📰 INS Rajput decommissioned after 41 years
First of the Indian Navy’s modern destroyers was built in former USSR
•Destroyer INS Rajput, built by the erstwhile USSR, was decommissioned on Friday at Naval Dockyard, Visakhapatnam after 41 years of service.
•“The ship was decommissioned in a solemn and low key event due to the ongoing COVID Pandemic when the national flag, Naval ensign, and the decommissioning pennant were lowered at sunset time…,” the Navy said in a statement.
•INS Rajput was constructed in the 61 Communards Shipyard in Nikolaev, present-day Ukraine, under her original Russian name Nadezhny meaning ‘Hope’. The keel of the ship was laid on September 11, 1976, and was launched into water on September 17, 1977. The ship was commissioned as INS Rajput on May 4, 1980 at Poti, Georgia by I.K. Gujral, then Ambassador of India to the USSR with Capt. Gulab Mohanlal Hiranandani as her first Commanding Officer.
•In 41 years, the ship had 31 Commanding Officers at her helm with the last CO taking charge of the ship on 14 Aug 2019. The ship since its commissioning has sailed a distance of over 7,87,194 nautical miles which is equivalent to navigating around the world 36.5 times and 3.8 times the distance from the Earth to the Moon, the Navy said.
•With the motto “Raj Karega Rajput”, INS Rajput has participated in several important Naval operations over the years. Some of these include Operation Aman off Sri Lanka to assist the Indian Peace Keeping Force (IPKF), Operation Pawan for patrolling duties off the coast of Sri Lanka, Operation Cactus to resolve hostage situation off the Maldives and Operation Crowsnest off Lakshadweep.
•In addition, the ship also took part in various cyclone relief operations including off Odisha coast in 1999, relief operations post Tsunami in Andaman & Nicobar Islands in 2004 and HADR mission after the earthquake at Jakarta.
•The ship was also the first Indian Naval Ship to be affiliated with an Indian Army regiment, the Rajput Regiment. INS Rajput was also the first ship in the Navy to get the first version of the BrahMos antiship supersonic cruise missile in 2005.
•The Indian Navy inducted its first destroyer in 1949 with the three R class ships followed by the Hunt class of ships, both from the UK. Both these classes were decommissioned from service in the 1970s.
•The Rajput class was followed by the Delhi class of destroyers, the first indigenously designed and built destroyers and inducted into service in the late 1990s and early 2000s. This was followed by three Kolkata class destroyers built under Project 15 and the under construction Vishakhapatnam class of stealth destroyers under Project 15B.
The Supreme Court had transferred pleas against the November 15, 2019 notification from the High Courts to itself.
•The Supreme Court on Friday upheld a government move to allow lenders initiate insolvency proceedings against personal guarantors, who are usually promoters of big business houses, along with the stressed corporate entities for whom they gave guarantee.
•In a judgment, which will ring loud and clear across the business community, a Bench of Justices L. Nageswara Rao and S. Ravindra Bhat held that the November 15, 2019 government notification allowing creditors, usually financial institutions and banks, to move against personal guarantors under the Indian Bankruptcy and Insolvency Code (IBC) was “legal and valid”.
•The November 15, 2019 notification was challenged before several High Courts initially. The Supreme Court had transferred the petitions from the High Courts to itself on a government request.
‘Intrinsic connection’
•The apex court said there was an “intrinsic connection” between personal guarantors and their corporate debtors.
•Justice Bhat, who authored the 82-page verdict, said it was this “intimate” connection that made the government recognise personal guarantors as a “separate species” under the IBC.
•It was again this intimacy that made the government decide that corporate debtors and their personal guarantors should be dealt by a common forum - National Company Law Tribunal (NCLT) - through the same adjudicatory process.
•In this context, Justice Bhat referred to how the November 2019 notification had not strayed from the original intent of the IBC. In fact, Section 60(2) of the Code had required the bankruptcy proceedings of corporate debtors and their personal guarantors to be held before a common forum - the NCLT.
•“The adjudicating authority for personal guarantors will be the NCLT if a parallel resolution process is pending in respect of a corporate debtor for whom the guarantee is given,” Justice Bhat noted.
