UPSC News: Indian Laws & Tech: Digital Piracy, ETFs & More

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GS Paper 2

Digital Markets Act

  • News: The European Union is investigating Apple, Google, and Meta for potential violations of the new Digital Markets Act.
  • Digital Markets Act: The Digital Markets Act (DMA) is a groundbreaking European law aiming to prevent large online platforms that connect consumers with content, goods, and services from abusing their market power.
  • Aim: 
      • The core objective of the DMA is to make the internet more competitive and safer for its users.
      •  It plans to achieve this by removing the powers that a handful of anticompetitive, Big Tech companies have acquired over the years.
  • Key Provisions:
    • Enhanced Data Privacy Measures: Tighter restrictions on how digital gatekeepers can use people’s data—users must give their explicit consent for their activities to be tracked for advertising purposes.
    • Collaboration between Messaging Services: Messaging services and social media platforms teaming up and sharing users. This could mean, for example, Meta-owned WhatsApp users being able to send messages directly to a completely different messaging service, such as Telegram. 
    • Empowering User Choice: Presenting users with the option to uninstall preloaded applications on devices.
    • Fair Competition Practices: Gatekeepers are banned from ranking their own products or services higher than others in online searches.
  • Penalties: Violations could result in fines of as much as 10% of the companies’ global annual turnover.
  • Enforcement: The European Commission enforces the DMA with significant fines for non- compliance. European Commission has the power to designate additional companies as gatekeepers based on evolving market conditions.

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Maritime Anti-Piracy Act, 2022

  • News: Indian Navy apprehended 35 Somalian pirates using newly enacted Maritime Anti-Piracy Act.
  • Maritime Anti-Piracy Act:  
    • It is the first domestic law to empower Indian authorities and courts to deal with piracy and pirate ships on the high seas.
  • Piracy: 
    • The act defines piracy as any illegal act of violence or detention or damage or destruction committed by any person, or by the crew or any passenger of a private ship. 
    • Such illegal acts come under the definition of piracy if they are committed against another ship or any person or property on board a ship, on the high seas.
  • Provisions: 
    • The Act allows Indian authorities to take action against piracy in the high seas. 
      • High seas include the Exclusive Economic Zone (EEZ) of India, the EEZ of any other State, as well as all waters beyond the jurisdiction of any other State, i.e. international waters. 
      • EEZ is an area of the ocean between 12 nautical miles and 200 nautical miles from the coastline of India. 
      • This is an area within which a coastal nation has jurisdiction over both living and non-living resources.
    • The Act also provides for designation of a specific sessions court in the States for speedy trial of offences under the law.
      • However, warships and government-owned ships employed for non-commercial purposes will not be under the jurisdiction of the court.
    • However, the Act also considers the offence as extraditable, where India has signed such treaties with those countries.
      • India has an agreement with Somalia where Somalian pirates have been extradited since 2017. 
  • Penalties:  The Act provides for a maximum punishment of life imprisonment or fine or both, for anybody who commits any act of piracy. 
  • Importance  of Act: 
    • The Act intends to give effect to the 1992 United Nations Convention on the Law of the Sea (UNCLOS), which provides a framework for combating piracy and armed robbery at sea. 
    • Before the enactment of this Act, India did not have any domestic law on maritime piracy. 
    • Therefore, Indian Penal Code provisions relating to armed robbery were usually used to prosecute pirates apprehended by the Indian Navy and the Coast Guard. However, this proved to be inadequate in the past.
      • For instance: the hijacking of Japanese ship MV Alondra Rainbow in 1999– the first sea piracy case tried by an Indian court–is often cited as an example of such inadequacy.
      • While a sessions court in Bombay tried and convicted the pirates under various sections of the Indian Penal Code, the Bombay high court overruled the lower court’s decision and acquitted all the accused in April 2005.

Operation Sankalp

  • News: The Indian Navy’s Operation Sankalp marks a significant milestone, commemorating 100 days of continuous service and dedication.
  • Definition: It is Indian Navy mission first launched in 2019 focused on maritime security in the Arabian Sea and the Indian Ocean Region (IOR). 
  • Aim: Countering piracy, drone attacks, and missile threats in the region.

Section 153A of the Indian Penal Code

    • News:  The Supreme Court, in a recent judgement, clarified that to constitute an offence under Section 153A of the Indian Penal Code, the essential requirement is to incite enmity and disharmony among different groups or communities.
    • Aim: Section 153A of the Indian Penal Code (IPC) prohibits actions that promote hostility between various groups based on religion, race, place of birth, residence, language, etc., and actions that disrupt harmony.
    • Penalty:  Violation of this section can result in imprisonment for up to three years, a fine, or both.
  • Application of Law: 
      • Hate speech laws have been invoked under regimes of all parties to crack down on criticism of public functionaries and to arrest individuals.
      • For instance, in May 2023, a Marathi actor Ketaki Chitale was arrested for a Facebook post allegedly defaming a NCP leader.
      • Data from the National Crime Records Bureau (NCRB) show that the rate of conviction for Section 153A is very low.
        • In 2020, 1,804 cases were registered, six times higher than the 323 cases in 2014.
        • The conviction rate in 2020 was 20.2%, suggesting that the process often becomes the punishment.
      • In 2020, 1,804 cases were registered, six times higher than the 323 cases in 2014.
  • Safeguards against misuse: 
    • Sections 153A and 153B require prior sanction from the government for initiating prosecution. But this is required before the trial begins, and not at the stage of preliminary investigation.
    • To curb indiscriminate arrests, the Supreme Court laid down a set of guidelines in its 2014 ruling in Arnesh Kumar v State of Bihar. 
    • As per the guidelines, for offences that carry a sentence of less than seven years, the police cannot automatically arrest an accused before investigation.

