• Personality rights are the rights of a person to protect their identity, including their name, voice, signature, images, and any other feature easily identified by the public.
• Personality rights are not expressly mentioned in a statute in India but are traced to fall under the right to privacy and the right to property.
• The closest statute to protect personality rights is Article 21 of the Constitution of India under rights to privacy and publicity.
• Other statutory provisions protecting personality rights include the Copyright Act, 1957. According to the Act, moral rights are only granted to authors and performers, including actors, singers, musicians, and dancers.
• The provisions of the Act mandate that the Authors or the Performers have the right to be given credit or claim authorship of their work and also have a right to restrain others from causing any kind of damage to their work.
• The Indian Trademarks Act, 1999 also protects personal rights under Section 14, which restricts the use of personal names and representations.
• The Delhi High Court and the Madras High Court have passed interim orders protecting the personality rights of celebrities, but the law is still at a nascent stage in India.
• Celebrities often register some aspects of their personality as trademarks to use them commercially. For example, Usain Bolt's "bolting" or lightning pose is a registered trademark.

4. How have Indian courts decided so far?

• In a recent case, the Delhi High Court granted an ex-parte, omnibus injunction restraining 16 entities from using actor Anil Kapoor's name, likeness, and image for commercial purposes.
• The court also granted an injunction against the use of technological tools like Artificial Intelligence, face morphing, and GIFs to create unauthorised versions of Kapoor.
• In an earlier case, the Delhi High Court had issued a similar injunction against the unauthorised use of Amitabh Bachchan's personality rights.
• The court had injuncted the use of variations of his name such as "Big B", his unique style of addressing the computer as "'Computer ji", and his catchphrase "lock kiya jaye".
• In 2015, the Madras High Court observed that "personality right vests on those persons, who have attained the status of celebrity".
• The court's observation came in the actor Rajnikanth's lawsuit against the producers of the movie "Main hoon Rajnikanth", claiming that his name, image, and style of delivering dialogues had infringed on his personality rights.
• The court said that the producers after admitting that the actor has a high reputation can't now say that Rajnikanth is a common name.

5. When can the Court grant an injunction?

The Delhi High Court has listed out the following elements comprising the liability for infringement of the right of publicity:

• The right has to be valid. This means that the court must be satisfied that the "plaintiff owns an enforceable right in the identity or persona of a human being."
• The celebrity must be easily identifiable in the alleged misuse. "The celebrity must be identifiable from the defendant’s unauthorized use Infringement of right of publicity requires no proof of falsity, confusion, or deception, especially when the celebrity is identifiable," the HC had said.
• The defendant must have intended to trade upon the identity of the plaintiff, from which identifiability can be presumed.

6. Conclusion

In essence, the protection of personality rights in India remains a developing area of law, with celebrities increasingly seeking legal recourse to safeguard their distinct identities in an evolving digital landscape.

VOTER VERIFIABLE PAPER AUDIT TRAIL (VVPAT)

• To address concerns about the credibility of EVMs and to increase voter trust by providing a physical, verifiable paper trail. This allowed voters to confirm that their vote was cast as intended and recorded accurately
• VVPAT enables voters to verify their votes independently, ensuring that the electronic voting process accurately reflects their chosen candidate before the vote is officially cast
• In case of disputes or the need for a recount, the paper records generated by VVPATs serve as a tangible, auditable trail, allowing for manual verification and cross-checking if necessary
• Meeting the demand for a transparent and accountable voting process, addressing legal challenges, and fulfilling ethical obligations to ensure fair elections

Key Features:

• VVPAT provides a physical paper trail for each vote cast using an electronic voting machine (EVM). It generates a printed slip with the details of the vote, allowing voters to verify their choices before the vote is officially cast.

• The printed paper slip is displayed behind a transparent window on the VVPAT machine for a few seconds, giving voters an opportunity to visually confirm their selections.

• Enhances the transparency and accountability of the electronic voting process by providing voters with a means to verify that their votes have been accurately recorded.

• The paper records produced by VVPAT serve as auditable and tangible evidence, enabling manual verification in case of disputes, recounts, or discrepancies

Applications:

• VVPAT ensures the integrity of the electoral process by allowing voters to independently verify that their votes are correctly registered, thereby reducing concerns about EVM tampering or malfunction.

