Prelims Pinpointer 02-04-2026

India’s Energy Security: LPG, LNG, and Strategic Reserves

Context and Impact of Crisis

• Disruption in the Strait of Hormuz due to the West Asia conflict has affected India’s energy supplies.
• India imports ~60% of LPG, and ~90% passes through the Strait, leading to ~54% supply disruption.
• Around 50% of natural gas is imported as LNG, with 30% supply disruption.
• The government prioritised household consumption, reducing supply to industrial and commercial users.
• The LPG situation is more difficult than LNG, prompting a shift towards PNG.

Properties of LPG and LNG

• LPG: Mixture of propane and butane, derived from crude oil refining and gas processing.
• LNG: Primarily methane, derived from natural gas.
• Liquefaction:
  • LPG: Liquefied under moderate pressure/low temperature.
  • LNG: Requires cryogenic cooling below -160°C.
• Volume Reduction:
  • LPG: Reduced to 1/260th of gaseous volume.
  • LNG: Reduced to 1/600th, enabling long-distance transport.
• Safety:
  • LPG: Heavier than air, accumulates and increases explosion risk.
  • Natural gas (PNG): Lighter than air, disperses quickly.

Usage, Distribution and Accessibility

• LPG Uses: Cooking, heating, industrial applications, and limited transport use.
• LNG Uses: Transported and converted to natural gas for PNG, CNG, fertilisers, power, refineries, petrochemicals.
• Distribution:
  • LPG: Delivered in cylinders via road, suitable for remote areas.
  • LNG: Transported via cryogenic ships → regasification → pipelines.
• Accessibility:
  • LPG: Portable and widely accessible, especially in rural areas.
  • PNG: Depends on pipeline infrastructure, mainly urban areas.
• Convenience:
  • PNG: Continuous supply, no refill required.
  • LPG: Requires periodic cylinder replacement.

Government Response and Policy Measures

• Supply prioritisation:
  • 100% supply ensured for households (PNG/CNG).
  • Industrial/commercial supply reduced to ~80%.
• User base:
  • LPG: 33.3 crore households
  • PNG: 1.5 crore connections
• PNG promotion:
  • Incentives like free gas and waived connection charges.
  • Push for City Gas Distribution (CGD) expansion.
• Domestic LPG production:
  • Increased by 40%, share rose to ~55% of demand.
• Demand management:
  • Booking gap increased to 25 days (urban) and 45 days (rural).
• Alternative fuels:
  • Use of kerosene, fuel oil, biomass, coal for industries. 

Dengue Vaccine Qdenga (TAK-003): Features, Efficacy, and India Launch

About

• Qdenga (TAK-003) is a live-attenuated tetravalent dengue vaccine developed by Takeda Pharmaceuticals.
• It targets all four dengue virus serotypes: DENV-1, DENV-2, DENV-3, and DENV-4.
• Built on a DENV-2 genetic backbone, with components of other serotypes integrated.
• Designed to provide broad protection against dengue infection.

Features and Mechanism

• Being live-attenuated, it uses weakened viruses to stimulate immune response.
• Provides protection against severe dengue and hospitalization.
• Does not require prior dengue infection screening, unlike earlier vaccines.
• Suitable for both seropositive and seronegative individuals.

Efficacy and Dosage

• Demonstrates long-term protection (more than 4 years).
• Shows over 80% reduction in dengue-related hospitalisation.
• Administered in a two-dose schedule, with a 3-month interval between doses.

Global and India Context

• Received WHO prequalification in May 2024, enabling wider global use.
• Recommended for individuals aged 4 to 60 years.
• In India:
  • Expected launch by 2026.
  • The Subject Expert Committee (SEC) has recommended its import and marketing.
  • Manufactured in partnership with Biological E (Hyderabad).
• Supports Make in India by enhancing domestic vaccine production and accessibility.

Commodity Derivatives Trading in India: NCDEX, MCX, and Price Risk Management

Meaning and Basic Concept

• Derivatives are short-term financial contracts traded in markets.
• Their value is derived from an underlying asset, such as agricultural commodities.
• Profit is earned by predicting price movements of the underlying commodity.

Types of Derivative Contracts

• Futures Contract:
  • A seller agrees to sell a fixed quantity at a predetermined price on a future date.
  • Creates a binding obligation for both buyer and seller.
• Options Contract:
  • Gives the buyer the right, but not the obligation, to buy or sell an asset.
  • Provides flexibility with limited risk compared to futures.

