MSP gained further momentum with the creation of the MSFN in September, which comes amid a growing reliance on countries like China for critical resources, particularly rare earth minerals.
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As part of the new partnership, member nations acknowledged that addressing the rising global demand for critical minerals to facilitate the clean energy transition requires collective efforts beyond the capacity of any single institution. Public and private sectors within member countries must collaborate to mobilize investments in both new and existing markets in this field.
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Speaking at the United Nations General Assembly in New York, US Undersecretary of State Jose W. Fernandez remarked, “The energy transition is at risk. We need increased production capacity for critical minerals, as many supply chains are concentrated in one or two countries and lack resilience.”
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The 17 rare earth elements (REEs) comprise the 15 Lanthanides (atomic numbers 57 to 71, starting with Lanthanum) along with Scandium (atomic number 21) and Yttrium (atomic number 39). These elements are categorized into two groups: light rare earth elements (LREEs) and heavy rare earth elements (HREEs).
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REEs, though used in small amounts, are critical components in over 200 consumer products, such as mobile phones, computer hard drives, electric and hybrid vehicles, semiconductors, flat-screen TVs, monitors, and advanced electronics. India has been a late entrant in the lithium value chain, coinciding with projections of a significant transformation in the electric vehicle (EV) sector.
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India has some REEs, including Lanthanum, Cerium, Neodymium, Praseodymium, and Samarium. However, heavy rare earth elements like Dysprosium, Terbium, and Europium are not present in extractable quantities within Indian deposits. As a result, India depends on imports from countries like China, which dominates the global REE market with an estimated 70% share of global production

Critical minerals are essential for the manufacturing of advanced technologies, including renewable energy systems, electric vehicles, and high-end electronics. These minerals, such as lithium, cobalt, nickel, and rare earth elements, play a vital role in supporting India's transition to a low-carbon economy and enhancing its industrial and technological capabilities.
India's Import Reliance
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Dependence on Key Suppliers:
India heavily depends on imports for critical minerals, with China being a dominant supplier, especially for rare earth elements (REEs). China's extensive processing infrastructure and global mining investments make it a critical player in this sector. -
Limited Domestic Availability:
While India possesses some rare earth elements like lanthanum, cerium, neodymium, and praseodymium, others, particularly heavy rare earth elements such as dysprosium and terbium, are either unavailable or found in non-extractable quantities within the country. -
Strategic Vulnerability:
Over-reliance on imports exposes India to supply chain disruptions, geopolitical risks, and market volatility, threatening its clean energy and technological goals
For Prelims: Critical minerals, Ministry of Mines, carbon emissions, cleaner energy, lithium, cobalt, nickel, graphite, tin, copper, Selenium, Cadmium, Centre of Excellence on critical minerals, Australia's CSIRO, Geological Survey of India,
For Mains:
1. What are critical minerals? Discuss their significance for a country's economic development and national security. Explain how the identification of critical minerals helps in reducing import dependency and ensuring resource security. (250 Words)
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Previous Year Questions
1. With reference to the mineral resources of India, consider the following pairs: (UPSC 2010)
Mineral 90%Natural sources in
1. Copper Jharkhand
2. Nickel Orissa
3. Tungsten Kerala
Which of the pairs given above is/are correctly matched?
A. 1 and 2 only B. 2 only C. 1 and 3 only D. 1, 2 and 3
Answer: B
2. Recently, there has been a concern over the short supply of a group of elements called 'rare earth metals.' Why? (UPSC 2012)
1. China, which is the largest producer of these elements, has imposed some restrictions on their export.
2. Other than China, Australia, Canada and Chile, these elements are not found in any country. 3. Rare earth metals are essential for the manufacture of various kinds of electronic items and there is a growing demand for these elements.
Which of the statements given above is/are correct?
A. 1 only B. 2 and 3 only C. 1 and 3 only D. 1, 2 and 3
Answer: C
3. In India, what is the role of the Coal Controller's Organization (CCO)? (UPSC 2022)
1. CCO is the major source of Coal Statistics in Government of India.
2. It monitors progress of development of Captive Coal/Lignite blocks.
3. It hears any objection to the Government's notification relating to acquisition of coal-bearing areas.
4. It ensures that coal mining companies deliver the coal to end users in the prescribed time. Select the correct answer using the code given below:
A. 1, 2 and 3 B. 3 and 4 only C. 1 and 2 only D. 1, 2 and 4
Answer: A
4. Which of the following statements best describes the term 'Social Cost of Carbon'? It is a measure, in monetary value, of the (UPSC 2020)
A. long-term damage done by a tonne of CO2 emission in a given year.
B. requirement of fossil fuels for a country to provide goods and services to its citizens, based on the burning of those fuels.