• Acts as a mechanism to build trust among voters, political parties, and stakeholders by offering a verifiable and transparent voting process.

• Helps in resolving legal challenges or disputes related to the accuracy of the voting process. The paper trail can be used for manual verification during recounts or audits.

• Boosts voter confidence in the electoral system, encouraging higher participation and trust in the democratic process

 5. What are the challenges and concerns with VVPAT?

 

 

While the Voter Verifiable Paper Audit Trail (VVPAT) system enhances transparency and credibility in the voting process, several challenges and concerns have been raised regarding its implementation:

• Introducing VVPAT systems involves substantial costs for manufacturing, deployment, and maintenance. It also requires logistical arrangements for printing, storage, and transportation of paper rolls, adding to the overall election expenses
• The process of verifying votes through VVPAT can extend the time required for casting votes, potentially causing longer queues and delays at polling stations, especially in high-turnout elections
• Like any technology, VVPAT systems are susceptible to technical glitches, paper jams, or calibration errors, which could potentially affect the smooth functioning of the voting process and cause delays
• Ensuring that voters and polling staff are adequately trained to use and handle VVPAT machines is crucial. Lack of awareness or inadequate training might lead to errors or confusion among voters during the verification process
• The time duration for verifying the printed slip in the VVPAT machine is brief, potentially causing difficulties for some voters, especially those with visual impairments or those who might need more time to verify their choices
• Safeguarding the printed paper trails for potential audits or recounts requires secure storage mechanisms to prevent tampering, damage, or loss of the paper records
• In massive elections with numerous candidates and constituencies, the volume of paper trails generated by VVPATs can become cumbersome to manage and recount manually if necessary

 

6.How VVPAT is different from EVMs?

 

Topic	Voter Verifiable Paper Audit Trail (VVPAT)	Electronic Voting Machines (EVMs)
Purpose	Provides a physical paper trail for each vote cast	Records and stores electronic votes
Functionality	Generates a printed paper slip for verification	Allows voters to electronically select candidates
Verification	Allows voters to verify their choices on paper	Does not provide a physical verification
Output	Prints a paper trail with voter selections	Records votes electronically within the machine
Transparency	Enhances transparency by offering a physical record	Relies on electronic recording
Recounts/Audits	Provides tangible paper records for manual recounts/audits	Requires accessing electronic data for recounts
Deployment	Linked as an additional component to EVMs	Independent electronic voting device
Mechanism	Shows printed slips briefly behind a transparent window	Uses buttons for candidate selection
Maintenance	Requires handling and storage of paper trails	Maintenance involves electronic systems
Voter Confidence	Boosts confidence by offering a physical verification option	Confidence relies on trust in electronic systems

 

 

 

For Prelims: Indian Polity and Governance   For Mains: General Studies II: Salient features of the Representation of People’s Act

 

 

 

Previous Year Questions   1. The Voter Verifiable Paper Audit Trail (VVPAT) system was used for the first time by the Election Commission of India in (UPSC CAPF 2019)   North Paravur Assembly Constituency, Kerala B.Noksen Assembly Constituency, Nagaland C.Mapusa Assembly Constituency, Goa D.Nambol Assembly Constituency, Manipur Answer (B)

 

 

Source: Indianexpress

 

 

GREAT NICOBAR ISLAND PROJECT

 

 

1. Context

 

The Andaman and Nicobar Islands administration has prepared a map for the denotification and renotification of tribal reserve land for the Great Nicobar Island mega-infrastructure project, and will soon be finalising the sites for setting up towers in these lands.

 

2.What is the Great Nicobar Island Project?

 

• The Great Nicobar Island Project is a significant infrastructure development initiative undertaken by the Indian government on Great Nicobar Island, part of the Andaman and Nicobar Islands in the Indian Ocean. The project aims to transform the island into a strategic and economic hub.
• A deep-draft international container transshipment terminal is planned to be developed at Galathea Bay. This port is expected to serve as a key shipping hub in the region, facilitating trade and reducing dependency on transshipment ports in other countries
• An international airport is proposed to improve connectivity to the island, both for tourism and strategic purposes. This airport will be capable of handling wide-bodied aircraft and will enhance the island's accessibility
• To support the infrastructure and population growth, a gas- and solar-based power plant will be developed. This plant aims to provide a reliable and sustainable energy source for the island's needs
• A modern township with residential, commercial, and recreational facilities is planned to accommodate the increased population and workforce that the project will attract. This township is expected to have state-of-the-art amenities and infrastructure