Role in Agriculture and Price Risk Management

• Farmers can lock in prices for their produce by entering into derivative contracts.
• Commodities must meet exchange-specified quality standards.
• Acts as a form of price insurance, protecting against market fluctuations.

Trading Mechanism and Exit

• Contracts can be bought and sold before expiry in the market.
• Traders or producers can exit positions by paying a margin to the exchange.
• Helps in maintaining liquidity and flexibility in trading.

Commodity Exchanges in India

• Major platforms for commodity derivatives trading:
  • National Commodity and Derivatives Exchange (NCDEX)
  • Multi Commodity Exchange (MCX)
• Commonly traded agricultural commodities include: Cotton, paddy, soybean, soya oil, mustard seed, etc.

Special Economic Zones (SEZs) in India: SEZ Act 2005, Incentives, and 2025 Amendments

Concept and Objectives

• SEZs are designated areas within a country offering special economic regulations and incentives for businesses.
• They provide duty-free trade, tax benefits, and world-class infrastructure to promote ease of doing business.
• Key objectives include:
  • Promoting exports of goods and services
  • Attracting foreign and domestic investment
  • Generating employment opportunities
  • Boosting economic activity and infrastructure development
• SEZ category includes various forms such as:
  • Free Trade Zones (FTZs)
  • Export Processing Zones (EPZs)
  • Free Ports and Industrial Estates

Evolution and Status in India

• Asia’s first Export Processing Zone (EPZ) was set up at Kandla (1965).
• SEZ Policy was introduced in April 2000 to make SEZs engines of economic growth.
• SEZ Act, 2005, passed; came into force on February 10, 2006 (with SEZ Rules).
• Existing EPZs converted into SEZs (e.g., Kandla, Surat, Mumbai, Cochin, Chennai, Visakhapatnam, Falta, Noida).
• As of March 31, 2024: 280 operational SEZs in India.

Key Features and Incentives

• SEZ is treated as a duty-free enclave, considered outside customs territory for authorised operations.
• Duty-free import and domestic procurement are allowed for SEZ units.
• No import licence required; both manufacturing and services permitted.
• Tax Incentives (Section 10AA):
  • 100% exemption on export income for first 5 years
  • 50% for next 5 years
  • 50% of reinvested export profits for next 5 years
• GST Treatment:
  • Supplies to SEZs are zero-rated under IGST Act, 2017.
• Operational Flexibility:
  • Single-window clearance for approvals
  • Subcontracting allowed
  • No routine customs inspection for cargo
• Compliance Requirements:
  • Must maintain Positive Net Foreign Exchange (NFE) over 5 years
  • Domestic sales allowed but subject to customs duties
  • Minimum Alternate Tax (MAT) applicable

2025 Amendments

• Focus on promoting semiconductor and electronic component manufacturing.
• Rule 5 amended: Minimum land requirement reduced from 50 hectares to 10 hectares.
• Rule 18 amended: SEZ units allowed to sell in domestic market on payment of applicable duties.
• Rule 7 amended: Board of Approval empowered to relax encumbrance-free land requirement in specific cases (e.g., mortgaged/leased land).

Foreign Contribution (Regulation) Amendment Bill, 2026

Context and Purpose

• The proposed FCRA Amendment Bill, 2026 seeks to strengthen regulation of foreign funds received by NGOs and individuals.
• It aims to address regulatory gaps, accountability issues, and misuse of foreign contributions.
• The parent law is the Foreign Contribution (Regulation) Act, 2010, administered by the Ministry of Home Affairs (MHA).

Key Provisions of Amendment Bill, 2026

• Designated Authority for Assets:
  • The government can appoint an authority to take over, manage, or dispose assets created from foreign funds.
  • Proceeds may be transferred to the Consolidated Fund of India.
• Expanded “Key Functionary” Definition:
  • Includes directors, trustees, partners, karta (HUF), office-bearers, etc.
  • Such persons can be held personally liable for violations.
• Prior Approval for Investigation:
  • State governments and law enforcement agencies must obtain Central Government approval before initiating FCRA-related investigations.
• Timelines and Automatic Cessation:
  • Fixed timelines for receipt and utilisation of funds.
  • Registration will automatically lapse if not renewed.
• Reduced Punishment:
  • Maximum imprisonment reduced from 5 years to 1 year, with rationalised penalties.

