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Indian Three Stage Nuclear Program

by admin

Last Updated: June 2025 (Indian Three Stage Nuclear Program)

Indian Three Stage Nuclear Program

This article deals with ‘Indian Three Stage Nuclear Program.’ This is part of our series on ‘Science and Technology’ which is an important pillar of the GS-3 syllabus. For more articles, you can click here

Introduction

Homi Bhabha formulated India’s 3-Stage Nuclear Program.
The reason for the formulation of this program was that India has the largest source of Thorium and modest deposits of Uranium. Considering this fact, Dr Homi Bhabha envisioned 3-Stage Nuclear Program in 1954. It aimed to secure India’s long-term energy independence by using Uranium and Thorium reserves found in the Monazite sands of coastal India.
Note: India has only 1-2% of the global Uranium but about 30% of the world’s Thorium.

Stage 1

The first stage involves the utilization of Pressurized Heavy Water Reactors (PHWR) fuelled by natural Uranium. In this stage, natural Uranium is used as a fuel, and heavy water (deuterium oxide) is used as a moderator and coolant. India has built several PHWRs, which generate electricity and produce plutonium-239 as a by-product (to be used as fuel for the next stage.)

Overview

Reactor

Pressurized Heavy Water Reactor (PHWR)

Fuel used

Natural Uranium (Note: It is not enriched. Just Natural Uranium is used.)

Moderator and coolant

Heavy Water (D2O/Deuterium Oxide)

Reaction

Main Reaction (Energy)

Other (to get Pu -239)

Process explained

Natural Uranium contains both U-238 and U-235 in the following proportions.

In Nuclear Reactor, when a slow-moving Neutron is bombarded on the Uranium fuel, it collides with and splits U-235 nuclei, thus releasing a large amount of energy and 3 neutrons. The production of 3 neutrons helps in making it a chain reaction.
Some of the neutrons will get absorbed into U-238, thus converting it into Pu-238 (Plutonium-238, which is fissile). Pu-238, thus generated, acts as fuel in the second stage.

Pressurized Heavy Water Reactor

Why is Heavy Water is used as Moderator?

A moderator in the form of Heavy Water is used to decrease the speed of neutrons produced in the nuclear reaction because it increases the probability of fission with Uranium-235, even though its proportion is just 0.7% in natural Uranium.
Heavy water slows down neutrons by their repeated collisions with neutrons.

Control Rods

To reduce the power level or to shut down the reactor, the reaction rate is lowered by decreasing the number of available neutrons. It is achieved with the help of control rods like Boron or Cadmium Rods, which can absorb the neutrons.

The operator of PHWR or First Stage of the Indian Nuclear Program

PHWR is operated by NPCIL or Nuclear Power Corporation of India Limited.
Almost the entire base of Indian nuclear power is composed of stage 1 PHWRS except for the two Boiling Water Reactors (BWRs) at Tarapore.

Stage 2

Fast Breeder Reactor

Overview

The second stage focuses on utilizing Fast Breeder Reactors. FBRs use Plutonium-239 obtained from the spent fuel of PHWRs as the fuel and liquid sodium as the coolant. These reactors can generate more fissile material (Plutonium-239) than they consume. Thorium would be added to the fuel cycle once sufficient stock had been amassed to transform it into uranium 233 for the third stage.

Reactor

FBR (Fast Breeder Reactor )

Fuel used

Mixed oxide (MOX) fuel (received from first stage) consisting of

Pu-239	Undergo fission to produce more energy
U-238	Undergo change to additional Pu239

Moderator

FBR doesn’t use a Moderator, as only fast-moving neutrons produce extra neutrons on collision with Pu-239.

Coolant

Liquid Sodium

Crucialties of Stage 2

Further, 2nd stage is crucial for 3rd stage as it converts Thorium-232 (which occurs naturally) into Uranium–233 by transmutation

Once there is a good reserve of Pu-239, Th-232 is introduced at the periphery of the core (blanket material).
The collision with neutrons will convert Th-232 to U-233 (which is fissile).

Stage 3

Thorium Based Reactors

The program’s third and final stage involves deploying Advanced Heavy Water Reactors. AHWRs are designed to use a mix of Thorium-232 and Uranium-233 (obtained as a by-product from 2nd stage) as fuel. Additionally, The Th-232 will be placed at the periphery of the Core fuel, resulting in additional U-233 fuel.

It’s important to note that while India has made significant progress in the first two stages, the third stage of the program is still in the developmental phase, and commercial deployment of AHWRs is yet to take place.

Thorium as Nuclear Fuel

India & Thorium

India has the largest reserve of Thorium in the world and consists of 30% of the world’s Uranium reserves
Main Indian reserves include
- Monazite beach sand in Kerala
- Found in Andhra (largest producer), Tamil Nadu, Odisha, Kerala and West Bengal

Advantages

Thorium is more abundant (4 times more) than Uranium in the Earth’s crust.
Thorium consists of a single isotope, Th-232, unlike Uranium. Hence there is no need for the isotope separation.
Thorium-based fuels have favourable physical and Chemical properties that improve the reactor’s performance. These include
- Higher melting point
- Higher thermal conductivity
- Low coefficient of thermal expansion
- Greater chemical stability
- Doesn’t further oxidise
The long-term radiological hazard of Uranium based nuclear fuel, dominated by Plutonium and other Actinides is not there in Thorium based fuel.

Disadvantages

No fissile isotopes in natural Thorium
The high sintering temperature required to make Thorium Oxide
Long interval over which Thorium 232 breeds to Uranium 233

Ethical Governance in India

by admin

Last Updated: May 2023 (Ethical Governance in India)

Ethical Governance in India

This article deals with the topic titled ‘ Ethical Governance in India (UPSC Notes) .’ This is part of our series on ‘Ethics’. For more articles, you can click here.

Introduction

Ethical Governance is a corruption-free, moral and people-centric government.

Philosophical Basis of Ethical Governance

People think that concept of Good Governance is modern. But they are wrong. Many times in past, scholars have conceptualized what constitutes good governance.

Kautilya

Kautilya, in his Arthashastra, wrote, “In the happiness of subjects lies the happiness of king and in the welfare of subjects lies the welfare of king. ” Hence, he has written about Citizen-Centric Government.
Kautilya has also highlighted the corruption & given the concept of Kantakshodhana, i.e. king should purge those elements strictly.

Gandhi’s Vision of Ramrajya

The vision of Ramrajya, or the ideal state, involves Governance based on Moral Principles like nonviolence, truth, and righteousness.
Gandhi said that government which is not working in the people’s interest is morally corrupt.
Swaraj, i.e. Self Rule, is one of the pillars of his Ramrajya or Good Governance.

Aristotle

He has divided the government into two parts

Perverted Government: Power is used in the interest of the ruling class
Legitimate Government: Power is used in the public interest

8 Characters of Ethical Government

Rule of Law

Rule of Law involves governance based upon rules and regulations
In modern times, these rules & regulations are codified in the country’s constitution and laws.

