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
Model Answer:
Introduction:
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.
Body:
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.
Steps to take:
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.
Conclusion:
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.