•In fact, side by side bankruptcy proceedings before the same forum for both the corporate debtors and their personal guarantors would help the NCLT “consider the whole picture, as it were, about the nature of the assets available, either during the corporate debtor’s insolvency process, or even later”.
•“This would facilitate the Committee of Creditors to frame realistic plans, keeping in mind the prospect of realising some part of the creditors’ dues from personal guarantors,” the judgment reasoned.
Correction of a misunderstanding
•The court further corrected a misunderstanding among petitioners that approval of a resolution plan in respect of corporate debtors would also extinguish the liability of the personal guarantor.
•The petitioners, mostly personal guarantors to stressed companies, had argued that an approved resolution plan in respect of a corporate debtor amounts to extinction of all outstanding claims against that debtor. Consequently, the liability of the guarantor, which is co-extensive with that of the corporate debtor, would also be extinguished.
•“The release or discharge of a principal borrower from the debt by operation of law, or due to liquidation or insolvency proceeding, does not absolve the surety/guarantor of his or her liability, which arises out of an independent contract,” Justice Bhat clarified.
•The concept of ‘guarantee’ is derived from Section 126 of the Indian Contracts Act, 1872. A contract of guarantee is made among the debtor, creditor and the guarantor. If the debtor fails to repay the debt to the creditor, the burden falls on the guarantor to pay the amount. The creditor reserves the right to begin insolvency proceedings against the personal guarantor if the latter does not pay. Usually, promoters of big businesses submit personal guarantees to creditors to secure loans and assure repayment.
Govt justification of notification
•During the hearings, the government had justified the November 2019 notification extending bankruptcy proceedings to personal guarantors. Attorney General K.K. Venugopal argued that by roping in guarantors, there was a greater likelihood that they would “arrange” for the payment of the debt to the creditor bank in order to obtain a quick discharge.
•Whereas, in some cases, on the other hand, the creditor bank would be prepared to take a haircut or forego the interest amounts so as to enable an equitable settlement of the corporate debt, as well as that of the personal guarantor.
•“This would result in maximising the value of assets and promoting entrepreneurship, which is one of the main purposes of the Code,” the Centre had argued in court.
📰 RBI Board approves transfer of ₹99,122 crore as surplus to government
The decision to transfer the surplus to the Central government was taken at the meeting of the Central Board of Directors of RBI.
•The Reserve Bank of India on Friday approved the transfer of ₹99,122 crore as surplus to the Central government for the accounting period of nine months ended March 31.
•The decision to transfer the surplus to the Central government was taken at the meeting of the Central Board of Directors of RBI. The meeting was held through video-conferencing.
•The RBI Board, according to a release, also reviewed the current economic situation, global and domestic challenges and recent policy measures taken by the Reserve Bank to mitigate the adverse impact of the second wave of COVID-19 on the economy.
•With the change in the Reserve Bank’s accounting year to April-March (earlier July-June), the Board discussed the working of the RBI during the transition period of nine months (July 2020-March 2021).
•During the meeting, the Board, headed by Governor Shaktikanta Das, “approved the Annual Report and accounts of the Reserve Bank for the transition period.
•“The Board also approved the transfer of ₹99,122 crore as surplus to the Central government for the accounting period of nine months ended March 31, 2021 (July 2020-March 2021), while deciding to maintain the Contingency Risk Buffer at 5.50%.” Deputy governors Mahesh Kumar Jain, Michael Debabrata Patra, M. Rajeshwar Rao, T. Rabi Sankar attended the meeting.
•Other directors of the Central Board, N. Chandrasekaran, Satish K. Marathe, S. Gurumurthy, Revathy Iyer and Sachin Chaturvedi also attended the meeting.
•Debasish Panda Secretary, Department of Financial Services and Ajay Seth, Secretary, Department of Economic Affairs too attended the meeting.
📰 Rules for insurance firms’ control tweaked after FDI ceiling raised to 74%
New norms seen as a ‘mixed bag’
•Indian promoters of insurance joint ventures with foreign partners will no longer be able to nominate a majority of the board members, as per the new rules notified under the Insurance Act. This follows the recent amendments to enhance the foreign direct investment (FDI) limit in the sector to 74% from 49%.