People’s Participation

Real democracy doesn’t just mean voting to elect government but the participation of people in governance itself.
The mechanism of people’s participation in contemporary times are

Conventional Tools	– Voting – Pressure Groups
New & Contemporary	– Panchayati Raj Institutions & Gram Sabha – RTI – Social Auditing – Citizen Charter – e-Governance (C2G) – Social Media (change.org, online petitions)

Consensus Orientation

Consensus Orientation in governance involves seeking input from various individuals and groups affected by a decision or policy, aiming to reach a consensus that considers the diverse perspectives and interests involved.
Ethical Governance is opposite to the ‘Winner takes All’ approach.

Equity and Inclusiveness

The distribution of resources should be based on the principle of equity so that different sections of society receive these resources based on their need
Inclusiveness involves including weaker sections in decision-making.

Effective and Efficient

Effective government achieves the targets in the stipulated time.
An efficient government is one which delivers maximum with minimum resources

Accountable

Discussed separately (CLICK HERE)

Transparent

The literal meaning of Transparency is openness
Tools of Transparency include RTI, E-Governance etc.
Dealt exclusively in a separate article (CLICK HERE)

Responsive

A responsive government is one which positively responds to people’s demands, needs and aspirations in a timely manner.

Impediments to Ethical Governance in India

The whole scene has to be seen in the context of

Corruption, Nepotism and Crony Capitalism
Misuse of power in personal interest
Red Tapism: Undue delay in public service delivery because of complex procedures
Lack of Transparency
Weak Accountability
Lack of public participation in decision making
Bureaucratic apathy, particularly towards weaker sections of society
Status quo and elitist orientation of bureaucracy
Politicization of Bureaucracy
Criminalization of politics

How to Strengthen Ethical Governance

For this, we need to take various steps in various fields

1. Political Structure

Enforce expenditure limits on elections strictly
Bring Political Parties under RTI
Remove excessive protection given to tainted politicians

2. Statutory Structure

2nd Administrative Reforms Commission (ARC) has given various recommendations in this regard

Amend the Prevention of Corruption Act
Integrity Pacts – When Government Organisation signs any contract with a Private organization, sign integrity pacts stating that if Private Organisation is found involved in any wrongdoing, the contract will cancel automatically.

3. Institutional Structure

Strengthen and give more teeth to CVC, Lokpal, CBI etc.

4. Social Infrastructure

Take help of society in reducing corruption and increasing Ethical Governance

Give Civic Education in Schools.
False Claims Act (USA): If you think there is wrongdoing in some organization, gather evidence & produce it before the court. If the fine is imposed on that organization, some portion of money from that fine will be given to the litigant.
Social Audit: Social Audit is the audit through client or beneficiary groups or civil society groups (i.e. stakeholders) to ensure the social accountability of an organization.

Fossil Fuel Resources in India

by admin

Last Updated: Nov 2024 (Fossil Fuel Resources in India)

Fossil Fuel Resources in India

This article deals with ‘Fossil Fuel Resources in India.’ This is part of our series on ‘Geography’, which is an important pillar of the GS-1 syllabus. For more articles, you can click here.

Categories of Energy Sources

Conventional: Conventional energy sources refer to the traditional methods of generating power that has been widely used for many years—E.g., Coal, Petroleum etc.
Non-Conventional: Non-conventional sources of energy are energy resources that are not derived from traditional fossil fuels—E.g. Solar, Wind etc.

1. Coal

Types of Coal

1. Peat

It has the highest percentage of moisture & gives more smoke.
Carbon content is 40% (lowest).
It represents the very first stage of coal formation.

2. Lignite

It is also known as Brown Coal and is superior to Peat.
Under pressure & heat, with time, Peat converts to lignite.
Carbon content is 40-60%.
In India, it is found in Neyveli (Tamil Nadu) (largest deposit), Palana (Rajasthan), and Lakhimpur (Assam).

3. Bituminous

It is also known as Black Coal.
It is dense, compact & black in colour.
Carbon content is 60-80%.
Almost 80% of Indian Coal is Bituminous.
It is found in Jharkhand, Orissa, West Bengal & Madhya Pradesh.

4. Anthracite

It is known as Hard Coal.
When buried deep, all moisture gets expelled & Anthracite coal is formed.
Carbon content is 80-90%.
It has a short flame & is the most expensive of all.
In India, Anthracite coal is found only in Jammu and Kashmir (Kalakot).

Distribution of Coal in the World

1. China

China has the largest reserves in the world (12%).
Overwhelming concentrations are found around
- Hwang Ho river basin, particularly in Shansi
- Manchurian coal fields
- Shantung Hupei fields

2. USA

The USA has the second largest reserves in the world.
Main coal regions
- Appalachian Region
- Arkansas Rocky Region
- Illinois
- Indiana

3. Australia

Australia has the fourth largest coal reserves, but they are substantially unexploited.
Main regions
1. Queensland
2. Tasmania
3. New South Wales
4. Victoria

4. Russia

Though coal reserves decreased after disintegration but have substantial reserves.
Main coal regions
1. Pechora coal basin
2. Kuznetsk region
3. Moscow-Tula region

5. Ukraine

A substantial amount of coal reserves are found in Donetsk Basin.

6. Germany

Germany is the largest coal producer in mainland Europe.
Main coal regions
1. Ruhr Valley
2. Saxony
3. Saar Basin

7. South Africa

The main coal regions in South Africa include Transvaal, Cape Province, and New Castle.

Indian Coal

India has the third largest coal reserves in the world, but coal is of medium quality.
India coal was not formed in the Carboniferous period. (Hence, it is not Anthracite)
Most of the Indian Coal was formed in the Gondwana period. Hence, approx. 80% of Indian coal is Bituminous and non-coking grade.
Since Indian Coal is of non-coking grade, it can’t be used as a reducing agent in metallurgical processes. Hence, coking coal is imported
Indian coal has low sulphur but high moisture. Thus it produces more smoke.

Formation of Indian Coal

Coal formation spans millions of years, involving the accumulation and transformation of organic matter. Globally, the formation of coal can be traced back to Carboniferous Period. But in India, most of the coal is from the Gondwana period. Coal formation begins with the accumulation of plant material in swamps and marshes to form peat. As more layers of plant material accumulated, the weight of the overlying sediment and the pressure from the Earth’s crust compressed the peat, gradually transforming it into coal, in the process known as coalification.

In India, Coal occurs in the rock sequences of two geological ages, i.e. Gondwana and Tertiary deposits.

1. Gondwana Coal

It was formed 570-275 million years ago (due to in Damodar-Mahanadi Rift)
Most of the coal reserves in India consist of Gondwana coal.
Gondwana coal is of Bituminous type.

2. Tertiary Coal

Tertiary coal belongs to the Oligocene period (15 to 60 million years ago).
2% of coal reserves in India is of Tertiary coal
Tertiary coal has low carbon content, in the range of 40-60%.
The largest deposit of Tertiary coal is found in Neyveli in Tamil Nadu.

