Content
- The making of an ecological disaster in the Nicobar
- A complex turn in India’s FDI story
The making of an ecological disaster in the Nicobar
Why in News
- The ₹72,000 crore Great Nicobar Mega Infrastructure Project (port, airport, township, power plant) has triggered strong criticism.
- Allegations: Displacement of tribals, violation of constitutional/statutory safeguards, destruction of 8.5–58 lakh trees, threat to biodiversity, and construction in a seismically vulnerable zone.
- A recent editorial by Sonia Gandhi (Sept 2025) highlights concerns of environmental catastrophe and violation of tribal rights.
Relevance :
- GS I (Society & Tribal Issues): Threats to PVTGs, violation of FRA.
- GS II (Governance & Constitution): Bypassing NCST (Art. 338A), due process failures.
- GS III (Environment & Security): Ecological destruction, CRZ violations, seismic vulnerability, IOR strategic security.
Practice Question : Critically examine how the Great Nicobar mega-infrastructure project threatens the survival of Particularly Vulnerable Tribal Groups (PVTGs) such as the Shompen.(250 Words)
Basics
- Location: Great Nicobar Island, southernmost island of the Andaman & Nicobar group, strategic location near Malacca Strait.
- Communities:
- Nicobarese tribe (Scheduled Tribe) – displaced by 2004 tsunami, ancestral villages fall in project zone.
- Shompen tribe (Particularly Vulnerable Tribal Group) – dependent on forests, protected by “Shompen Policy”.
- Project Components:
- ₹72,000 cr investment.
- Deep-water transshipment port (130 ships capacity).
- International airport (4,000 m runway).
- Township (3.5 lakh people).
- Gas-based power plant.
- Strategic Rationale: Enhance Blue Economy, connectivity, logistics hub; counterbalance Chinese presence in IOR.
Comprehensive Overview
Tribal Rights Concerns
- Constitutional Provisions ignored:
- Article 338-A: Consultation with NCST mandatory → bypassed.
- 5th/6th Schedule principles: Spirit of tribal self-governance violated.
- Statutory safeguards neglected:
- Forest Rights Act (2006): Shompen not consulted despite being custodians of forests.
- Right to Fair Compensation & Transparency in Land Acquisition Act (2013): SIA excluded tribals as stakeholders.
- Local Governance bypassed: Tribal Council’s consent “rushed”; later revoked.
Environmental & Ecological Issues
- Deforestation:
- Govt estimate: 8.5 lakh trees.
- Independent: 32–58 lakh trees.
- Loss of old-growth rainforest (globally unique).
- Compensatory Afforestation farce:
- Planned in Haryana (different ecology).
- 25% land auctioned for mining.
- CRZ Violation:
- Port site overlaps CRZ 1A (turtle nesting, coral reefs).
- HPC “reclassified” zone; report not public.
- Biodiversity at risk:
- Nicobar long-tailed macaque, turtle nesting, dugongs.
- Flawed assessments: nesting studied off-season; drones for dugongs ineffective in deep waters.
Disaster & Security Risks
- Seismic Zone:
- 2004 tsunami: land subsidence of 15 feet.
- 2025: 6.2 magnitude earthquake reminder of risks.
- Infrastructure highly vulnerable to quakes/tsunamis.
- Strategic Paradox:
- Project aimed at boosting national security in IOR.
- But locating critical assets in high-risk seismic zone = jeopardizes long-term viability.
Governance & Process Concerns
- Bypassing due process: NCST, SIA, FRA consultations skipped.
- Opaque decision-making: HPC reclassification not public.
- Conflict of Interest: Environmental assessments conducted under alleged duress.
- Mockery of legal safeguards: Tribal autonomy and environmental laws undermined.
Ethical & Developmental Dimensions
- Humanitarian question:
- Shompen (PVTG) face existential threat.
- Nicobarese permanently uprooted from ancestral land.
- Development vs Rights Debate:
- Govt projects economic & strategic gains.
- Critics argue ecological limits + social justice being ignored.
- Intergenerational equity: Destruction of fragile ecosystems contradicts SDG commitments.
Conclusion
- The Great Nicobar project epitomises the development vs rights paradox, where economic and strategic goals are being pursued at the cost of constitutional safeguards, tribal autonomy, and ecological sustainability.
- Ignoring due process, displacing PVTGs like the Shompen, and bypassing statutory protections reflects a governance failure that risks creating an irreversible humanitarian and environmental catastrophe.