•However, a majority of board members, key management persons (KMP) need to be resident Indian citizens, as should at least one of the three top positions — the chairperson of the board, the MD and CEO.
Applies to all JVs
•This new norm will apply to all insurers, irrespective of the stake held by the foreign partner, said legal experts. The Finance Ministry has also specified further conditions on the composition of the board for firms where foreign investors’ stake exceeds 49%.
•“In an Indian insurance company having foreign investment exceeding 49%, not less than 50% of its directors shall be independent directors, unless the chairperson of its board is an independent director, in which case at least one-third of its board shall comprise independent directors,” state the Indian Insurance Companies (Foreign Investment) Amendment Rules, 2021, notified by the Finance Ministry.
Ceding control
•“The significant change introduced is the deletion of the requirements pertaining to Indian ownership and control, irrespective of whether the insurer has majority foreign ownership or not,” said Shailaja Lall, partner at law firm Shardul Amarchand Mangaldas & Co. “Previously, Indian promoters or investors were required to nominate a majority of the Board. This deletion is being seen favourably by foreign investors proposing to hold stakes in insurance companies,” she added.
•“However, the requirement to have a majority of the board and KMP comprised of Indian resident citizens will mean that foreign investors will have to continue to rely on Indian citizens who are resident in India to man key roles in the insurance company and its board. Therefore, while the FDI limit in insurance companies has been increased to 74%, the government has sought to provide adequate protection for insurance companies,” she added.
•While the rules are a step forward for enabling fresh investments in the insurance sector, more changes are needed before transactions can begin, PwC said in a note. Further amendments are now expected in Foreign Exchange Management (Non-debt Instruments) Rules, 2019, and IRDAI guidelines on Indian ownership and control, the advisory firm added.
•“The Rules are identical to the draft rules which were published by the central government and it appears that none of the suggestions made by various industry bodies have been accepted,” observed Ms. Lall, stressing that the Consolidated FDI Policy would also need to be amended to enable the increase in FDI from 49% to 74% under the automatic route, to become effective.
•Onerous requirements have also been stipulated on the retention of net profits linked to the insurer’s solvency margin and dividend payment plans, where a foreign player’s stake is more than 49%. Such firms will have to retain 50% of their net profits in General Reserves, if they propose to pay dividends on equity shares in any financial year when the prescribed solvency margin is not met.
📰 Fitful approach: On WhatsApp privacy policy and need for data protection laws
India must have data protection laws in place before acting against WhatsApp
•The Centre’s recent notice to messaging service provider WhatsApp to withdraw its updated privacy policy is an avoidable intervention into what is a legitimate business decision. WhatsApp, early this year, updated its privacy policy, according to which users would no longer be able to stop the app from sharing data (such as location and number) with its parent Facebook unless they delete their accounts altogether. WhatsApp initially proposed a February 8 deadline. But an intense backlash against this decision, triggering an exodus of its users to rival platforms such as Signal, forced WhatsApp to push the update to May 15. Eventually, it decided not to enforce this as well, preferring to, as a spokesman told this newspaper, “follow up with reminders to people over the next several weeks”. WhatsApp has over two billion users in the world, about half a billion of whom are in India, and who use it for free. Its privacy updates are designed to make the business interactions that take place on its platform easier while also personalising ads on Facebook. That is how it will have to make its money. In its affidavit in the Delhi High Court, WhatsApp has reportedly said that it is not forcing users to accept the updated privacy policy. They have an option — to delete their accounts. And if WhatsApp is ready to take the risk of users abandoning it, why should the government intervene in the process? The Ministry of Electronics and IT (MeitY) has sought a response from WhatsApp within seven days.
•In doing so, MeitY has made a charge that WhatsApp has discriminated against its Indian users. Its letter to WhatsApp reportedly states that given that Indians depend on it to communicate, “It is not just problematic but also irresponsible, for WhatsApp to leverage this position to impose unfair terms and conditions on Indian users, particularly those that discriminate against Indian users vis-à-vis users in Europe.” First, it can be argued that there are enough alternatives to WhatsApp in the market. But more importantly, it has to be pointed out that Europe’s citizens are protected by strong data laws that go by the name of General Data Protection Regulation or GDPR. Where is the Indian equivalent of such laws? When will they be implemented? These are questions that the government should answer. These questions become even more pertinent because WhatsApp has reportedly said in its affidavit that it is being singled out, and that its policy is not different from those of private apps such as Google, BigBasket, Koo, as well as public apps such as Aarogya Setu, Bhim, IRCTC, and others. A fitful approach to issues concerning the user may do more harm to India’s approach to data protection and freedom than anything else.