Indian Distribution

1. Bituminous Coal

Jharkhand	Damodar Valley (Bokaro, Dhanbad, Jharia, Giridih and Daltonganj)
Odisha	Mahanadi Basin and Talcher Valley
West Bengal	Extension of Damodar Valley in Raniganj and Barakar formations
Chhatisgarh	Narmada and Son Rift Valley
Madhya Pradesh	Chindwara and Jhilmil
Andhra Pradesh	Singreni and Kotagudam Coal Field
Maharashtra	Nagpur and Kampti Coal Field

2. Lignite Coal

Tamil Nadu	Neyvelli
Rajasthan	Palana
Gujarat	Umarsar

3. Anthracite Coal

Only found in one place

Jammu and Kashmir

Kalakot

Problems of Indian Coal

India doesn’t has high-grade coking coal. Hence, India depends on imports to meet domestic requirements.
Regulatory challenges: A stricter regulatory framework for land acquisition, resettlement and rehabilitation, and environment management leads to a higher cost of compliance for access and extraction of coal.
Good & low-grade coal are found together in Indian mines. Mining companies do selective mining & extract good coal, leaving bad coal behind. Selective mining is wasteful.
India does open-cast mining—in contrast to underground mining worldwide. The open cast is cheaper but is associated with high pollution.
Deep mining techniques used in India are primitive, leading to high causalities.
Poor connectivity from coal mines to consumer locations via railways leads to a mismatch of demand and supply.
Mining is primarily done by PSUs (Coal India). Their efficiency is low.
The poor financial state of DISCOMs: This has led to a financial challenge in the overall power sector. Several states, including Jharkhand and Maharashtra, have large outstanding dues to coal companies.

2. Petroleum

Petroleum is obtained from sedimentary rocks of Marine origin of the Tertiary period.

Theory of Origin

The origin of Petroleum & Natural gas is considered to be organic. Marine Living Organisms (like fish and microscopic plants and animals) got buried under accumulated sediments of crude mud, silt & sand and underwent a chemical change to form crude oil and natural gas due to high pressure & heat after millions of years. It is the reason why oil is found in many seabed.
The point to note is that where ever oil is found on land, that region must have been undersea in the geological history because that is the only way living organisms can be settled there and then pressurized to form oil.
E.g. the Middle East has enormous oil reserves because of the same reason. From 500-100 million years ago (MYA), large portions of the modern-day Middle East were submerged under a large, now non-existent sea called the Tethys Sea. Rivers feeding this ancient ocean saturated it with nutrients, giving rise to massive numbers of microscopic animals. They died & fell to the bottom of the sea, which was pressurized to form oil.

Some History

The first oil well was constructed in the USA in 1859.
In India, Petroleum was first discovered at Margherita (upper Assam) in 1860 by Assam Railway & Trading Company & then in Digboi in 1869.
ONGC was established in 1956. Later, ONGC discovered oil in the Gulf of Khambat in 1961 & Bombay High in 1976.

Global Distribution

1. North America

USA	Alaska and Rocky Mountain region
Canada	Alberta province
Mexico	Tampico and Taxpum region

2. South America

Venezuela	Maracaibo Bay and Orinoco Basin
Columbia	Maracaibo Bay
Argentina	Patagonia Peninsula

3. Europe

Russia	Volga-Caspian Region, Kamchatka & Shakalin Region and Ob-Lena Basin
Ukraine	Dnieper and Crimea
UK	North Sea

4. Asia

Saudi Arabia	Ghawar, Abu Sarah and Safania
Iraq	Kirkuk and Mosul
Iran	Masjid-i-Suleiman, Naft-i-Shah and Lali
UAE	Abu Dhabi, Dubai and Sharjah
Qatar	Doha and Jebel
China	Sinkiang, South China Bay & Bo Hai Bay
Indonesia	Sumatra

5. Africa

Libya	Gulf of Sidra
Algeria	Edjile and Hassi Masaud
Nigeria	Boguma and Bonny
Egypt	Ras Gharib, Ras Matarma and Sinai peninsula.

Indian Distribution

States	Mineral Rich Regions
Assam	– Digboi – Neharkatia – Sibsanagar – Dibrugarh
Gujarat	On Shore – Kheda – Mehsana Offshore – Gandhar Oil Field – Aliya Bet
Rajasthan	Barmer (exploited by Cairns)
Maharashtra	Nilam Oil Field (Bombay High)
KG Basin	– Rawa Oil Field – Narimanam Oil Field

Side Topic: Grades of Crude Oil

There are various grades of Crude Oil

Russian	Ural
North Sea (Europe)	Brent
US	West Texas

PYQ: The term ‘West Texas Intermediate’, sometimes found in news, refers to a grade of (UPSC CSE 2020)

Crude oil
Bullion
Rare earth elements
Uranium

3. Natural Gas

Sedimentary rocks in which hydrocarbons are trapped often hold gas, which may be in association with crude oil or alone.
It consists primarily of methane, which is lighter than air & toxic. It requires air-tight tanks for storage & similarly, leakproof pipes or trucks for transport, raising capital costs.

Global Distribution

Global Reserves	Global Production
Russia	Russia
Iran	USA
Saudi Arabia	Canada
UAE	UK
USA	Netherlands
Nigeria	Algeria
Venezuela	Indonesia

Indian Distribution

In India,
natural gas is found along with oil reserves. India does not have
exclusive natural gas reserves.
Oil &
Natural gas Commission(ONGC) does the exploration of Natural Gas.
According to
the estimate, the total Natural Gas reserve is about 450 billion cubic
metres.

In India, potential Natural
Gas sites in India are
1. Bombay High
2. Gujarat
3. Assam
4. KG Basin
5. Kaveri Basin
After 1990, production of
natural gas increased phenomenally yet production falls short of demand,

Year	Production (in million m^3)
1960	17
1970	76
1980	200
1990	12,873
2000	20,920
2010	25,750

4. Shale Gas

Shale oil, often known as “tight oil,” is found in lesser quantities and deeper than conventional crude reserves. Its extraction requires creating fractures in oil and gas-rich shale to release hydrocarbons through hydraulic fracking.
Note: Shale is Sedimentary Rock
It is colourless, odourless & lighter than air.
In India, potential Shale Gas reserves are in
1. Cambay
2. Gondwana
3. Krishna-Godavari (K-G) Basin
4. Cauvery Basin
5. Ganga Basin
6. Assam – Arakan Basin
7. Barmer Hill Formation (Rajasthan)

Atomic Minerals (UPSC Notes India)

by admin

Last Updated: May 2023 (Atomic Minerals (UPSC Notes India))

Atomic Minerals (UPSC Notes India)

This article deals with ‘Atomic Minerals (UPSC Notes India).’ This is part of our series on ‘Geography’, which is an important pillar of the GS-1 syllabus. For more articles, you can click here.

1. Uranium

Two main sources of Uranium are Pitchblende (containing 50-80% Uranium) & Uraninite (containing 65-80% Uranium).