 

Strategic and Economic Importance

• Great Nicobar Island is situated near the Malacca Strait, one of the world's busiest shipping lanes. Developing this island will enhance India's strategic presence in the Indian Ocean Region, particularly in terms of maritime security and trade control
• The project aims to boost the local economy by creating job opportunities and attracting investments. Improved infrastructure and connectivity are expected to stimulate tourism and other economic activities on the island
• Enhancing connectivity through the transhipment port and international airport will integrate Great Nicobar Island more closely with the global and regional trade networks, potentially making it a key logistical and commercial hub

 

Environmental and Social Considerations

• The project has raised concerns about its potential impact on the island's rich biodiversity and ecosystems. Great Nicobar Island is home to unique flora and fauna, including endangered species. Ensuring sustainable development practices and environmental protection measures will be crucial
• There are concerns about the impact on local communities, particularly indigenous tribes such as the Nicobarese and Shompen. Ensuring that their rights and livelihoods are protected is a key consideration for the project
• The project's emphasis on using renewable energy sources like solar power and promoting eco-friendly practices is an effort to mitigate environmental concerns. However, balancing development with conservation will be an ongoing challenge

 

 

Great Nicobar   Great Nicobar is the largest of the Nicobar Islands, part of the Union Territory of Andaman and Nicobar Islands in India. It is located in the Indian Ocean, near the western entrance of the Malacca Strait, which is a key maritime route for international trade.   Here are some key aspects of Great Nicobar: Great Nicobar is situated at the southern end of the Nicobar Islands, approximately 1,280 kilometers (800 miles) from the Indian mainland The island features diverse landscapes, including dense tropical rainforests, hilly terrain, and coastal areas. Mount Thullier is the highest point on the island, rising to an elevation of about 642 meters (2,106 feet) Great Nicobar is known for its rich biodiversity and is part of the Great Nicobar Biosphere Reserve. The island hosts unique flora and fauna, including several endemic and endangered species. The Nicobar megapode, Nicobar tree shrew, and saltwater crocodile are some of the notable species found here The island is sparsely populated, with a mix of indigenous tribes and settlers from other parts of India. The Nicobarese and Shompen are the primary indigenous communities on the island The indigenous tribes have distinct cultural practices, languages, and traditions. Efforts are being made to preserve their cultural heritage and ensure their rights and well-being amidst development initiatives Great Nicobar’s strategic location near the Malacca Strait, one of the world's busiest maritime routes, enhances its significance for India's maritime security and trade interests Given its strategic position, the island hosts Indian military installations, which play a crucial role in monitoring and securing the Indian Ocean Region

 

3. Strategic Importance

 

• The Bay of Bengal and Indian Ocean region are critically important for India's strategic and security interests, especially as the Chinese People’s Liberation Army Navy aims to increase its presence in these waters.
• India is concerned about the buildup of Chinese naval forces at key Indo-Pacific chokepoints, particularly Malacca, Sunda, and Lombok. China's efforts to extend its influence in the area include constructing a military facility on the Coco Islands in Myanmar, located just 55 km north of the Andaman & Nicobar Islands.
• Earlier this year, The Indian Express reported significant upgrades to the military infrastructure on the Andaman & Nicobar Islands.
• This includes modernizing airfields and jetties, creating new logistics and storage facilities, establishing a base for military personnel, and enhancing surveillance capabilities.
• The goal of these upgrades is to support the deployment of more military forces, larger warships, aircraft, missile batteries, and troops.
• Maintaining close surveillance over the area surrounding the archipelago and establishing a strong military presence on Great Nicobar is crucial for India's national security

