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Insights Daily Current Events, 26 January 2015

Insights Daily Current Events, 26 January 2015

THE NUCLEAR DEAL

The second summit, between the PM of India and President of the US, was marked by a renewed 10-year defence partnership and the much-anticipated nuclear breakthrough.

Defence cooperation:

India and the U.S. have agreed to extend the Defence Cooperation Agreement and identified four projects under the Defence Technology Trade Initiative (DTTI) for joint production and development and exploring cooperation for jet engines and aircraft carrier systems.

  • The projects identified under the DTTI include next-generation Raven mini-unmanned aerial vehicles (UAVs), roll-on, roll-off intelligence kits for C-130 transport aircraft and mobile electric hybrid power source.
  • The agreement would help upgrade the country’s domestic defence industry and expand the manufacturing sector in India. The agreement would guide the bilateral defence cooperation for the next 10 years.

DTTI is an initiative which is within the defence framework. The significant project under DTTI is the plans for joint development and production of next generation Raven Mini UAVs, a device which the Indian Army was eyeing. If the joint manufacturing of the UAV happens, then India would be able to get a slice of the multi-billion order book for the world’s most advanced hand-launched drone.

Nuclear cooperation:

The breakthrough on the nuclear deal – 10 years after the agreement was negotiated and six years after it was signed – paves the way for American companies to set up civil nuclear reactors, which India hopes will contribute to its energy security.

  • Both the leaders claimed to have broken the logjam over the Indo-US nuclear deal – after overcoming key hurdles related to the liability of suppliers of nuclear reactors in the event of an accident and tracking of fuel supplied by the US.
  • A nuclear risk management fund, worth Rs 1,500 crore, will be created to cover operators and suppliers. This will be led by five Indian public-sector insurance firms, which will together contribute Rs 750 crore to the pool (the rest will be provided by the government).

It is almost ten years since the civil nuclear agreement between India and the US was discussed and over seven years since the final agreement was signed.
The civil liability for nuclear damage act passed in 2010 had been the major reason why the deal was not moved forward.

Sources: The Hindu, PIB.

 

 

PM Relief Fund

A reply to RTI application shows that Collections for the Prime Minister’s National Relief Fund (PMNRF) in this financial year might be the highest since 2004-05.

  • From April 1 to December 31, 2014, the fund got Rs 316 crore, making it a monthly average of Rs 35 crore.

PMNRF:

In pursuance of an appeal by the then Prime Minister, Pt. Jawaharlal Nehru in January, 1948, the Prime Minister’s National Relief Fund (PMNRF) was established with public contributions to assist displaced persons from Pakistan.

  • The resources of the PMNRF are now utilized primarily to render immediate relief to families of those killed in natural calamities like floods, cyclones and earthquakes, etc. and to the victims of the major accidents and riots.
  • Assistance from PMNRF is also rendered, to partially defray the expenses for medical treatment like heart surgeries, kidney transplantation, cancer treatment, etc.

Some facts:

  • The fund consists entirely of public contributions and does not get any budgetary support.
  • The corpus of the fund is invested with banks in fixed deposits.
  • Disbursements are made with the approval of the Prime Minister.
  • PMNRF has not been constituted by the Parliament.
  • The fund is recognized as a Trust under the Income Tax Act and the same is managed by Prime Minister or multiple delegates for national causes.
  • PMNRF is exempt under Income Tax Act.
  • Prime Minister is the Chairman of PMNRF and is assisted by Officers/ Staff on honorary basis.
  • These contributions also qualify as CSR (corporate social responsibility) spend for companies, making it more attractive in terms of tax exemptions.

Type of contributions accepted in PMNRF:

  • PMNRF accepts only voluntary donations by individuals and institutions.
  • Contributions flowing out of budgetary sources of Government or from the balance sheets of the public sector undertakings are not accepted.
  • At the time of natural calamity of devastating scale, Prime Minister, makes an appeal for donation to the fund.

Revival:

In its effort to popularise the PMNRF, the PMO had in September 2014 asked the government departments to publicise the scheme of 100 per cent tax exemption for contributions to the PMNRF, to encourage donations.

Sources: The Hindu, PMNRF.