Naturally occurring Uranium is composed of

Isotope	Percentage	Nature of Radioactivity
U238	99.3%	Fertile/Fissionable	It has to absorb a neutron to become fissile. Plutonium is formed in the process.
U235	.7%	Fissile	– U235 can form a self-sustaining chain reaction. – But they need to be enriched to 3-4 % to sustain the chain reaction.

Global Distribution

Significant uranium deposits are found in

Kazakhstan
Canada (Athabasca Basin)
Australia
Niger
Namibia

Distribution in India

In India, Uranium is found in the following areas

Jharkhand	– Jadughoda – Bhatin – Narwapahar – Turamdih
Meghalaya	Mahadek Basin
Andhra	Tumallapalle (largest mine in India)
Karnataka	Bhima Basin
Rajasthan	Aravallis

India produces 2% of the total Uranium produced in the world.

Important Note

Uranium Corporation of India Ltd. (UCIL) is responsible for mining uranium ore for commercial purposes.
Uranium mined by the UCIL is used for both weapons and civil nuclear programs. The imported Uranium is used for civil nuclear energy purposes only.

Uranium Mining Issues

Uranium contamination of groundwater due to Mining
Uranium deposits in India are primarily of low grade (less than 0.15% Uranium).
Problems with land acquisition
Issues of rehabilitation and resettlement of affected persons

2. Thorium

In nature, there is more Thorium than Uranium.
Two primary sources of Thorium are Monazite sands & Allanite.
As such, Thorium found in Monazite is fertile but can be converted to fissile material Uranium.

Global Distribution

Significant uranium deposits are found in

Brazil
Australia
USA
Egypt

Distribution in India

India has the largest reserve of Thorium in the world.
Main reserves include
- Monazite beach sand in Kerala
- Found in Andhra (largest producer), Tamil Nadu, Odisha, Kerala and West Bengal

Tourism (UPSC Notes)

by admin

Last Updated: July 2025 (Tourism (UPSC Notes))

Tourism (UPSC Notes)

This article deals with ‘Tourism (UPSC Notes).’ This is part of our series on ‘Economics’ which is an important pillar of the GS-3 syllabus. For more articles, you can click here.

Introduction

India is ranked 8th in terms of tourism’s total contribution to GDP, contributing 5% to total GDP (2020). (target: increase contribution of tourism in the country’s economy to 10 per cent by 2047).
It is a labor-intensive sector, accounting for 39 million jobs (2020) and significantly impacts trade, investment, social inclusion, etc.
But India has not been able to exploit the potential of tourism to full capacity (corroborated by India vs. USA)

Hence, India has vast untapped potential in the tourism sector

Potential of Tourism in India

Large Diversity in Landscape: India’s landscape can cater to almost every type of traveller, whether they are seeking adventure, wellness, culture and heritage or cuisines.
Ancient Civilisation: India is an ancient civilization, and a number of historical places and buildings have tremendous potential to draw tourists. E.g., Hampi, Khajuraho, Agra, Delhi, Madurai etc.
Religious Tourism: India is home to a large number of religions. Hinduism, Sikhism and Buddhism took birth here.
Huge Labour Available: The availability of a huge labour force, both skilled and unskilled, can act as a catalyst.
Medical Tourism: India can provide specialized treatments at the cost of 1/4th that of developed countries. Target countries include Central Asia, Neighbours like Bangladesh, Sri Lanka etc.
MICE (Meeting, Incentive, Conferences & Exhibitions): It is a specialized niche of business tourism. Indian MICE Tourism potential is pegged at 25,000 crore due to Places like Pragati Maidan Delhi (for exhibition) and institutes like IITs, AIIMS, IIMs etc., for International Conferences.

Reasons for untapped Tourism Potential

The tourism industry is closely integrated with several other industries like the hotel industry, accommodation, aviation, railway, roadways, healthcare, entertainment etc. The combined weaknesses of all the sectors make Indian Tourism more vulnerable.
Negative Perceptions, such as India being unsafe for female foreign tourists and lack of hygiene, negatively impact Indian tourism.
Governance Issue :
1. Government is unable to make schemes to attract tourists like Buddhist Tourists who have cultural ties with India.
2. No advertisement campaigns like Malaysian and Singapore Tourism are run in foreign countries.
3. Lack of automated immigration procedures like Visa on Arrival.
Limited Professionalism in people involved in the tourism sector, like tourist guides
Insurgency in potential Tourist Spots: Tourist places like Kashmir and North East are hit by insurgency, impacting tourism potential.

Schemes to Promote Tourism in India

In the last two years, the Ministry of Tourism has taken many steps to make India an attractive destination.

PRASAD Scheme (Pilgrimage Rejuvenation and Spiritual Augmentation Drive): To develop tourism infrastructure in and around famous religious and pilgrimage cities. (12 cities Ajmer, Amritsar, Amravati, Dwarka, Gaya, Kamakhaya, Kancheepuram, Kedarnath, Mathura, Patna, Puri, Varanasi and Velankanni)
HRIDAY: For holistic development of Heritage cities (12 identified Cities, namely, Ajmer, Amaravati, Amritsar, Badami, Dwarka, Gaya, Kanchipuram, Mathura, Puri, Varanasi, Velankanni and Warangal.)
Swadesh Darshan Scheme: It aims to develop a theme-based tourist circuit. These circuits include North-East India Circuit, Buddhist Circuit, Himalayan Circuit, Coastal Circuit, Krishna Circuit, Desert Circuit, Tribal Circuit, Eco Circuit, Wildlife Circuit, Rural Circuit, Spiritual Circuit, Ramayana Circuit and Heritage Circuit.
Adopt a Heritage: Corporate Houses will adopt a Heritage and develop their infrastructure. E.g., Dalmia Group adopted Red Fort for ₹ 25 Crore, and they will provide basic amenities and develop infrastructure.
Fast Track Immigration – Trusted Traveller Programme (FTI-TTP): It involves an accelerated immigration pathway for international travellers by screening them through automated gates. Currently, it is available only to Indian nationals and OCIs at IGI Airport (Delhi).
E-visa process simplified: Nationals of 161 countries have been allowed visits for business and medical treatment. Additionally, a special visa category called ‘Medical Visa’ & ‘Medical Attendant Visa‘ has been created to ease the entry of medical tourists into India
The government is building a large number of museums to showcase Indian heritage and promote tourism.
Incredible India Tourist Helpline: Multilingual helpline has been launched to provide assistance and information to tourists in 12 languages of the world, including Hindi & English
100 % FDI allowed in hotels, resorts & recreational activities
Revamped schemes like Hunar se Ruzgar to give training to travel guides and Institutes of Hotel Management have been opened.
State Specific
- Rajasthan has passed a bill under which misbehaviour with tourists has been made a cognizable offence. It is to prevent the touts from forcing tourists to buy things at exorbitant prices or fraudulating the tourists, as it impacts tourism negatively.
Other
- Yuge Yugeen Bharat National Museum: India is developing the world’s largest museum in Delhi, which spans over 117,000 sq m. India has partnered with France for this as France has expertise in such projects.
- Bharat Ranbhoomi Darshan: Joint project of the Indian Army and Ministry of Tourism to promote battlefield tourism.