4. Environmental Concerns

• The proposed infrastructure upgrade has faced opposition due to its potential ecological threat to the islands. Wildlife conservation researchers, anthropologists, scholars, civil society members, and the Congress party have raised concerns about the devastating impact on the Shompen, a particularly vulnerable tribal group (PVTG) of hunter-gatherers, who have an estimated population of a few hundred individuals residing in a tribal reserve on the island.
• Critics claim the project infringes on the rights of the tribal population and will harm the island’s ecology, including the felling of nearly a million trees. There are fears that the port project will damage coral reefs, affecting the local marine ecosystem, and pose a threat to terrestrial species like the Nicobar Megapode bird and leatherback turtles, which nest in the Galathea Bay area.
• A statement by senior Congress leader and former Environment Minister Jairam Ramesh highlighted that the proposed port is in a seismically active zone, which experienced permanent subsidence of about 15 feet during the 2004 tsunami.
• The statement also accused the local administration of insufficiently consulting the Tribal Council of Great and Little Nicobar Islands as required by law.
• In November 2022, the tribal council withdrew a no-objection certificate it had issued for the diversion of about 160 sq km of forest land, citing inadequate information provided to them.
• In April 2023, the Kolkata Bench of the National Green Tribunal (NGT) chose not to interfere with the environmental and forest clearances granted to the project. However, the Tribunal ordered the formation of a high-power committee to review the clearances. There is still no clarity on whether the committee, mainly composed of government representatives, has submitted its report

 

 

For Prelims: National Green Tribunal (NGT), Great Nicobar Island, Coastal Regulation Zones, Turtles, Dolphins, Particularly Vulnerable Tribal Groups (PVTGs), Mangroves, Great Nicobar Biosphere Reserve For Mains: Significance and Issues Related to Great Nicobar Island Project

 

Previous Year Questions 1. Which one of the following pairs of islands is separated from each other by the ‘Ten Degree Channel’? (2014) (a) Andaman and Nicobar (b) Nicobar and Sumatra (c) Maldives and Lakshadweep (d) Sumatra and Java Answer (a) 2. Which of the following have coral reefs? (2014) Andaman and Nicobar Islands Gulf of Kachchh Gulf of Mannar Sunderbans Select the correct answer using the code given below: (a) 1, 2 and 3 only (b) 2 and 4 only (c) 1 and 3 only  (d) 1, 2, 3 and 4 Answer (a) 3. In which one of the following places is the Shompen tribe found? (2009) (a) Nilgiri Hills (b) Nicobar Islands (c) Spiti Valley (d) Lakshadweep Islands Answer (b)

 

Source: indianexpress

 

 

NIPAH VIRUS

 

 

1. Context

 

The Nipah virus (NiV) has emerged as a major zoonotic threat in India, with repeated outbreaks recorded since 2001. Case fatality rates range between 40% and 75%, depending on the level of clinical care available.

 

2. Nipah Virus

• Nipah virus (NiV) is a zoonotic virus that can spread between animals and people.
• The natural host of NiV is fruit bats, also known as flying foxes.
• NiV can also infect pigs and people
• NiV infection can cause a range of illnesses, from asymptomatic infection to acute respiratory illness and fatal encephalitis. The case fatality rate for NiV infection is estimated to be between 40% and 75%
• The symptoms of NiV infection typically appear 4-14 days after exposure to the virus. The initial symptoms are similar to those of the flu, including fever, headache, and cough.
• In severe cases, the virus can cause encephalitis, which is a swelling of the brain. Encephalitis can lead to coma and death.
• NiV can be transmitted from animals to people through contact with infected saliva, urine, or other bodily fluids.
• It can also be transmitted through contact with contaminated food or water. Person-to-person transmission of NiV is possible, but it is rare.
• Nipah virus outbreaks have been reported in several countries in Southeast Asia, including Malaysia, Bangladesh, India, and Singapore.
• The virus has caused sporadic outbreaks, with varying levels of severity

3.Transmission

 

• The first outbreaks of the Nipah virus among humans was reported from Malaysia (1998) and Singapore (1999).
• The virus takes its name from the village in Malaysia where the person in whom the virus was first isolated died of the disease.
• The transmission from animals happens mainly through consumption of contaminated food. According to the CDC, transmission can happen due to consumption of raw date palm sap or fruit that has been contaminated with saliva or urine from infected bats.
• Some cases of NiV [Nipah] infection have also been reported among people who climb trees where bats often roost.
• The animal host reservoir for this virus is known to be the fruit bat, commonly known as flying fox.
• Fruit bats are known to transmit this virus to other animals like pigs, and also dogs, cats, goats, horses and sheep
• Humans get infected mainly through direct contact with these animals, or through consumption of food contaminated by saliva or urine of these infected animals
• Since it was first identified in 1998-99, there have been multiple outbreaks of the Nipah virus, all of them in South and Southeast Asian nations. In Bangladesh, there have been at least 10 outbreaks since 2001.
  In India, West Bengal had seen an outbreak in 2001 and 2007, while Kerala had reported several cases in 2018, and isolated cases in 2019 and 2021.

