Draft Development of Enterprise and Service Hubs (DESH) Bill

The Centre plans to table the Development of Enterprise and Service Hubs (DESH) Bill in the monsoon session of the Parliament, which will overhaul the special economic zones (SEZ) legislation.

What are SEZs?

A Special Economic Zone (SEZ) is an area in which the business and trade laws are different from the rest of the country.

SEZs are located within a country’s national borders, and their aims include increasing trade balance, employment, increased investment, job creation, and effective administration.

Additionally, companies may be offered tax holidays, where upon establishing themselves in a zone, they are granted a period of lower taxation.

SEZs in India

The SEZ policy in India first came into inception on April 1, 2000.

The prime objective was to enhance foreign investment and provide an internationally competitive and hassle-free environment for exports.

The idea was to promote exports from the country and realize the need for a level playing field must be made available to the domestic enterprises and manufacturers to be competitive globally.

Subsequently, the SEZ Act 2005, was enacted to provide the umbrella legal framework, covering all important legal and regulatory aspects of SEZ development as well as for units operating in SEZs.

SEZ units used to enjoy 100% income tax exemption on export income for the first five years, 50% for the next five years, and 50% of the ploughed back export profit for another five years

Why replace the existing SEZ Act?

The World Trade Organization’s dispute settlement panel has ruled that India’s export-related schemes, including the SEZ Scheme, were inconsistent with WTO rules.

India has been accused of giving tax benefits to exports through SEZs.

Countries aren’t allowed to directly subsidize exports as it can distort market prices.

SEZs also started losing their allure after the introduction of minimum alternate tax and a sunset clause to remove tax sops.

How is the DESH legislation different?

The DESH legislation goes beyond promoting exports.

It has a much wider objective of boosting domestic manufacturing and job creation through ‘development hubs’.

These hubs will no longer be required to be net foreign exchange positive cumulatively in five years (i.e, export more than they import) as mandated in the SEZ regime.

They will be allowed to sell in the domestic area more easily. The hubs will, therefore, be WTO-compliant.

DESH legislation also provides for an online single-window portal for the grant of time-bound approvals for establishing and operating the hubs.

What role will states play in DESH?

DESH is expected to play a larger role, definitely.

In the SEZ regime, most decisions were made by the commerce department at the Centre.

Now, states will be able to participate and even directly send recommendations for development hubs to a central board for approval.

Besides, state boards would be set up to oversee the functioning of the hubs.

They would have the powers to approve imports or procurement of goods, and monitor the utilization of goods or services, warehousing, and trading in the development hub.

Way forward

If indeed India needs the special hubs, the govt must address the critical gaps in existing SEZ law through the DESH bill and it must be thought through before bringing it to the Parliament.

Effective implementation of the law could act as a lever to India’s growth.

Nominated Members in Rajya Sabha

Olympic sprinter PT Usha and music composer Ilaiyaraaja among others have been nominated to the Rajya Sabha in the category of eminent persons nominated by the President.

Nominated Members in RS

Twelve members are nominated to the RS by the President of India for six-year term.

This is for their contributions towards arts, literature, sciences, and social services.

This right has been bestowed upon the President according to the Fourth Schedule under Articles 4(1) and 80(2) of the Constitution of India.

Normal composition

The present strength is 245 members of whom 233 are representatives of the states and UTs and 12 are nominated by the President.

The Rajya Sabha is not subject to dissolution; one-third of its members retire every second year.

Constitutional provisions for nominated members

80(1)(a) of Constitution of India makes provision for the nomination of 12 members to the Rajya Sabha by the President of India in accordance with provisions of Arts.80(3).

80(3) says that the persons to be nominated as members must be possessing special knowledge or practical experience in respect of such matters as the following namely: Literature, science, art and social service.

Powers and privileges of such members

A nominated member enjoys all the powers and privileges and immunities available to an elected Member of Parliament.

They take part in the proceedings of the House as any other member.

Nominated members are however not entitled to vote in an election of the President of India.

They however have rights to vote in the vice presidential election.

As per Article 99 of the Constitution, a nominated member is allowed six months’ time should he join a political party.

EU’s Sustainable Finance Taxonomy

Activists have been widely criticizing the EU’s sustainable finance taxonomy as a “greenwashing” exercise that puts the European Union’s climate change targets at risk.

What is the EU Taxonomy?

The EU taxonomy is a complex system to classify which parts of the economy may be marketed as sustainable investments.

It includes economic activities, as well as detailed environmental criteria that each economic activity must meet to earn a green label.

Why in news now?

Rules for most sectors came into effect this year, covering investments including steel plants, electric cars and building renovations.

The rules for gas and nuclear energy, however, have been long delayed amid intense lobbying from governments who disagree on whether the fuels help fight climate change.

What does it say about gas and nuclear energy?

The European Parliament supported that proposal in a vote paving the way for it to become law and apply from 2023.

Under the proposal, for a gas-fuelled power plant to be deemed green, it must emit no more than 270 grams of CO2 equivalent per kilowatt hour, or have average emissions of 550g CO2e/kW over 20 years.

It must also commit to switch to low-carbon gases by 2035.

Gas and nuclear power plants are classed as transitional activities.

What’s the taxonomy for?

The taxonomy does not ban investments in activities not labelled “green”, but it limits which ones companies and investors can claim are climate-friendly.

The EU’s goal to eliminate its net emissions by 2050 will require huge investments, much of it private funding.

The rules also aim to stamp out green-washing, where organisations exaggerate their environmental credentials, among so-called eco-friendly investment products.

Who does it apply to?

Providers of financial products – including pension providers – in the EU must disclose which investments comply with the taxonomy’s climate criteria.

For each investment, fund or portfolio, they must disclose what share of underlying investments comply with the rules.

Large companies and listed firms must also disclose what share of their turnover and capital expenditure complies.

That means polluting companies can get recognition for making green investments.

For example, if an oil company invested in a wind farm, it could label that expenditure as green.

What makes a “green” investment?

The rules classify three types of green investments.

First, those that substantially contribute to green goals, for example, wind power farms.

Second, those that enable other green activities, for example, facilities that can store renewable electricity or hydrogen.

Third, transitional activities that cannot be made fully sustainable, but which have emissions below industry average and do not lock in polluting assets or crowd out greener alternatives.

NFSA State Ranking Index

Odisha has topped the list of 34 states and Union territories (UTs) in the first-ever NFSA State Ranking Index. Ladakh was ranked last on the index.

NFSA State Ranking Index

The GoI has come up with a first-ever state ranking index to capture the implementation of the Targeted Public Distribution System (TPDS) under the National Food Security Act (NFSA).

The states and UTs were ranked for 2022 on the basis of three parameters:

NFSA coverage, rightful targeting and implementation of all provisions under the Act

The delivery platform while considering the allocation of food grains, their movement and last-mile delivery to fair price shops

Nutrition initiatives of the department

Why need such index?

NFSA is a crucial policy instrument to ensure food security. It covers nearly 800 million people.

However, NFSA’s implementation through TPDS has not been uniform in the country.

While some states and Union territories lead, others are yet to pick up in terms of coverage, beneficiary satisfaction, digitisation and overall system efficiency.

The index has been developed to create an environment of competition, cooperation and learning among states while addressing matters of food security and hunger.