Metallic Minerals

by admin

Last Updated: May 2023 (Metallic Minerals)

Metallic Minerals

This article deals with ‘ Metallic Minerals (UPSC Notes).’ This is part of our series on ‘Geography’, which is an important pillar of the GS-1 syllabus. For more articles, you can click here.

Introduction

Minerals containing one or more metallic elements are called metallic minerals.
Metallic Minerals provide a strong base for the development of the metallurgical industry & hence the process of industrialization.

1. Iron Ore

Iron ore is the most critical mineral on which a nation’s economy hinges.
In 2018, India became the 2nd largest producer of Steel in the world, following China.
India has the largest reserve of iron ore in Asia.
Haematite and Magnetite are the two primary varieties of iron ore found in our nation.
Due to its superior quality, Indian iron ore is in high demand in the global market.
In the country’s north-eastern plateau region, the iron ore mines are located adjacent to the coal fields, adding to their advantage.

4 Main Ore Types

1. Magnetite

It is also known as Black Ochre.
It has a high iron content of up to 70%.
As the name suggests, it has magnetic properties.
The largest concentration of Magnetite is found in Sweden, Liberia & former USSR. It is found in India as well.
It is used in Electronic industries.

2. Haematite

It is the industrially most important ore.
It contains 50-65 % iron content
It is known as Red ochre.
The largest concentration of Haematite is found in the Lake Superior Region, Labrador & Quebec in Canada, Guinea Highlands in Venezuela, Brazil etc. & the Dharwarian & Singhbhum rocks of India.
In India, it is found in the Chotanagpur Plateau region, Dharawar & Cuddapah systems of Karnataka, Andhra Pradesh, Tamil Nadu (Salem, Tiruchi) & Goa.
The main use of Haematite is in the iron & steel industries.

3. Limonite

Limonite has less than 50% iron content.
It is yellow in colour.
It is used as pigment for paint manufacturing.

4. Siderite

Siderite is the carbonate of iron. It is found interbedded in sedimentary rocks.
Iron content is 20-30%. Hence, it is economically unviable to extract.
It acts as a source of Manganese & Magnesium.

Distribution in World

North America	Lake Superior Region, Labrador & Quebec
South America	Brazil
Africa	Liberia, South Africa & Algeria.
Europe	Sweden, France (Normandy & Lorraine), Former USSR, UK & Germany
Asia	India & China (Manchuria & Wuhan)

Distribution in India

The country’s total reserves of iron ore were about 20 billion tonnes in 2004-05. Jharkhand, Odisha, Chhattisgarh, Goa, Karnataka, Andhra, Telangana, and Tamil Nadu contain over 95% of the country’s iron ore deposits.

1. Odisha

Iron ore occurs in a series of hill ranges in Sundergarh, Mayurbhanj and Jhar.
Important mines are Gurumahisani, Sulaipet, Badampahar, Mayurbhanj, Kiruburu (Kendujhar) & Bonai (Sundergarh).

Details of Important Mines

Badampahar	Iron ore is supplied to Bokaro, Jamshedpur, Rourkela & Durgapur steel plants.
Mayurbhanj	– Haematite with an iron content of more than 65% is found here (the highest quality found in India ) – Iron ore is supplied to Bokaro, Durgapur, Rourkela & Jamshedpur.

2. Jharkhand

There are some of the oldest iron ore mines & steel plants in this region.
The most important mines are Noamundi and Gua in Poorbi and Pashchimi Singhbhum districts.

3. Chhattisgarh

Bailadila (Bastar) , Dalli Rajhara (Durg) & Dantewara are important mines in Chattisgarh

Details of Important Mines

Bailadila	– It is located in the Bastar district & is the largest mechanized mine in India. – Haematite extracted from this mine is exported to Japan and supplied to the Vishakhapatnam plant.
Dalli Rajhara	– It is located in the Durg district. – Haematite extracted from these mines is supplied to the Hindustan Steel plant in Bhilai.

4. Karnataka

In Karnataka, Iron ore is found in the following areas

Sandur-Hospet area of Ballari/Bellary district.
Baba Budan Hills and Kudremukh of Chikkamagaluru district.
Parts of Shivamogga, Chitradurg & Tumakuru districts.

Details of Important Mines

Baba Budan Hills	Mostly exported to Iran through Mangalore port.
Kudremukh Deposits	Exported to Iran.
Sandur Range	Supplied to Vijayanagar Steel plant.

5. Maharashtra

Found in districts of Chandrapur, Bhandara and Ratnagiri.

6. Telangana

Found in Karimnagar and Warangal district.

7. Andhra Pradesh

Found in Kurnool, Cuddapah and Anantapur districts.

8. Tamil Nadu

Found in Salem and Nilgiri districts.

9. Goa

Iron ore is found in North Goa.
Mormugao port provides an additional advantage from where Iron ore is exported to Iran & Japan.

2. Manganese

India is 5th largest producer of Manganese in the world.
About 1/5 of Indian Manganese is exported mainly to Japan.

Uses

Manganese is needed during iron forging. If Manganese is not added to iron, iron breaks. It makes steel anticorrosive, hard& tough.
It is used to produce alloys by mixing with Copper, Bronze, Nickel etc.
It is also used in manufacturing insecticides & pesticides, photography and dry battery.

Global Distribution

Africa	South Africa and Gabon
South America	Brazil
Europe	Ukraine and Russia
Asia	India
Australia	Australia (Victoria & Queensland)

Distribution in India

Almost all geological formations include deposits of Manganese. However, it is mainly associated with the Dharwar system.

Odisha	– Odisha is the largest producer of Manganese. – Major mines are located in the Iron ore belt, i.e. Kendujhar, Sundergarh, and Koraput.
Karnataka	The Manganese mines are located in Dharwar, Belagavi, Ballari, Chikkmagaluru, North Canara, Chitradurg, Shivamogga and Tumkur.
Maharashtra	Nagpur, Bhandara and Ratnagiri districts.
Jharkhand	Manganese is found in all iron ore regions. Chaibasa is the biggest mine.
Madhya Pradesh	Manganese is found in the Balaghat region.

Note: Manganese was mined for the first time in Srikakulam (1892) in Andhra Pradesh.

3. Bauxite

8% of the Earth’s crust is made up of Aluminium.
Bauxite is mainly found in tropical & subtropical regions, but Aluminum is separated from the ore in an area with cheap electricity using the Hall Herault method.
The first bauxite mine was in Les Baux village in France. Bauxite name derived from it.