4. Zoonotic diseases

Zoonotic diseases, also known as zoonoses, are infectious diseases that can be transmitted between animals and humans. These diseases can be caused by bacteria, viruses, parasites, and fungi, and they pose a significant public health concern worldwide. Zoonotic diseases can be transmitted through direct or indirect contact with infected animals, their secretions, or contaminated environments. Some common examples of zoonotic diseases include:

1. Influenza: Various strains of influenza viruses can infect both animals and humans. Influenza viruses can undergo genetic changes, leading to new strains that have the potential to cause pandemics.

2. Rabies: Rabies is a viral disease that primarily affects mammals, including bats, dogs, and raccoons. It is transmitted to humans through the bite of an infected animal and can be fatal if not treated promptly.

3. Salmonellosis: Caused by the bacterium Salmonella, this disease is often associated with contaminated food products, particularly those of animal origin such as poultry and eggs.

4. Lyme Disease: Transmitted by ticks, Lyme disease is caused by the bacterium Borrelia burgdorferi and is commonly found in wildlife, particularly deer. Humans can become infected when bitten by an infected tick.

5. West Nile Virus: This mosquito-borne virus primarily circulates among birds but can be transmitted to humans through mosquito bites, leading to fever and, in some cases, severe neurological complications.

6. E. coli Infections: Certain strains of Escherichia coli (E. coli) can cause gastrointestinal illness in humans. Contaminated food and water, as well as contact with infected animals, can lead to E. coli infections.

7. HIV/AIDS: While the human immunodeficiency virus (HIV) is primarily transmitted among humans, it is believed to have originated from the transfer of simian immunodeficiency virus (SIV) from non-human primates to humans, making it a zoonotic disease.

8. COVID-19: The coronavirus disease 2019 (COVID-19) pandemic, caused by the novel coronavirus SARS-CoV-2, is believed to have originated in bats and was likely transmitted to humans through an intermediate animal host, highlighting the zoonotic nature of the virus.

5. Way forward

Nipah virus is considered a serious public health concern due to its high mortality rate, the potential for person-to-person transmission, and the lack of specific treatments or vaccines. Surveillance and research efforts are ongoing to better understand and combat this virus. It's essential to stay updated on the latest information and follow public health guidelines if you live in or travel to regions where Nipah virus is known to be present.

 

For Prelims: Viruses, Bacteria, Immunity, Vaccine types For Mains: 1.Discuss the challenges in controlling viral diseases and the strategies employed by governments and international organizations in addressing viral epidemics. Highlight the lessons learned from recent viral outbreaks 2.Analyze the global problem of antibiotic resistance and its implications for healthcare. Suggest policy measures and interventions to combat the growing threat of antibiotic-resistant bacteria

 

 

Previous Year Questions 1.Viruses can affect (UPSC CSE 2016) 1.Bacteria 2. Fungi 3. Plants Select the correct code with the following code A.1 and 2 only B. 3 Only C. 1 and 3 D. 1, 2, 3 Answer (D) 2. Which of the following statements is/ are correct? (UPSC CSE 2013) 1. Viruses lack enzymes necessary for the generation of energy 2.Viruses can be cultured in any synthetic medium 3.Viruses are transmitted from one organism to another by biological vectors only  Select the correct answer using the code given below A. 1 Only B. 2 and 3 C. 1 and 3 D. 1, 2, 3 Answer (A)

 

Source: indianexpress

 

 

FOREIGN DIRECT INVESTMENT (FDI)

 

 

1. Context

 

Net Foreign Direct Investment (FDI) into India fell 159% in August, with more money leaving the country than entering it, according to official data. This is the second time this financial year that outflows have exceeded inflows.

