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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.
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