Our Coaching Institute
Q 35- Discuss the problems raised by India's recently issued guidelines governing cross-border electricity commerce. (250 words)
- Paper & Topic: GS II à Government policies and interventions for development in various sectors and issues arising out of their design and implementation
- GS III à Infrastructure: Energy, Ports, Roads, Airports, Railways etc
- India has issued new regulations governing the cross-border trade of power.
- They outline the boundaries of the South Asian power market, defining who can buy from and sell to India.
- This has consequences for Bangladesh's, Bhutan's, and Nepal's power markets, which have connected their energy futures with the Indian market to varied degrees.
- The new guidelines aim to strike a balance between China's expanding regional influence and the region's development goals.
- New cross-border electricity trade provisions:
- Power plants owned by a corporation based in the nation that does not have a bilateral agreement with India on power sector cooperation are not allowed to participate under the new conditions.
- The rules impose the same security constraints on tripartite trade, such as trade between Bhutan and Bangladesh via Indian territory.
- The guidelines set elaborate surveillance mechanisms to detect changes in the ownership patterns of organisations trading with India, making things even more secure.
- Concerns about the new rules include:
- The institutional framework that has formed over the last decade as a result of this churn is India-centric. India has a geographical advantage because it is located in the heart of South Asia.
- However, India's monopolistic power tendencies would irritate its neighbours, since it will stifle their economic growth.
- India's vision of One Sun, One World, One Grid will be hampered by the lack of impartial institutions for planning, investment, and conflict resolution in the power trade (OSOWOG).
- With intentions to expand energy ties to counter China's growing influence, cross-border energy trading is a vital aspect of the neighborhood-first policy.
- However, it may harm India's soft influence among its smaller neighbours.
- India's regional leadership may not flourish without a standard-based approach, which could have an impact on other global endeavours by its neighbours who may be hesitant to trust India.
- By establishing criteria that investors and utilities can prepare for and profit from, an appealing institutional model can entice countries to join the pool.
- Countries are consequently unlikely to defect to other pools once they have been locked in.
- The most likely initial battleground will be Southeast Asia, where China currently reigns supreme. A well-thought-out, durable institutional architecture will almost certainly outperform everything China has to offer.
- It's worth thinking about loosening the vice-like grip on South Asia, which is intended at fighting China, by establishing a rule-based regional institution that can counter Chinese offerings in other arenas.
- India could develop an appealing institutional model by establishing norms that benefit both investors and utilities.
- India must establish a regional organisation based on rules to counter Chinese offerings in other arenas.