 

 

India-US Delhi Declaration of Friendship

An ‘India-US Delhi Declaration of Friendship’ was issued after the Modi-Obama meeting. The declaration attempts to define the contours of the India-US strategic partnership.

  • The declaration said: “Chalein Saath Saath – forward together we go,”.

Details of the Joint statement:

  • It laid stress on the importance of strengthening bilateral defence ties, creation of transparent and rules-based markets and cooperation on climate change.
  • It included a commitment to strengthening maritime cooperation, by ensuring security and freedom of navigation in the contentious South China Sea.
  • The joint statement also called for closer India-Japan-US trilateral dialogue at the level of their respective foreign ministers.
  • The US has also promised to help India become a member of the Asia Pacific Economic Cooperation (Apec).
  • The US also promised to help increase India’s voice and vote at international financial institutions like the World Bank and the International Monetary Fund.
  • The joint statement identified Lashkar-e-Toiba, the Haqqani Network, D Company and Jaish-e-Mohammad among the terror outfits whose networks the two nations will take joint concerted efforts to disrupt. It also asked Pakistan to bring the perpetrators of the 26/11 Mumbai terrorist attack to justice.

The two sides signed agreements for developing Ajmer, Allahabad and Visakhapatnam as smart cities. They also agreed for the need to scale up their cooperation in helping the former accurately forecast monsoon rainfall, vital for the country’s agriculture and economic growth.

Sources: BS.

 

 

Companies can collaborate with each other for CSR

In a move that could benefit the corporate sector at large, the government has allowed companies to enter into collaboration with each other to engage in corporate social responsibility (CSR).

  • A notification is issued by the Government to amend the CSR provision in the new Companies Act, allowing two companies to collaborate with each other on their own, or through their holding, subsidiary or associate companies. These two companies can form a trust, society or another third company for CSR work.
  • The rules have permitted collaborative CSR efforts between unrelated entities, and this amendment would help operationalise that using a separate legal entity structure.

CSR:

According to the Companies Act, 2013, any company with a net worth of Rs 500 crore or a turnover of Rs 1,000 crore or net profit of Rs 5 crore needs to spend at least 2 % of its average net profit in the preceding three financial years on CSR activities.

  • The company’s report of the Board of Directors attached to the financial statements is required to include an annual report on the CSR activities of the company. This would cover a brief outline of the CSR policy, the composition of the CSR Committee, the average net profit for the past three financial years and the prescribed CSR expenditure.
  • If the company concerned fails to spend the specified amount on CSR, it has to specify the reasons for not spending in this report.
  • CSR activities include spending on eradicating hunger, poverty and malnutrition, promoting preventive health care, education and gender equality, setting up homes for women, orphans and senior citizens, measures for reducing inequalities faced by socially and economically backward groups.
  • It also includes spending on ensuring environmental sustainability and ecological balance, animal welfare, protection of national heritage and art and culture, measures for the benefit of armed forces veterans, war widows and their dependents, training to promote rural, nationally recognised Paralympic or Olympic sports, contribution to the prime minister’s national relief fund or any other fund set up by the central government for socio economic development and relief and welfare of Scheduled Castes, Scheduled Tribes, other backward classes, minorities and women.
  • Contribution to political parties is not a part of CSR and only activities in India would be considered for computing such an expenditure.

 

Sources: BS, GOI.

 

IT sector to raise totalisation pact

India’s information technology industry has planned raise non-conclusion of the totalization agreement, during the US president’s visit.
A totalization agreement between the US and India has been a long-standing demand by the IT industry.

What is Totalization agreement?

Totalization agreements are a means of protecting the benefit rights of workers who divide their working career between two or more countries. They also help to eliminate situations in which workers or employers are required to pay Social Security taxes to two countries on the same earnings. In addition, totalization agreements remove legal obstacles that prevent a person who has earned benefits in one country from receiving those benefits while residing in the other country.

  • It will allow Indian workers stationed in the US to bring back contributions they make to the US social security system on their return to India. Indian IT workers who are in the US for temporary work pay as much as $1 billion towards social security a year but don’t stay long enough to get the benefits.
  • The US has totalisation agreements with 25 countries, including the UK, Australia, Japan and South Korea.

For further reference: http://amcham.dk/dl/po/Totalization%20Agreement%20FAQs.pdf.

 

Sources: ET, Wiki, PIB.