Global Producers

Bauxite reserves	Bauxite Producers	Alumina	Aluminium
Guinea	Australia	China	China
Australia	Brazil	Australia	Russia
Brazil	China	Brazil	Canada
	India (Rank 6)	India (Rank 5)	India ( Rank 6)

Global Distribution

North America	USA (but significant import from Jamaica, Surinam etc.)
South America	Guinea, Jamaica, Surinam and Brazil
Europe	France, Yugoslavia, Hungry and Russia(Urals)
Asia	Vietnam, India and China
Australia	Australia (exported to Japan)

Distribution in India

Bauxite is found mainly in tertiary deposits. It is associated with laterite rocks, commonly found in coastal areas and Peninsular India.

Odisha	– Odisha is the largest producer of Bauxite. – Niyamgiri & Gandhmardhan hills are biggest fields . – Bauxite Mines are present in Kalahandi, Sambalpur, Bolangir and Koraput.
Jharkhand	Lohardaga
Gujarat	Bhavanagar and Jamnagar
Chattisgarh	Amarkantak plateau
Madhya Pradesh	Katni-Jabalpur area and Balaghat
Maharashtra	Kolaba, Thane, Ratnagiri, Satara, Pune and Kolhapur

4. Copper

Copper is a soft brown metal found in igneous & metamorphic rocks.
The main ores of Copper are Cuprite, Malachite, Chalcocite & Bornite.
In the electrical industry, Copper is a crucial metal for producing cables, electric motors, transformers, and generators.
It is alloyable, malleable and ductile and a good conductor of heat and electricity. Since gold is a soft metal, Copper is mixed with it to strengthen jewellery.
The most important alloys of Copper include
1. Brass: Alloy of Copper and Zinc
2. Bronze: Alloy of Copper and Tin

Global Distribution

North America	USA (West coast), Canada (Ontario & Quebec) and Mexico
South America	Chile and Peru
Europe	Russia (Urals), Georgia and Armenia
Asia	Kazakhstan
Australia	Australia (Mt Esa & Mt Morgan)
Africa	Zaire (Katanga Plateau), Zimbabwe and Zambia.

Distribution in India

Jharkhand	Singhbhum and Hazaribagh
Madhya Pradesh	Balaghat
Rajasthan	Udaipur, Bhilwara & Alwar

Indian share in world production is 4%. India isn’t self-sufficient and imports Copper from Zimbabwe, Australia, USA & Mexico.

5. Gold

Gold is known as the international currency.
Properties: durable, doesn’t rust, luster, malleable & ductile.
It is used as an ornament as well as to mint coins (historically).

Global Distribution

Africa	South Africa, Zimbabwe and Ghana
North America	Canada and USA
South America	Columbia, Peru, Ecuador and Brazil.
Europe	Former USSR
Asia	China, Japan, Korea and India
Australia	Australia

Distribution in India

About 90% of production is from Karnataka & rest is from Rajasthan, West Bengal, Jharkhand, Bihar & Andhra Pradesh. Three important gold fields in India.

1. Karnataka

1.1 Kolar Gold Mines, Mysore

Mining started here in 1871.
It still contributes 60 % of the total production of the country.
The mine is more than 3000 m deep, and almost all gold has been extracted.

1.2 Hutti Goldfield, Raichur dist.

It is the only gold-producing company in India.

2. Andhra Pradesh

Ramgiri Goldfield and Anantapur.

3. Placer or Alluvial gold

Gold is obtained from sand & sedimentary deposits of the river.
It is found in the Subarnrekha river in Jharkhand & Lo in the Singhbhum district of the Chotanagpur plateau.

6. Silver

Silver is white & valuable metal.
It is used in making ornaments & mint coins (historically).
Main ores include Argentine, Stephanite & Proustite.
It is found in association with zinc & lead.

Global Distribution

North America	Mexico, Canada and USA
South America	Bolivia and Chile
Europe	Spain, Germany, Sweden, Italy and France
Asia	Japan, Myanmar and India
Australia	Australia

Distribution in India

India is not very rich in silver.
Rajasthan is the largest producer owing to following
- Zowar mines in Udaipur.
- In Hindustan Zinc Smelter in Udaipur, Silver is obtained as a by-product of Zinc & Lead.
Other producers include
- Tudoo Lead Smelter: Dhanbad(Jharkhand)
- Kolar Gold Field & Hutti: Karnataka
- Vishakhapatnam Smelter: Andhra Pradesh

Corporate Governance in India

by admin

Last Updated: Jan 2025 (Corporate Governance in India)

Corporate Governance in India

This article deals with ‘Corporate Governance in India (UPSC Notes).’ This is part of our series on ‘Economics’ which is an important pillar of the GS-3 syllabus. For more articles, you can click here.

What is Corporate Governance?

Corporate Governance works on the Triple Border Line Principle, i.e. it takes into account Planet, People and Profit while taking any decision.

It is a way of directing company to

Protect the interests of stakeholders.
To comply with legal-regulatory-ethical requirements.

Note: Stakeholders are the people and groups who have a legitimate interest in the operation’s activities.

Companies Act,2013

The act was made after Satyam Scam to plug the loopholes and to protect all stakeholders with provisions of

Independent Directors: Independent Directors are appointed to protect the interests of Minority Shareholders. 1/3rd of all Directors should be independent and shouldn’t have a pecuniary relationship with the company more than 10% of their total income.
Audit mechanism: Make Audit Committees consisting of Independent Auditors and give guidelines related to Auditors like individual Auditor cant Audit a company for more than 5 years.
Serious Fraud Investigation Office (SFIO): Earlier, this body solved Saradha & Satyam Scam. SFIO was Statutory Status by the Companies Act along with powers of Search and Seizure.
Investor Protection and Education Agency: This fund has been created to educate and spread financial literacy among investors.

Side Topic: Administrative Setup in Company

Kotak Mahindra Committee on Corporate Governance

Issues with Corporate Governance in India (according to Kotak Committee)

Insider trading (explained below)
Nepotism in board appointments (Board members are relatives or known ones)
The Independent Directors in India have played a passive role. It can be easily removed if they do not side with promoters.
The entire board is not often present at general meetings for stakeholders.
Executive Compensation policies are not transparent and do not require shareholders’ approval.
Family-owned Indian companies have excessive controls and poor succession planning.
Unrealistic risk assessment policies.
Inadequate emphasis on privacy, data protection and cyber security.
Lack of serious effort by the board towards Corporate Social Responsibility (CSR) projects.

Kotak Mahindra Committee recommendations

Increasing Transparency
1. Full disclosure of utilization of funds.
2. Disclosures of Auditor Credentials and Audit Fee.
3. Disclosure of the Skills of Directors.
Reshaping Board of Directors
- Separation of Powers: The CEO & Chairperson of the Board of Directors can’t be the same person in the top 500 listed companies.
- At least one Women Independent Director in Top 500 listed companies
Levelling the playing field in Algorithmic Trading for all investors (big (who can afford) and small (who can’t))
Permission of Minority shareholders should be necessary in case payments to related parties exceed 2% of revenue.