📰 Extending safety: On deferring second dose of COVID-19 vaccine
Staggering of vaccine doses should not be to merely buy time until more doses are available
•Pursuing a policy of spreading the interval between two doses of vaccine, the Centre has now outlined more scenarios of second dose deferment. While lactating women are now encouraged to get vaccinated, those who have recovered from an infection ought to be getting vaccinated three months hence — the recommendation earlier was four to eight weeks. Those inoculated but who have tested positive should defer their second dose by three months after clinical recovery from COVID-19. The recommendations follow from earlier ones that advise increasing the interval from 12-16 weeks for Covishield, the more widely available vaccine. But there are two underlying principles behind these recommendations, the first being a vaccine shortage. Until early April, India had a very different scheme for its vaccination roll-out, appearing to take stock of availability as well as prioritising those at greater disease risk. It was the ferocity of the second wave that caused the government to panic and ‘free up’ vaccine supply applying a ‘to each his own’ approach. While this benefits a fraction of the privileged, it has not improved access as seen by the stagnation in daily inoculations and a fall in second dose recipient numbers.
•The second principle is that the timing of the second dose for an optimal boost to the immune system is not clear. A general policy for childhood vaccines in India is a four to eight-week interval. However, clinical trials of the AstraZeneca vaccine in the U.K (18-55 years) showed that binding antibodies (the ones that actually block viruses) were nearly twice as high in those who got their shots 12 or more weeks apart than in doses had within six weeks. The vaccine also appeared to be more protective in those above 18 with a longer dose interval. While antibody levels are a key marker of protection, they are not the only ones. Cell-based immunity, whereby the immune system confers long-lived immunity, counts too. Given that SARS-CoV-2 has been around for less than 20 months, there is uncertainty about the duration of protection. There are also documented cases of breakthrough infections as well as deaths even after a second dose. Though they fall within expected statistical boundaries so far, it is only more inoculations from now that will shed greater clarity on the degree of protection. Put together, these recommendations do buy policy makers time to stagger doses until more vaccines become available from August. On the other hand, the toll from India’s second wave continues to surpass similar daily figures from the U.S. and Brazil. Given that many Indians have still not been exposed to the virus and newer threatening variants abound, there is no reason to be complacent that people will be protected from future waves. The aim of vaccines is to prevent severe disease and death and all policy recommendations must be geared towards that goal. There is no room for knee-jerk reactions that can compromise this objective.
📰 The AIDS fight offers a COVID vaccine patent pathway
There are recognised ways to overcome the patents hurdle, ensuring social justice and boosting the COVID-19 battle
•In order to achieve global herd immunity and prevent new strains of COVID-19 from emerging, possibly for years to come, vaccines need to be affordable and available in massive quantities throughout the globe. This can happen through patent owners voluntarily licensing their products to other companies, especially Indian producers who are experienced at mass-producing low-cost medications. This can also be done by temporarily suspending patent rights for COVID vaccines, an option that is being pursued by India and South Africa through the World Trade Organization (WTO) and one that is legal in the event of a public health emergency, according to that organisation’s own rules. One way or the other, India and the world need several Indian pharmaceutical companies, not just the Serum Institute of India, to gain the right to make these vaccines if we are going to see an end to this pandemic any time soon.
Turning point in the HIV fight
•Decades of struggles over patent rights and access to medications for HIV/AIDS demonstrate that it is possible to navigate patent restrictions using something called “voluntary licenses” where a patent holder decides to license a product to other producers. The United Nations’ Medicines Patent Pool and the World Health Organization’s COVID-19 Technology Access Pool are important tools in an effort to promote voluntary licensing for COVID products that so far have been ignored by pharmaceutical producers. Sharing patent rights through voluntary licensing would need to involve India’s large pharmaceutical sector whose production capacity helped make treatments for AIDS more affordable in low-income countries and helped mitigate that pandemic.