GS Paper3

Exchange-traded funds (ETFs)

  • News:  Securities and Exchange Board of India (SEBI) has directed mutual fund houses to stop accepting any more inflows in schemes that invest in overseas exchange-traded funds (ETFs).
  • Exchange-traded funds (ETFs): 
      • An ETF, or exchange traded fund, is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund.
      •  Unlike regular mutual funds, an ETF trades like a common stock on a stock exchange. 
      • The traded price of an ETF changes throughout the day like any other stock, as it is bought and sold on the stock exchange.
      •  The trading value of an ETF is based on the net asset value of the underlying stocks that an ETF represents.
      •  ETFs typically have higher daily liquidity and lower fees than mutual fund schemes, making them an attractive alternative for individual investors. 
      • ETFs are considered to be more tax efficient compared to other mutual fund schemes. 
      • There are mainly five types of ETFs – equity ETF, bonds ETF, commodity ETF, international ETF and sectoral/thematic ETF.
  • Benefits of ETFs: 
      • Diversification: ETFs offer instant exposure to a diversified set of underlying assets, mitigating portfolio risk by spreading investments across various sectors and industries.
      • Cost Efficiency: ETFs typically have lower expense ratios than actively managed mutual funds, resulting in enhanced long-term returns for investors due to passive tracking of an index.
      • Transparency: Most ETFs disclose their holdings daily, providing complete transparency and empowering investors to align their investments with their objectives and risk tolerance.
      • Liquidity: ETFs are actively traded on stock exchanges throughout the day, allowing for convenient buying and selling at prevailing market prices, offering increased flexibility compared to mutual funds.
      • Tax Efficiency: ETFs often present tax benefits due to their in-kind creation and redemption process, potentially reducing capital gains distributions and optimizing returns.
      • Accessibility: A diverse array of ETFs spanning various asset classes, sectors, and themes allows for customization of portfolios according to specific investment objectives and risk preferences, making ETFs accessible to a broad spectrum of investors.
      • Minimal Investment: Many ETFs have modest minimum investment requirements, enabling accessibility for investors with smaller capital bases, facilitating gradual portfolio construction and market engagement even with limited funds.
  • Limitations of ETFs: 
    • Reduced Potential for Returns: ETFs may not outperform the market significantly over the long term due to their passive tracking of an index, potentially limiting potential returns compared to actively managed funds.
    • Short-Term Price Fluctuations: ETF values can fluctuate throughout the day in response to market shifts, leading to increased short-term volatility compared to more stable investments.
    • Tracking Discrepancy: Some ETFs may not precisely mirror their underlying index, resulting in slight variances in performance, which could affect overall returns.

Gulaal Gota

  • A Gulaal Gota is a small ball made of lac, filled with dry gulaal.
  • Weighing around 20 grams when filled with gulaal, these balls are thrown at people on Holi.
  • Method:
    •  Making Gulaal Gotas involves first boiling the lac in water to make it flexible.
    •  Lac is a resinous substance that is secreted by certain insects. It is also used to make bangles.
    • Gulaal Gotas are made by Muslim lac makers, called Manihaars, only in Jaipur.
  • History: 
    • The ancestors of Manihaars were shepherds and horse traders who arrived from Afghanistan. 
    • They settled in Bagru, a town located close to Jaipur, and learnt lac-making from Hindu lac makers or Lakhere.
    • The city of Jaipur was established in 1727. Its founder Sawai Jai Singh II, an admirer of art, dedicated a lane at the Tripoliya Bazaar to the Manihaar community, naming it “Manihaaron ka Raasta”. 
    • This is where lac bangles, jewellery, and Gulaal Gota are mostly sold, to date.

Hyperloop Technology

    • News: Swiss transportation technology company Swisspod and TuTr Hyperloop will collaborate to establish a robust framework for cooperation in the development and deployment of hyperloop technology within India.
      • TuTr Hyperloop is a deep tech incubated startup at IIT Madras. 
      • It designs and develops ultra-high-speed ground transportation systems, among others.
  • Hyperloop Technology: 
      • Hyperloop is a new form of ground transport currently in development by a number of companies.
      •  It could see passengers travelling at over 700 miles an hour in floating pod which races along inside giant low-pressure tubes, either above or below ground.
  • Different From Traditional Rail: There are two big differences between Hyperloop and traditional rail. 
      • Firstly, the pods carrying passengers travel through tubes or tunnels from which most of the air has been removed to reduce friction. This should allow the pods to travel at up to 750 miles per hour.
      • Secondly, rather than using wheels like a train or car, the pods are designed to float on air skis, using the same basic idea as an air hockey table, or use magnetic levitation to reduce friction. 
  • Benefits of Hyperloop: 
    • Hyperloop could be cheaper and faster than train or car travel, and cheaper and less polluting than air travel. 
    • It is  also quicker and cheaper to build than traditional high-speed rail. 
    • Hyperloop could therefore be used to take the pressure off gridlocked roads, making travel between cities easier, and potentially unlocking major economic benefits as a result.
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