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Insights Daily Current Events, 20 December 2014


Insights Daily Current Events, 20 December 2014

New India-U.S. defence pact on the cards

A new 10-year defence framework with the United States is likely be finalised.

About the New Agreement:

  • The new framework will replace the existing agreement of June 2005.
  • The new defence framework will outline a series of exchanges between Indian and U.S. officials, including regular meetings between service and non-service defence personnel, the updated Defence Trade and Technological Initiative, upgraded military and naval exercises, as well as ‘knowledge partnerships’ between the national defence universities in both countries.

The 2005 defence pact had laid strong foundations leading to mutually beneficial defence cooperation between the two countries through security dialogue, service-level exchanges, defence exercises and defence trade and technology collaboration.

The US has been pushing defence deals with India worth over Rs 20,000 crore, including the sale of Apache attack choppers, Chinook heavylift helicopters and the Javelin anti-tank guided missiles.

India has raised the FDI cap in defence sector recently from 26 per cent to 49 per cent with an aim of boosting indigenous defence production. India imports almost 70 per cent of its defence needs from foreign sources.

Sources: The Hindu.


Electricity Bill focusses on renewable energy

The Electricity Amendment Bill 2014, introduced in the Lok Sabha recently, lays strong emphasis on promoting renewable energy generation in the country while also aiming at increasing accountability and transparency in the functioning of regulatory bodies.

  • The amendments will usher in much needed further reforms in the power sector.
  • It will also promote competition, efficiency in operations and improvement in quality of supply of electricity in the country resulting in capacity addition and ultimate benefit to the consumers.

Salient features of the proposed amendments:

  • Enhancing Grid safety and security: In order to strengthen and enhance Grid safety and security, specific measures regarding maintenance of spinning reserves along with strong and effective deterrence in the form of enhanced penalties for violations of the directions given by the State and Regional Load Despatch Centres etc., have been envisaged.
  • Separation of Carriage & Content in the Distribution sector: To achieve the objectives of efficiency and for giving choice to consumers through competition in different segments of electricity market, concept of multiple supply licensees is proposed by segregating the carriage from content in the distribution sector and determination of tariff based on market principles, while continuing with the carriage (distribution network) as a regulated activity.
  • To rationalize the tariff structure on sound financial principles for the viability of the distribution sector and recovery of revenue requirement of licensees without any gap, the provisions of Tariff Policy are proposed to be made mandatory for the determination of tariff.
  • The bill also proposes to make it mandatory for any company establishing lignite and coal-based thermal power plants, to generate renewable energy. While the amount of renewable energy to be generated by such plants will be decided later, the Bill proposes it to be not less than 10% of the total installed capacity of a thermal plant.
  • The amendments aim to provide those consuming less than one megawatt a choice of power distribution companies, separate the content and carriage businesses, bring renewable energy into the mainstream and rationalise rates.
  • The Bill also aims to empower power generators to sell the surplus power generated within a state to entities outside it.
  • The amendments also seek to empower appropriate commissions to initiate suo-motu proceedings to determine the rate in case a utility/generating company doesn’t file its petition on time. It also gives the load despatch centre the power to penalise those not complying with its directions on power supply.

The Planning Commission had in March 2011, constituted a working group on power sector reforms. The group had recommended several amendments to the Electricity Act 2003.

Sources: The Hindu, PIB, Business Standard.


Conversion to Islam solely for marriage not valid: High Court

In a significant judgment, the Allahabad High Court has ruled that the religious conversion of girls “without their faith and belief in Islam” and “solely for the purpose of marriage” to Muslim boys could not be held valid.


  • The order was passed dismissing a batch of petitions filed by five couples, hailing from different districts of Uttar Pradesh, who had sought protection as married couple.
  • In each case, the boys were Muslim while the girls were Hindus who got converted to Islam for solemnising “nikah”.

In 2000 the Supreme Court had laid down that “conversion of religion of a non-Muslim without any real change of belief in Islam and only for the purpose of marriage is void”.

Sources: The Hindu.

India tests glide bomb

A 1000-kg “glide bomb,” designed and developed by the Defence Research and Development Organisation (DRDO), was successfully tested.

The bomb, guided by its on-board navigation system, glided for about 100 km before reaching the targeted area with precision.

Difference between Conventional Bombs and Guided Bombs:

  • When conventional bombs are dropped from an aircraft, they are at the mercy of the winds; and are influenced by the speed and direction of the aircraft. But, glide bombs have winglets, and navigation and guidance systems. Their navigation system takes them to the target with precision.

A glide bomb or stand-off bomb is an aerial weapon with aerodynamic surfaces to give it a flatter, gliding, flight path than that of a conventional bomb without such surfaces. This allows it to be released at a distance from the target rather than right over it, allowing a successful attack without the aircraft needing to survive until reaching the target.

Sources: The Hindu, PIB, Wiki.

CBDT signs first bilateral Advance Pricing Agreement

The Central Board of Direct Taxes (CBDT) recently signed a bilateral Advance Pricing Agreement (APA) with a Japanese company. The APA is for five years.

How the APA will help:

  • APAs will improve the investment climate in the country
  • It is also expected to bring about certainty and uniformity in transfer pricing matters of multinational companies and reducing litigation.
  • In the context of growing economic ties between Japan and India the APA is expected to generate positive sentiments among Japanese investors in India.

The APA has been finalised in a period of about one-and-a-half years, which is shorter than time normally taken in finalising APAs internationally.

An advance pricing agreement (APA) is an ahead of time agreement between a taxpayer and a taxing authority on an appropriate transfer pricing methodology (TPM) for some set of transactions at issue over a fixed period of time.

Sources: The Hindu, Wiki.