•In the 1990s, the WTO began implementing a global intellectual property regime known as the Trade Related Aspects of Intellectual Property Rights agreement, or TRIPS. While TRIPS alarmed public health experts because of its potential to raise the price of essential medicines, voluntary licensing agreements between pharmaceutical producers were able to bring down the price of AIDS medications despite the TRIPS regulations.
•Responding to anti-TRIPS activism from low-income countries and realising they would not be able to profit off of low-income markets anyway, some manufacturers placed licensing agreements to produce AIDS drugs for which they owned patent rights in the UN-affiliated Medicines Patent Pool. Several India-based companies then used these voluntary licences to manufacture these drugs on a massive scale and sold them at prices they determined. In the case of Gilead, which placed more products in the Patent Pool than any other producer, their licences required the licensee to pay Gilead a royalty of 3% of the sales of the drug and limit sales to low-income countries. This effort brought down the price of key AIDS medications in these countries. Most significantly, tenofovir, a first-line treatment for HIV/AIDS, has come down in price from $200-$500 per person per year to $39 per person per year in low-income countries now that 13 India-based pharmaceutical companies are producing it.
Context of health emergency
•It is also possible for governments to issue what are called “compulsory licenses” which override patent rights to allow local production or import of drugs by generic manufacturers in the event of a public health crisis. Since 2003, this right has been enshrined in the Doha Declaration addendum to the WTO’s TRIPS agreement and this is what India and South Africa are lobbying for, having recently been joined by the United States though not as of yet the European Union (EU). The Doha addendum, Section 5c, offers AIDS, malaria and tuberculosis as examples of what qualifies as a health emergency. By this standard, COVID-19 should easily qualify. In fact, not invoking Doha exemptions in this unprecedented health crisis would make this agreement meaningless. We may thus find compulsory licences being issued in several countries for vaccines and treatments for COVID-19, although manufacturers in India say they prefer to work with voluntary licences because there is more good will between companies while compulsory licences often come with a legal battle brought by the patent holder. Voluntary licences also enable production to begin more expeditiously as they usually are accompanied by “technology transfer” meaning that the patent holder reveals to the licensee how to manufacture the medication, sparing the licensee the lengthy and costly process of figuring out how to reverse engineer the product.
The COVAX option
•Some favour ensuring access to COVID-19 vaccines through the COVAX programme, which was established to purchase vaccine doses and donate them to low-income countries but does not involve modifying patent rights. Similar ventures during the AIDS crisis were chronically underfunded and had only minor effects on that pandemic compared to the voluntary licensing and mass production of antiretroviral drugs from Indian producers. COVAX is also currently underfunded and the Director-General of WHO, Dr. Tedros Adhanom Ghebreyesus, warned that people in the lowest-income countries might have to wait until 2022 to get vaccinated through this programme, which may actually be optimistic since COVAX has shipped around 68 million doses so far.
•Similar concerns to those presented here were raised in last year’s annual meeting of WHO which established a patent-sharing pool for COVID products, the COVID-19 Technology Access Pool. So far, no patent holders have joined this effort which is why India and South Africa called on the WTO to temporarily waive patent protections for COVID-19. Meanwhile, the UN Medicines Patent Pool stands ready to accept voluntary licences having added a placeholder for COVID-19 on the list of diseases they address. Hopefully, the EU will join the efforts by India and South Africa at the WTO, and pharmaceutical producers will realise, as some did during the AIDS pandemic, that voluntary licensing comes with better public relations and that they are not going to make money off low-income countries regardless of patent enforcement.
A key step
•Furthermore, the billions of dollars in government aid given to companies to help develop COVID-19 treatments should entail an obligation to enable the mass production of affordable vaccines. After all, as legal scholars have long explained, patents are not ironclad ownership rights. They are a temporary contract that balances the public interest with the claims of the innovator. This is not just a question of social justice and ensuring life-saving therapies are available to the world’s poor. It is a necessary step to prevent deadlier, more contagious and possibly vaccine-resistant variants of COVID-19 from proliferating in an under-vaccinated world.