FCRA Act, 2010: Core Features

• Regulates acceptance, utilisation, and accounting of foreign contributions and hospitality.
• Came into force in 2011; amended in 2016, 2018, and 2020.
• Around 16,000 registered associations, receiving ~₹22,000 crore annually.
• Objective:
  • Prevent use of foreign funds for activities against national interest, sovereignty, and public order.
• Registration Requirements:
  • Mandatory registration or prior permission from Central Government.
  • Valid for 5 years, renewal required before expiry.
  • Organisation must:
    • Be registered under relevant laws
    • Have minimum 3 years track record
    • Spend at least ₹15 lakh in last 3 years
• Banking Rule:
  • Foreign funds must be received in a designated SBI account (New Delhi main branch).
• Utilisation Restrictions:
  • No transfer (sub-granting) to unregistered entities.

Restrictions and Prohibitions

• Foreign contribution prohibited for:
  • Election candidates
  • Journalists and media entities
  • Judges and government servants
  • Members of legislature
  • Political parties and organisations of political nature
• Applicants must not:
  • Be fictitious entities
  • Be involved in communal disharmony or anti-national activities

General Anti-Avoidance Rules (GAAR): Concept, Features, and Tax Avoidance

Concept 

• GAAR is an anti-tax avoidance framework under the Income Tax Act, 1961.
• It came into effect from 1st April 2017.
• It aims to curb aggressive tax planning that leads to revenue loss for the government.
• Targets arrangements that are legally valid in form but designed to avoid tax in substance.

Key Features

• Applies to transactions or arrangements primarily undertaken to reduce tax liability.
• Focuses on substance over form, i.e., the real intention behind the transaction.
• Designed to tackle tax avoidance, not legitimate tax planning.
• Covers cases where:
  • Arrangement lacks commercial substance
  • The main purpose is the tax benefit
  • Structure is artificial or contrived

Powers under GAAR

• Tax authorities can declare a transaction as an Impermissible Avoidance Arrangement (IAA).
• They can:
  • Re-characterise or disregard transactions
  • Recompute income and tax liability
  • Deny tax benefits arising from such arrangements

Procedural Aspect and Threshold

• Applicable to cases involving significant tax impact.
• Reassessment notices for under-reported income of ₹50 lakh or more can be issued within:
  • 5 years and 3 months from the end of the relevant assessment year. 

Copyright Act 1957: Fair Dealing, Duration, and International Conventions

Background and Purpose

• The Copyright Act, 1957 is the first post-independence copyright law in India, replacing the 1914 Act.
• It aligns India with international conventions such as:
  • Berne Convention (1886)
  • Universal Copyright Convention (1951)
  • Rome Convention (1961)
  • TRIPS Agreement
• India also joined the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT) in 2013, strengthening digital copyright protection.
• The Act grants creators exclusive rights such as:
  • Reproduction, adaptation, distribution, translation, and communication to the public.

Key Provisions and Features

• Copyright is a bundle of rights covering:
  • Reproduction, communication, translation, adaptation
• Covers a wide range of works:
  • Literary, musical, dramatic, artistic works
  • Cinematograph films and sound recordings
  • Includes software, databases, architecture, and craftsmanship
• Ownership and Assignment:
  • Author is the first owner, except in employer-employee cases
  • Assignment must be through a written agreement (Section 19)
  • If duration not specified → valid for 5 years
  • If territory not specified → limited to India
• Recognises joint authorship when contributions are indistinguishable.
• Provides civil, criminal, and administrative remedies (including customs detention).
• Jurisdiction based on the place where cause of action arises (as per Supreme Court ruling).
• Foreign works protected via International Copyright Order.

Exceptions (Fair Dealing – Section 52)

• Ensures balance between creator rights and public interest.
• Permitted uses include:
  • Private use and research
  • Education and teaching
  • Criticism and review
  • Reporting of current events
• Freedom of Panorama:
  • Allows photography/depiction of buildings and public artworks
  • Permits inclusion of such works in films if incidentally present

Duration of Copyright

• Literary, dramatic, musical, artistic works: Lifetime of author + 60 years after death
• Other categories (60 years from publication):
  • Cinematograph films
  • Sound recordings
  • Photographs
  • Government works
  • Public undertakings and international organisations
• Anonymous/Pseudonymous works: 60 years from publication
• For foreign works, duration cannot exceed country of origin.