Editorial 1: The India-UAE deal to trade with rupees
Context
- During Prime Minister Narendra Modi’s recent visit to the UAE, the Reserve Bank of India (RBI) and its Abu Dhabi-headquartered counterpart the Central Bank of the UAE signed two memoranda of understanding (MoUs). While the first established a framework to promote the use of local currencies for cross-border transactions, the other was for interlinking payment systems.
Promotion of local currencies
- The first of the two MoUs aims to establish a Local Currency Settlement System (LCSS) to promote the use of rupee and the dirham bilaterally. It will cover all current and permitted capital account transactions.
- This, the RBI said, would enable exporters and importers to send invoices and pay in their respective domestic currencies, which in turn would help the development of the INR-AED foreign exchange market.
- It would also help promote investments and remittances between the two countries.
- Broadly, the arrangement would help optimise transaction costs and settlement time for transactions, including for remittances from Indians residing in UAE.
Significance to exporters
- The focus on denominating export contracts and invoices in the local currency helps avert exchange-rate risks (such as when a third currency is being used as a standard), which further facilitates the scope to discover competitive pricing.
- Moreover, it could also lead to enhanced avenues for cooperation among the banking systems of the two countries, thereby contributing to the expansion of trade and economic activity for both.
- The major items of export from India to the UAE include mineral fuels, mineral oils and products, bituminous substances, mineral waxes, followed by pearls, precious stones and metals, electrical machineries and equipment, among other things.
- The major items imported by India are petroleum crude and petroleum related products.
- India-UAE trade rose to $85 billion in 2022. Furthermore, the UAE was India’s third largest trading partner and second-largest export destination in FY2022-23. Conversely, India was the UAE’s second largest trading partner.
Interlinking of payment systems
- The second of the two MoUs links India’s Unified Payments Interface (UPI) with its UAE-counterpart Instant Payment Platform (IPP).
- This is alongside the linking of card switches, that is, RuPay switch and UAESWITCH. Card switches entail facilitating communications and transactions between different payment service providers.
- The agreement would also explore linking of payment messaging systems of the two countries.
- The apex banking regulator in India said that the UPI-IPP linkage would enable users in either country to make fast, convenient, safe, and cost-effective cross-border fund transfers.
- As for card switches, the regulator stated, it will facilitate mutual acceptance of domestic cards and processing of card transactions.
- This is relevant to 3.5 million resident Indians living in the UAE.
The importance
- One of the several issues with sending remittances back home, especially for low wage earners, is the high costs of transactions.
- The World Bank noted in the 2023 Migration and Development Brief that India experienced a 24.4% increase in remittances to $111 billion in 2022 on a year-over-year basis.
- This represented 3.3% of the GDP. It further stated that at present, remittance inflows from GCC (Gulf Cooperation Council) countries, which accounts for about 28% of the country’s total remittance inflows, also soared in 2022.
- High energy prices favoured the employment and incomes of the less-skilled Indian migrants in the GCC countries, while the GCC governments’ special measures to curb food price inflation shielded migrants’ remitting potential.
- About 36% of the remittances were attributed to high-skilled and largely high-tech Indian migrants in the U.S., the U.K., and Singapore..
Conclusion
- Continued collaboration in areas such as technology, renewable energy, infrastructure development, tourism, and healthcare can further strengthen the bilateral relationship between India and the UAE.
Editorial 2: A push for GM mustard disregarding science, the law
Context
- A determined battle by environmentalists in the Supreme Court of India against Delhi University’s genetically modified (GM) herbicide-tolerant (HT) mustard is all that stands between GM food and Indian farmers and consumers.
GM crops
- GM crops are quite different from conventional varieties and hybrids, such as those developed by farmers, agricultural research institutions and companies.
- Biotechnologists insert select genes at a random location in the DNA of a plant to develop a GM crop.
- The insertion makes a GM crop express traits that it ordinarily would not.
- For instance, GM mustard has been altered to withstand the broad-spectrum plant-killer or herbicide glufosinate.
- This makes it easier to develop hybrid mustard seeds for higher yields.
- And farmers growing GM mustard can spray the herbicide to kill all plants except the mustard.
The debate on GM crops in India
- India has seen a robust debate on GM crops in the last two decades.
- Environmentalists, scientists, politicians, farmers, consumers and the higher judiciary have asked probing questions about the safety, efficacy and even the very necessity of GM food.
- Many have been alarmed by the experience with Bt cotton, the first and only GM crop approved in the country.
- Long-term research suggests that Bt cotton has provided only fleeting benefits to farmers, while enormously increasing their costs of cultivation and risk.
- On the other hand, some seed companies have profited handsomely from the expensive GM seeds.
- In the wake of the fierce debate, two Standing Committees of the Parliament independently and comprehensively examined GM crops and food.
- The Supreme Court also appointed a Technical Expert Committee (TEC) in the public interest litigations filed separately by the non-government organisation Gene Campaign.
Convergence in risk assessment
- The Committee on Science and Technology, Environment and Forests made a specific reference to GM mustard, and asked the government to conduct a thorough, independent, and transparent assessment of long-term biosafety, environmental risk and socio-economic impacts.
- Five of the six TEC members found HT crops completely unsuitable in the Indian context and warned of serious harm to the environment, rural livelihoods and sustainable agriculture if they were released.
- Given the overwhelming political and technical consensus, the government needs to approach the issue of HT crops transparently and robustly with an emphasis on precaution.
Misleading the court
- In recent hearings in the Supreme Court, to get around the growing evidence of long-term ecological and health risks of HT crops, the government has argued that GM mustard should not be considered HT at all — since the objective for developing it was to improve yields.
- In fact, a crop that can withstand herbicides is an HT crop. As far as the science of biotechnology and ecology go, there is no doubt that GM mustard is an HT crop.
Conclusion
- The apparent disregard with which the government is steamrolling science-based concerns and opposition to GM mustard is horrifying. If the Supreme Court allows GM mustard to go through, it will likely pave the way for the release of other HT crops such as cotton, rice, and maize. The future of farming and India’s food culture and heritage hangs in the balance.