Examples of Corporate Governance Issue

Company	Issues
1. Tata Sons	Independent Director Nusli Wadia was removed for siding with Cyrus Mistry in his fight with Ratan Tata.
2. Ranbaxy 3. IL&FS 4. DHFL	Indulged in ‘Creative Accounting’, i.e. fudged their accounts.
5. Sun Pharma	Insider Trading during Ranbaxy acquisition.

Side Topic: Insider Trading

When someone with access to non-public information about the security instrument indulges in buying or selling a security, it is known as Insider Trading.
E.g., a person who is on the board of Directors of a company and knows about the new product that the company is going to launch, which will increase the price of shares, starts buying shares in advance.

Why is it illegal?

Insiders are better positioned to make bigger trading gains due to access to non-public information

Against the Right to Equality.
Wrong use of the information given to him in a fiduciary capacity

In India, the following acts prohibit Insider Trading

SEBI (Insider Trading) Regulation, 1992
Companies Act 2013

Gold Imports in India (UPSC Notes)

by admin

Last Update: Jan 2025 (Gold Imports in India (UPSC Notes))

Gold Imports in India (UPSC Notes)

This article deals with ‘Gold Imports in India (UPSC Notes).’ This is part of our series on ‘Economics’, which is an important pillar of the GS-3 syllabus. For more articles, you can click here.

Introduction

India is the 2nd largest gold importer in the world (1st = China). India imports gold from the following destinations.
1. Switzerland
2. UAE
3. South Africa
Due to cultural factors, Indians have a high obsession with gold.
As India imports most of its gold, it leads to a significant current account deficit and a weakening of ₹ against $.
Along with that, high usage of gold results in following vicious cycle.

Why is high gold demand in India?

Cultural Factors: Indians have a great love for gold ornaments.
Intrinsic Value: Gold preserves its value in the long run and generates an above-inflation return, making investors gravitate towards gold in times of high inflation.

Steps taken by the government to reduce gold imports

To control imports of gold, the Government has taken various measures.

Inflation Indexed Bonds: During the period of high inflation, people invest in Gold because other investments have a negative real interest rate. Interest Rates of Inflation Index Bonds are pegged to inflation.
Custom Duty on Gold was hiked (Budget 2023).
80:20 Rule: 20% of imported Gold must be exported after adding value to it.
Various Schemes like Gold Monetisation Scheme, Sovereign Gold Bond Scheme and Indian Gold Coin have been started by the Government (dealt in detail below).

Detail of Gold Schemes

#1 Gold Monetisation Scheme (GMS)

GMS offers an option to resident Indians to deposit their precious metal and earn interest on it (up to 2.5%).
But that Gold will be melted into Gold Coins and Bars for valuation.
All residents can invest in this scheme but are subject to Know Your Customer (KYC) Norms & have to disclose the source of the Gold.
Deposit limit: Minimum deposit at any one time is 30 grams with 995 fineness. There is no maximum limit for the deposit.
Tenure and interest rate:
1. Short Term (1-3 years): 2.25% interest
2. Medium (5-7 years): 2.5% interest
3. Long (12-15 years): 2.5 % interest
Upon maturity, one can redeem a deposit in gold or cash equivalent.

#2 Sovereign Gold Bond Scheme

The scheme seeks to shift part of the demand for physical gold for investment into Demat (Dematerialised) gold bonds to reduce the demand for physical gold. Additionally, the government use it to finance its fiscal deficit.
These gold bonds are interest-giving (up to 2.75% interest paid semi-annually). On the redemption date, one gets the principal equivalent of the latest price of gold in grams. So, if the gold price increases, then investors get more profit.
Investment Limits:
1. Minimum Investment: 2 grams of physical gold
2. Maximum Investment: 500 grams
Tenure of Gold Bonds: There is a lock-in period of 5 years. 8 years is the maximum tenure. But there is an exit option from the 5th year.
These Bonds are tradable and exchangeable.
2024 Update: The government of India is planning to discontinue this scheme due to the high cost of financing this scheme.

#3 Indian Gold Coin

It is India’s first ever Indian gold coin and bullion to be officially issued by Union Government.
Denominations: The coins will be available in 5 and 10 grams and 20-gram bullion denominations.
These coins and bullion can be easily liquidated.

Concept of Accountability (UPSC Notes)

by admin

Last Updated: May 2023 (Concept of Accountability (UPSC Notes))

Concept of Accountability (UPSC Notes)

This article deals with the topic titled ‘ Concept of Accountability (UPSC Notes) .’ This is part of our series on ‘Ethics’. For more articles, you can click here.

What is Accountability?

Accountability has three aspects
1. Answerability of the officials for their decisions and actions
2. Enforceability of rules and laws to punish the officials if they fail to effectively discharge their duty
3. Grievance redressal mechanism for the ordinary people who suffer due to the absence of accountability.
Accountability is required in the case of Public Servants because they have a lot of discretion.

Benefits of Accountability

Checks Abuse of power: It prevents the public services from turning into tyrants as they are held answerable for their deeds and misdeeds.
Checks corruption and fraud
Lack of accountability decreases the legitimacy of the government
Makes the system more responsive: Owing accountability for their actions motivates public servants to discharge their duty with honesty, integrity and efficiency.
Stops arbitrary and unauthorized exercise of authority
Ensures better service delivery

Points against Accountability

Officers spend their time maintaining records or answering RTIs.
It makes them status-quoist in their conduct in fear of public scrutiny.

Accountability vs. Responsibility

Quite often, Accountability is misunderstood as Responsibility.

Responsibility is an inner concept like your responsibility to do some work.
Accountability is an outer concept like your accountability for some work you have done.

Types of Accountability

There can be two types of Accountability in Governance

#1 Vertical Accountability

Accountability of the government to persons outside the government is ensured by

Elections
RTI
Media & Social Media
Citizens Charter
NGO & Pressure Groups

#2 Horizontal Accountability

Accountability of Public Institutions/ Servants to the Government

It can be further of two types

External	Accountability of Public Servants outside his wing 1. Accountability of Minister (Executive) to Parliament (Legislature) 2. Judiciary 3. CAG 4. CVC 5. NHRC
Internal	Accountability of Public Servant inside his wing/department 1. Accountability to Superiors 2. Internal Audit 3. Grievance Redressal Mechanisms

Whenever we have to answer how to increase Accountability, we must cover all these angles.

Steps to make Accountability more effective in India

Strengthening RTI Act
Protection of Whistleblowers through legislation.
Strong Lokpal Act
Social Audits by local communities and NGOs can enhance accountability in public service delivery, for instance, in MGNREGA.
Using Information and Technology: Like maintaining digital records to increase transparency
Citizen’s initiative: e.g. Mazdoor Kisan Shakti Sangathan (MKSS) (MKSS, founded in 1990 in Rajasthan, is a social organization working towards increasing accountability in India. MKSS began demanding access to government records in 1994, which led to the creation of the RTI Act in 2005.)
Promoting competition and discouraging monopolistic attitudes among public service sectors.
Need to lay down a statutory Code of Ethics for Civil Services (British Civil Services Code can act as a model.)