 

2. FDI in India

• India's net foreign direct investment (FDI) inflows experienced a decline, decreasing by nearly 31% to $25.5 billion during the first 10 months of the 2023-24 fiscal year. The Finance Ministry attributed this decline to a broader trend of slowing investments in developing countries, while expressing optimism for a potential increase in investments in the current calendar year.
• Although global FDI flows overall saw a 3% rise to approximately $1.4 trillion in 2023, economic uncertainty and elevated interest rates impacted global investment, resulting in a 9% decrease in FDI flows to developing nations, as outlined in the Ministry's February assessment of economic performance.
• Reflecting the global trend of reduced FDI flows to developing countries, gross FDI inflows to India also experienced a slight decline, from $61.7 billion to $59.5 billion during the period from April 2023 to January 2024. In terms of net inflows, the corresponding figures were $25.5 billion versus $36.8 billion. The decrease in net inflows was primarily attributed to an increase in repatriation, while the decline in gross inflows was minimal.
• While a modest uptick in global FDI flows is anticipated for the current calendar year, attributed to a decrease in inflation and borrowing costs in major markets that could stabilize financing conditions for international investment, significant risks persist, according to the Ministry. These risks include geopolitical tensions, elevated debt levels in numerous countries, and concerns regarding further fragmentation of the global economy

 

3. Foreign Direct Investment (FDI)

Foreign Direct Investment (FDI) refers to the investment made by individuals, businesses, or governments from one country (the home country) into another country (the host country) with the objective of establishing a lasting interest or significant degree of influence in the foreign business or enterprise

Key Aspects:

• FDI involves the transfer of funds and resources from one country to another. This capital inflow can help stimulate economic growth in the host country by providing funds for investment in infrastructure, technology, and other areas.
• FDI often leads to the creation of jobs in the host country. When foreign companies establish subsidiaries or invest in existing businesses, they typically hire local employees, which can help reduce unemployment and improve living standards
• Foreign investors often bring advanced technologies, processes, and management practices to the host country. This technology transfer can enhance the host country's productivity, competitiveness, and industrial capabilities
• FDI can provide access to new markets for both the host country and the investing company. Foreign investors can tap into the host country's consumer base, while the host country gains access to the investing company's global distribution networks.
• FDI can contribute to overall economic development in the host country by promoting industrialization, improving infrastructure, and fostering innovation and entrepreneurship.

4.FDI Routes in India

India has several routes through which Foreign Direct Investment (FDI) can enter the country. These routes are regulated by the Reserve Bank of India (RBI) and the Department for Promotion of Industry and Internal Trade (DPIIT), and they define the conditions, limits, and sectors in which FDI is allowed

1. Automatic Route: Under the automatic route, FDI is allowed without the need for prior approval from the RBI or the government. Investors only need to notify the RBI within a specified time frame after the investment is made. This route is available for most sectors, except those that are prohibited or require government approval.

2. Government Route: In sectors or activities that are not covered under the automatic route, FDI requires government approval. Investors must apply for approval through the Foreign Investment Facilitation Portal (FIFP) or the Foreign Investment Promotion Board (FIPB), depending on the sector.

4.1. Examples

• Under the automatic route, FDI of up to 100% is allowed for manufacturing of automobiles and components.
• For the manufacturing of electric vehicles (EVs), 100% FDI is allowed under the automatic route.
• In single-brand retail trading, 100% FDI is allowed, with up to 49% allowed under the automatic route. Beyond 49%, government approval is required.
• Multi-brand retail trading (supermarkets and department stores) with FDI is permitted in some states, subject to certain conditions and restrictions. The FDI limit is typically capped at 51%.
• FDI in the insurance sector is allowed up to 74%, with up to 49% under the automatic route. Beyond 49%, government approval is needed
• In the telecom sector, 100% FDI is allowed, with up to 49% under the automatic route. Beyond 49%, government approval is required
• In the defense sector, FDI up to 74% is allowed under the automatic route, with government approval required for investments beyond 49%
• In most segments of the media and broadcasting sector, including print and digital media, 100% FDI is allowed, with up to 49% under the automatic route

4.2.Sectors where FDI Prohibited

• FDI is prohibited in the atomic energy sector, which includes activities related to the production of atomic energy and nuclear power generation.
• FDI is generally prohibited in the gambling and betting industry, which includes casinos and online betting platforms
• FDI is not allowed in the lottery business, except for state-run lotteries
• FDI is prohibited in chit funds, which are traditional Indian savings and credit schemes.
•  Nidhi companies are non-banking finance companies (NBFCs) that facilitate mutual benefit funds. FDI is typically not permitted in these entities
• While FDI is allowed in single-brand retail trading, it is generally prohibited in multi-brand retail trading of agricultural products. Some states have allowed it under specific conditions, but this remains a highly regulated area.
• FDI is not allowed in the trading of transferable development rights (TDRs) pertaining to the construction of real estate