C. efforts put in by a climate refugee to adapt to live in a new place.
D. contribution of an individual person to the carbon footprint on the planet Earth.
Answer: A
5. Direction: It consists of two statements, one labelled as ‘Statement (I)’ and the others as ‘Statement (II)’. You are to examine these two statements carefully and select the answer using the codes given below: (UPSC ESE 2018)
Statement (I): Green energy refers to one which does not harm the ecosystem of planet earth. Statement (II): All renewable energy is green energy.
A. Both Statement (I) and Statement (II) individually true and Statement (II) is the correct explanation of Statement (I)
B. Both statement (I) and Statement (II) are individually true, but Statement (II) is not the correct explanation of Statement (I)
C. Statement (I) is true, but Statement (II) is false
D. Statement (I) is false, but Statement (II) is true
Answer: C
6. Which type of battery is used in the recently launched world's first fully electric cargo ship by change? (Delhi Police Constable 2017)
A. Lead Acid B. Manganese C. Lithium ion D. Nickel metal hydride
Answer: C
7. White gold is an alloy of (UPSC CAPF 2022)
A. gold, nickel and palladium
B. gold, cobalt and palladium
C. gold, titanium and platinum
D. gold, magnesium and palladium
Answer: A
8. Graphene is frequently in news recently. What is its importance? (UPSC 2012)
1. It is a two-dimensional material and has good electrical conductivity.
2. It is one of the thinnest but strongest materials tested so far.
3. It is entirely made of silicon and has high optical transparency.
4. It can be used as 'conducting electrodes' required for touch screens, LCDs and organic LEDs. Which of the statements given above are correct?
A. 1 and 2 only B. 3 and 4 only C. 1, 2 and 4 only D. 1, 2, 3 and 4
Answer: C
9. Graphite and diamonds are__________. (WBCS Prelims 2020)
A. isotopes B. isomers C. isotones D. allotropes
Answer: D
10. Consider the following statements: (UPSC 2020)
1. Coal ash contains arsenic, lead and mercury.
2. Coal-fired power plants release sulphur dioxide and oxides of nitrogen into the environment. 3. High ash content is observed in Indian coal.
Which of the statements given above is/are correct?
A. 1 only B. 2 and 3 only C. 3 only D. 1, 2 and 3
Answer: D
11. Which of the following can be found as pollutants in the drinking water in some parts of India? (UPSC 2013)
1. Arsenic
2. Sorbitol
3. Fluoride
4. Formaldehyde
5. Uranium
Select the correct answer using the codes given below.
A. 1 and 3 only B. 2, 4 and 5 only C. 1, 3 and 5 only D. 1, 2, 3, 4 and 5
Answer: C
12. In the context of solving pollution problems, what is/are the advantage/advantages of the bioremediation technique? (UPSC 2017)
1. It is a technique for cleaning up pollution by enhancing the same biodegradation process that occurs in nature.
2. Any contaminant with heavy metals such as cadmium and lead can be readily and completely treated by bioremediation using microorganisms.
3. Genetic engineering can be used to create microorganisms specifically designed for bioremediation.
Select the correct answer using the code given below:
A. 1 only B. 2 and 3 only C. 1 and 3 only D. 1, 2 and 3
Answer: C
13. Due to improper/indiscriminate disposal of old and used computers or their parts, which of the following are released into the environment as e-waste? (UPSC 2013)
1. Beryllium
2. Cadmium
3. Chromium
4. Heptachlor
5. Mercury
6. Lead
7. Plutonium
Select the correct answer using the codes given below.
A. 1, 3, 4, 6 and 7 only B. 1, 2, 3, 5 and 6 only
C. 2, 4, 5 and 7 only D. 1, 2, 3, 4, 5, 6 and 7
Answer: B
14. When was the Geological Survey of India (GSI) of India founded? (UPRVUNL Staff Nurse 2021)
A. 1851 B. 1951 C. 1871 D. 1931
Answer: A
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INDIA-KUWAIT
- India and Kuwait share historically close and enduring relations, strengthened by geographical proximity, historical trade connections, cultural ties, and the significant Indian community in Kuwait.
- These bonds have been nurtured over time, with India serving as a natural trading partner. Notably, until 1961, the Indian Rupee was Kuwait's legal tender. Before the discovery of oil, Kuwait's economy was centered around its strategic harbor and maritime activities, including shipbuilding, pearl diving, fishing, and trade with India via wooden dhows carrying dates, Arabian horses, and pearls in exchange for wood, cereals, textiles, and spices.
- Kuwait's economy today is dominated by petroleum, with crude oil reserves of 101.5 billion barrels (around 6% of global reserves) and proven natural gas reserves of 1,784 billion cubic meters (63 trillion cubic feet) (source: OPEC).