Side Topic: Various Examples of Social Accountability

Participatory budgeting	In Participatory Budgeting, the citizens directly participate in budget (especially at the local government) formulation and monitoring the execution.	Gujarat (Local Governance)
Participatory Planning	Beneficiaries of government programs are involved in the planning and design of program components to determine local problems, priorities and solutions.	Kerala, Brazil and Bangladesh
Citizen Report Card	Participatory surveys that provide quantitative feedback to service providers on the satisfaction levels amongst citizens on the quality of public services	Bangalore, Maharashtra (Ukraine and Philippines)
Social Audit	Process whereby a government program is audited with the active participation of the program’s intended beneficiaries.

Success Stories

People’s Campaign for Decentralized Planning in Kerala: Its success has been attributed to significant financial and functional devolution and the institutional incentives for participation which led to increased representation of hitherto marginalized voices like SCs, STs and women.
Mazdoor Kisan Shakti Sangathan (MKSS) – a Rajasthan-based grassroots organization, employed ‘social audits’ which break the state’s monopoly over official oversight and legitimize citizen inclusion into hitherto exclusive affairs of the state

Various Challenges to Accountability in India

Special Expertise: Public administrators are experts in their specific areas. Hence, it is difficult for outside agencies to surpass them in their areas of specialization & question them.
Massive Expansion of Bureaucracy: It is difficult for the political executive to effectively control the bureaucracy due to the massive expansion of bureaucracy.
Lack of Coordination: The number of agencies has also increased – for example, CBI, CVC, Lokayuktas, SVC etc. without effective coordination. Due to their overlapping jurisdiction and lack of coordination, they cannot hold the public servants accountable.
Excessive Constitutional Security offered to Public Servants: Article 311 of the Indian Constitution makes it almost impossible to remove a civil servant.
Employees’ Unions: The tendency of employees’ unions to resist managerial action against their members even when they have blatantly violated ethical norms reduces the accountability of employees.
Disruption by powerful vested interests: Threats and coercion can make communities hesitant to participate directly and speak up in Social Accountability initiatives.

Special Economic Zones

by admin

Last Updated: Jan 2025 (Special Economic Zones)

Special Economic Zones

This article deals with ‘SEZs (Special Economic Zones) .’ This is part of our series on ‘Economics’, which is an important pillar of the GS-3 syllabus. For more articles, you can click here.

Introduction

SEZs are geographical areas with economic laws different from a country’s general economic laws. Accordingly, they are delineated duty-free enclaves and shall be deemed foreign territories for trade, duties and tariffs.

India enacted the Special Economic Zones 2005 Act, which provided for establishing, developing and managing the SEZs. The SEZ law also provides for establishing the International Financial Services Centre (GIFT Center) and Free Trade and Warehousing Zones.

Timeline

1965	Export Processing Zone (EPZ) opened in Kandla —> India was the first in Asia to do so
2000	First SEZ announced to attract larger foreign investment.
2005	Parliament passed SEZ Act
2018	Baba Kalyani Report on SEZs published
Present	The Government has approved over 400 SEZs, and over 230 have been operational.

Salient Features

Duty-free enclaves, i.e. treated as foreign territories for the purpose of trade as far as duties & tariffs are concerned.
No requirement for a license for imports
Units must become net foreign exchange earners within 3 years.
They are subjected to full customs duty & import policy when they sell their products to the domestic market.
FDI = 100% FDI allowed through Automatic Route.
Examples: DLF Cybercity (Haryana), Kandla (Gujarat) and Vishakhapatnam (Andhra Pradesh)

Main Objectives of SEZ

Generate additional economic activity
Promote exports of goods & services
Promote investment from foreign and domestic sources
Create employment opportunities
Develop Infrastructure facilities

Failed SEZ policy & reasons

1. Lack of Clarity in Policy

A number of changes are done at frequent intervals. Hence, there is a lack of stability in policy.

2. Virtually no Income tax benefits now

The income tax benefits were neutralized by introducing the 20% Minimum Alternate Tax (MAT) and the 20% dividend distribution tax (DDT) in 2011-12

3. Wrong Location

India chose the wrong locations for SEZ.

In China, most of the SEZs are located in coastal areas. E.g., Shenzhen.
On the other hand, in India, many SEZs are located in the interior parts, such as Haryana. Even in some coastal states such as Tamil Nadu, SEZs are not located on the coasts.

4. Free Trade Agreements

SEZs have access to duty-free imports of manufacturing inputs because, technically, they are considered outside the country’s domestic tariff area. But, with India signing Free Trade Agreements with countries where duties on many products are eliminated or reduced substantially, the advantage accruing to SEZs was negated.

5. Absence of complementary Infrastructure

Absence of complementary infrastructure like port connectivity via roads or railway lines

6. WTO – Countervailing Duty

Tax incentives provided inside SEZs are considered against WTO principles by other nations, and they impose Countervailing Duties on products from Indian SEZs.

7. Custom duty on sending products to the Domestic Market

Today, it is better for you to manufacture in Thailand and get duty-free access to India than to manufacture in an Indian SEZ and face an import duty barrier. It is a considerable deterrent to Make in India. India should be signing an FTA with all the Indian SEZs first.

8. Land Acquisitions

500 Acre for Multisector and 50 Acre for Single Sector is difficult to acquire. Hence, land acquisition is one of the significant hurdles.

9. Labour Laws

Labour laws inside SEZs are equally harsh as the mainland. They can’t fire workers easily, and the Industrial Disputes Act (IDA) applies if the company employs more than 100 workers.

Case Study: Why are SEZs in China doing better than Indian SEZs?

The SEZ Model in India was inspired by China’s SEZs which were critical instruments of its export-led growth. Reasons for better functioning of SEZs in China are

Location: Located close to ports from where it can export easily
Size: China’s zones are few but huge in size. E.g. Hainan, a province in China, is one complete SEZ covering an area of 33,000 sq. km. Indian SEZs are barely 500 -1000 ha in size.
Laws: China has amazingly business-friendly laws. Corporates must give an employee only one month’s notice before firing him. Contrast that to India, where businessmen must follow a lengthy procedure to fire an employee.
In China, the thrust of SEZs has been to attract foreign investments and modern technology; in India, the emphasis has been on exports.

Way forward to improve them

SEZs should be allowed to sell within the country without payment of customs duty on the product.
Abolition of MAT and DDT (Dividend Distribution Tax).
Provide relaxed labour laws there.
Fiscal incentives need to be carefully designed so that it doesn’t violate WTO rules.

Baba Kalyani Report on SEZ (2018)

Instead of giving them blanket general tax holidays, SEZ units should be given tax benefits linked to how many jobs have been created, how much FDI investment attracted, how many goods/ services have been exported etc.
SEZs should be converted into Employment and Economic Enclaves (3E).
Encourage Domestic Electronics Companies in 3Es so that India can end the Chinese monopoly in the Indian electronics market.
Synergise SEZs with CEZs, DMIC, NIMZ , Mega Food Parks etc .
Improve connectivity to SEZs.