5. Foreign Portfolio Investors (FPIs)

Foreign Portfolio Investors (FPIs) refer to foreign individuals, institutions, or funds that invest in financial assets in a country, such as stocks, bonds, mutual funds, and other securities. FPIs are distinct from Foreign Direct Investors (FDIs), who typically make long-term investments in companies and assets to establish a lasting interest

Key Aspects:

• FPIs invest in a country's financial markets, primarily by buying and selling securities traded on stock exchanges and fixed-income instruments like bonds and government securities
• FPIs often seek to diversify their investment portfolios by spreading their investments across different asset classes, sectors, and countries. This diversification helps manage risk and enhance returns
• FPIs have the flexibility to buy and sell securities in the secondary market, providing liquidity to the market and contributing to price discovery
• FPIs typically have a shorter investment horizon compared to Foreign Direct Investors (FDIs). They may engage in short-term trading or hold securities for a few months to a few years.
• FPIs are subject to regulatory frameworks and restrictions in the countries where they invest. These regulations are designed to ensure that foreign investments do not pose undue risks to the local financial markets and economy.

6.Foreign Portfolio vs. Foreign Direct Investment

 

FPI (Foreign Portfolio Investment)	FDI (Foreign Direct Investment)
FPI involves the purchase of financial assets such as stocks, bonds, mutual funds, and other securities in a foreign country. These investments are typically made with the intention of earning returns on capital and do not result in significant control or ownership of the underlying businesses	FDI entails making an investment in a foreign country with the primary objective of establishing a lasting interest and significant control or influence over a business enterprise or physical assets. FDI often involves the acquisition of a substantial ownership stake (typically at least 10%) in a company or the establishment of new business operations.
FPI is generally characterized by a shorter investment horizon. Investors in FPI may engage in trading and portfolio rebalancing activities, and their investments are often more liquid. The focus is on earning capital gains and income from investments.	FDI is characterized by a longer-term commitment. Investors in FDI intend to engage in the day-to-day management or decision-making of the business, contribute to its growth and development, and generate profits over an extended period.
FPI investors typically have little to no influence or control over the companies in which they invest. They are passive investors who participate in the financial markets and rely on market dynamics to drive returns.	FDI investors actively participate in the management and decision-making of the businesses they invest in. They often seek to exercise control over company operations and strategy, which may include appointing board members or key executives.
FPI investments are often made through financial instruments like stocks, bonds, and securities. Investors may use instruments like mutual funds or exchange-traded funds (ETFs) to gain exposure to foreign markets	FDI investments involve a direct equity stake in a company, either through share acquisition or the establishment of a subsidiary or branch in the host country. FDI can also involve the purchase of real assets such as land, factories, or infrastructure
FPI can provide short-term capital inflows, but it may be more susceptible to market volatility and sudden capital outflows. It may not have as direct an impact on job creation and economic development as FDI.	FDI often contributes to long-term economic development by creating jobs, stimulating infrastructure development, transferring technology and expertise, and enhancing the competitiveness of local industries
FPI investments are subject to regulations that vary by country and may include foreign ownership limits, reporting requirements, and tax considerations.	FDI is subject to regulations that can be more stringent and may involve government approval, sector-specific conditions, and investment protection measures

 

 

 

 

For Prelims: Economic and Social Development-Sustainable Development, Poverty, Inclusion, Demographics, Social Sector Initiatives, etc For Mains: General Studies III: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment

 

 

Previous Year Questions   1. Both Foreign Direct Investments (FDI) and Foreign Institutional Investor (FII) are related to investment in a country. (UPSC CSE 2011)   Which one of the following statements best represents an important difference between the two? A.FII helps bring better management skills and technology, while FDI only brings in capital B.FII helps in increasing capital availability in general, while FDI only targets specific sectors C.FDI flows only into the secondary markets, while FII targets primary market D.FII is considered to the more stable than FDI   Answer (B)

 

Source: indianexpress