- Oil revenues account for approximately 94% of Kuwait's state income .
- The country offers a wealthy and competitive market for consumer goods and project exports, ranking as the 4th largest market among GCC nations after the UAE, Saudi Arabia, and Qatar. Kuwait also boasts a Sovereign Wealth Fund (SWF) of around USD 1 trillion, managed by the Kuwait Investment Authority (KIA).
- Trade has been a key element of India-Kuwait relations. India is one of Kuwait's leading trading partners, with bilateral trade totaling USD 10.479 billion during 2023-24.
- Indian exports to Kuwait reached USD 2.1 billion, reflecting a year-on-year growth of 34.78%. Kuwait remains a dependable supplier of crude oil and LPG to India, meeting approximately 3.5% of the country's total energy needs.
- In FY 2023-24, Kuwait was India's 6th largest crude oil supplier and 4th largest petroleum gas provider
- India and Kuwait share historically strong and friendly relations, with the Indian diaspora serving as a vital link between the two nations. Historically, India was a key trading partner for Kuwait, and the Indian Rupee remained the country’s legal tender until 1961.
- Today, Kuwait heavily relies on the Indian workforce, with approximately one million Indians constituting 21% of Kuwait's total population and 30% of its workforce, making them the largest expatriate community in the country.
- In the 19th and early 20th centuries, Kuwait thrived as a small trading port, primarily engaged in maritime trade with the Indian subcontinent through ports like Karachi, Mumbai, and Cochin.
- Kuwaiti merchants transported goods such as Arabian horses, dates, and pearls to India on wooden dhows and returned with timber, spices, and textiles. This flourishing trade also attracted Indian traders, who became involved in various businesses, including textiles, spices, and food products.
- Kuwait’s economic boom during the 1970s and 1980s, fueled by its oil reserves, spurred rapid infrastructure development. The Indian community played a crucial role during this period, with many professionals and skilled workers contributing significantly to the oil, gas, and construction sectors.
- However, the Gulf War of 1990-1991 caused a mass exodus of Indians, including a large-scale evacuation by the Government of India, which airlifted over 1.7 lakh Indians from Jordan. Post-liberation, most of the Indian community returned to Kuwait, eventually becoming the largest expatriate group in the country.
- According to the Public Authority for Civil Information (PACI) of Kuwait, as of December 2023, Kuwait’s population stood at 4.859 million, with 3.3 million expatriates.
- Indian workers represent a substantial portion of the workforce, particularly in the private and domestic sectors.
- The Indian medical community in Kuwait is particularly noteworthy, comprising approximately 1,000 doctors, 500 dentists, and 24,000 nurses, who are highly regarded for their professionalism and compassion.
- The Indian community is valued for its hard work, trustworthiness, and non-interfering nature. Indian professionals, including businessmen, entrepreneurs, and medical and engineering experts, hold esteemed positions in Kuwait. Strong cultural and social ties with India are maintained through over 200 registered Indian associations that organize cultural events and humanitarian initiatives.
- Kuwait also hosts 26 CBSE-affiliated schools, catering to more than 60,000 students, primarily Indians. However, there are relatively few Indian students pursuing higher education in Kuwait and few Kuwaitis studying in Indian universities.
- The Indian community remains a preferred group in Kuwait, contributing significantly to the country's development while preserving their cultural heritage
- India and Kuwait share a longstanding relationship rooted in deep cultural ties and mutual exchanges. To commemorate the 60th anniversary of diplomatic relations in 2021-22, the Indian Embassy in Kuwait organized numerous events, including over 200 cultural programs.
- Notable events such as Splendors of India and Namaste Kuwait were hosted in 2022, while a Festival of India took place in March 2023 under the Ministry of Culture, India. Both countries have also agreed to a new Cultural Exchange Programme (CEP) to enhance bilateral cultural collaboration.
- With approximately one million members, the Indian community is the largest expatriate group in Kuwait and is highly regarded. It includes a diverse range of professionals such as engineers, doctors, chartered accountants, scientists, software specialists, management consultants, architects, technicians, and nurses.
- Many Indian workers also contribute significantly in unskilled and semi-skilled roles. The Indian business community has established a strong presence in Kuwait’s retail and distribution sectors, with some businesses operating for two to three generations.
- Notable entities like Lulu Hypermarket and other NRI-owned companies have significantly increased the availability of Indian products in the Kuwaiti market.
- Over 200 Indian associations registered with the Embassy actively organize cultural programs and charitable activities, fostering a sense of community and cultural cohesion
India and Kuwait have signed several important bilateral agreements over the years, including:
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For Prelims: India-Kuwait relations, Double Taxation Avoidance Agreement (2017)
For Mains: General Studies Paper II (Governance, Constitution, Polity, Social Justice and International relations)
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