- True national interest lies not in short-term infrastructure gains but in upholding intergenerational equity, ecological resilience, and inclusive development that respects both tribal rights and strategic security.
A complex turn in India’s FDI story
Why in News
- Gross FDI inflows in FY 2024–25 touched $81 billion (↑13.7% YoY).
- Yet, net FDI inflows after disinvestments and repatriations fell sharply — retained capital just $0.4 billion.
- Rising outward FDI by Indian firms (up to $29.2 billion in FY 2024–25) raises questions about the domestic investment climate.
- Debate: FDI quality vs. quantity — capital increasingly short-term, profit-seeking, routed via tax havens.
Relevance
- GS I: Globalisation, socio-economic impacts of FDI.
- GS II: Policy frameworks, regulatory bodies, governance challenges.
- GS III: Economy (investment climate, BoP, industrial growth), short vs. long-term capital flows.
Practice Question : How has Foreign Direct Investment (FDI) shaped India’s economic and social landscape since 1991? Evaluate the changing sectoral trends.(250 Words)
Basics of FDI in India
- Definition: Investment by non-residents in Indian companies (equity, reinvested earnings, intra-company loans).
- 1991 Liberalisation: Opened up most sectors to FDI → inflows rose from ~$100 million in 1990 to >$80 billion by 2020s.
- Major Sources of FDI:
- Singapore, Mauritius: ~45% of inflows (often tax-arbitrage driven).
- USA, UK, Germany: Traditional industrial investors (now retreating).
- Key Recipient Sectors:
- E-commerce, IT, Computer hardware/software, Financial services, Telecom.
- Manufacturing share declining → fell to 12% of FDI by FY 2024–25.
Comprehensive Overview
Trends in Inflows & Outflows
- FDI inflows (gross):
- $46.6 bn (2011) → $84.8 bn (2021).
- Peaked at $84.8 bn in FY 2021–22.
- Declined to $71 bn in FY 2023–24, rebounded to $81 bn in FY 2024–25.
- Disinvestments & Repatriations:
- Surged 51% in FY 2023–24 ($44.4 bn).
- Rose further to $51.4 bn in FY 2024–25 (63% of inflows).
- Net inflows:
- 2021–22: robust.
- 2024–25: just $0.4 bn retained after outflows.
- Outward FDI by Indian firms:
- $13 bn (2011–12) → $29.2 bn (2024–25).
- Motivations: tax efficiency, stable regimes abroad, regulatory hurdles at home.
Sectoral Shifts
- Growth sectors: IT, fintech, e-commerce, energy distribution, hospitality.
- Declining sectors: Manufacturing, infrastructure, high-tech industrial bases.
- Implication: Weak multiplier effect on jobs, exports, technology.
Structural Concerns
- Short-termism: Capital chasing quick returns (tax arbitrage, treaty routing) vs. long-term development.
- Regulatory opacity: Frequent policy changes, compliance burdens discourage durable investments.
- Geographic concentration: Mauritius, Singapore dominate → signals tax-driven capital, not industrial commitment.
- Confidence erosion: Parallel behaviour of foreign disinvestment & Indian outward FDI shows systemic weaknesses.
Macroeconomic Implications
- Balance of Payments:
- FDI is a stable source of forex; declining net inflows = higher vulnerability.
- Currency & RBI Policy:
- Lower net inflows reduce RBI’s cushion for rupee stability.
- Industrial Growth:
- Without manufacturing-linked FDI, “Make in India” & employment potential weakens.
- Technology Transfer:
- Outflows to advanced economies deprive India of domestic tech absorption.
Comparative Perspective
- China (for contrast):
- Retains higher share of inflows in manufacturing/tech sectors.
- India’s reliance on services-driven FDI = weaker long-term industrial upgrading.
- Global trend: Emerging economies see rising outward FDI, but India’s case is sharper due to weak domestic climate.
Way Forward
- Policy & Regulatory Reforms:
- Simplify compliance, ensure predictability, remove retrospective taxation fears.
- Sectoral Targeting:
- Attract FDI in advanced manufacturing, clean energy, semiconductors, R&D hubs.
- Infrastructure & Logistics:
- Address cost disadvantages, improve power, transport, and urban capacity.
- Human Capital:
- Skill development aligned with Industry 4.0 and global supply chains.
- Balanced Strategy:
- Focus on quality & durability of capital, not just headline numbers.
