24 Jan 2024 : The Hindu Editorial

Topic 1 : Limits and borders: On the territorial jurisdiction of the Border Security Force

Context: Centre must consult States before making decisions that impinge on their powers

Introduction

• Litigation concerning the territorial jurisdiction of the Border Security Force (BSF) in Punjab seems to be the result of the lack of effective consultation between the central and State governments on the issue.
• Punjab has filed a suit against the Union government under Article 131 of the Constitution, challenging the decision to increase the operational jurisdiction of the BSF from 15 km to 50 km.

Federal principles and encroachments

• The border State sees the Centre’s move as a breach of federal principles and an encroachment into the law-and-order powers of the Punjab police.
• West Bengal has a similar view, and both States have got resolutions passed in their Assemblies against the expansion. In this backdrop, the Supreme Court’s decision to examine the questions that arise from the expansion of the BSF’s area of operations acquires significance.
• In October 2021, the Centre had issued a notification under the provisions of the BSF Act, standardising the area over which the BSF would have jurisdiction to operate. In Punjab, West Bengal and Assam, the distance was raised from within 15 km from the border to 50 km, while it was reduced from 80 km to 50 km in Gujarat.
• For Rajasthan, it was kept unchanged at 50 km. The Union government said in a reply in the Rajya Sabha in December 2021 that the extension of the BSF’s jurisdiction will help it discharge its border patrol duty more effectively.

Union Government's Expansion of BSF Jurisdiction

• While the Union government may have valid reasons for its move, it should not be seen as encroaching into the domain of the State governments, which have the constitutional responsibility to maintain public order and exercise police powers.
• The BSF mainly focuses on preventing trans-border crimes, especially unauthorised entry into or exit from Indian territory.
• It does not have the power to investigate or prosecute offenders but has to hand over those arrested and the contraband seized from them to the local police.
• In practice, BSF personnel usually work in close coordination with the police and there ought to be no clash of jurisdiction. It is possible to argue that the expanded jurisdiction merely authorises the BSF to conduct more searches and seizures, especially in cases in which the offenders manage to enter deep into the country’s territory.
• However, it goes without saying that there ought to be strong reasons for the expansion of the jurisdiction of any central force.

Conclusion

• In this regard, the most relevant questions among those framed by the Supreme Court are whether the Centre’s notification encroaches upon the State government’s domain; and what factors ought to be taken into account while determining the “local limits of areas adjoining the borders of India”.

Topic 2 : The need to overhaul a semiconductor scheme.

Context: An overhauled Semiconductor Design-Linked Incentive scheme would fortify India’s comparative advantage and augment its forays into other stages of the semiconductor global value chain.

Introduction

• The mid-term appraisal of the semiconductor Design-Linked Incentive (DLI) scheme is due soon. Since its announcement, the DLI scheme has approved only seven start-ups, markedly short of its target of supporting 100 over five years. This impact assessment, therefore, presents an opportunity for policymakers to appraise and revamp the scheme.

India’s semiconductor strategy

• India’s $10 billion Semicon India Program has had mixed results, at best. There are three goals of India’s semiconductor strategy.
• The first is to reduce dependence on semiconductor imports, particularly from China, and especially in strategic and emerging sectors, ranging from defence applications to Artificial Intelligence development.
• The second is to build supply chain resilience by integrating into the semiconductor global value chain (GVC).
• The third is to double down on India’s comparative advantage: India already plays host to the design houses of every major global semiconductor industry player and Indian chip design engineers are an indispensable part of the semiconductor GVC.

India's Semiconductor Powerhouse Status and Industrial Policy

• These goals will help cement India’s status as a semiconductor powerhouse. However, resources are limited. Therefore, priorities for industrial policy should ensure that we reap disproportionate benefits from our investments.
• Stimulating the design ecosystem is less capital-intensive than the foundry and assembly stages of the semiconductor GVC. Bolstering this stage can help establish strong forward linkages to an up-and-coming fabrication and assembly industry in India.
• Therefore, it is odd to note a concerted lack of policy scrutiny of the DLI scheme’s lack of results, while Production-Linked Incentive schemes for foundries and assembly stages received quick revisions post notification.

Issues with the scheme

• Prima facie, the DLI scheme fares well with its focus on providing access to design infrastructure, such as electronic design automation (EDA) tools, alongside financial subsidies for different steps of the chip design process. But there has been lacklustre uptake of the scheme.

• First, the scheme mandates that beneficiary start-ups maintain their domestic status for at least three years after receiving incentives, and for this they cannot raise more than 50% of their requisite capital via foreign direct investment. This is a significant barrier.
• Costs for semiconductor design startups are also significant. Semiconductor R&D usually only pays off in the longer term, and the funding landscape for chip start-ups in India continues to be challenging despite promising IP and business potential.
  • Such capital requirements, combined with the lack of success stories caused by the absence of a mature start-up funding ecosystem for hardware products in India, reduce the risk appetite of domestic investors.
• The relatively modest incentives under the DLI scheme (capped at ₹15 Crore for Product DLI and ₹30 Crore for Deployment Linked Incentive, per application) would not make for a worthwhile trade-off for start-ups standing to lose out on access to crucial long-term funding.
• The primary aim of the DLI scheme should be to cultivate semiconductor design capabilities in India, with the understanding that home-grown IP will organically evolve as local talent fosters the creation of indigenous companies over time.
  • The scheme needs to be revised to focus on the broader objective of facilitating design capabilities for a wide array of chips within the country, so long as the entity engaging in the design development process is registered in India.

Nodal agency

• The Centre for Development of Advanced Computing’s role as the nodal agency appraising proposals by applicants under the DLI scheme merits a re-look too. As it is also a market player in the Indian chip design sector, clear concerns of a conflict of interest arise, as well as its capacity and suitability to be the implementing and regulating agency.
• The Karnataka government’s Semiconductor Fabless Accelerator Lab (SFAL), with its specific partnerships with the Indian Electronics and Semiconductor Association, EDA vendors, IP, and testing companies, could be an appropriate blueprint for an implementing agency for DLI.
• A similar agency under the auspices of the India Semiconductor Mission could aim to emulate SFAL’s approach and provide affiliated start-ups access to a network of mentors, industry, and financial institutions, in addition to the disbursal of financial incentives under the scheme.
• It could inspire an expanded focus for a revamped DLI scheme attracting a broader range of semiconductor design start-ups (not just ones ready for volume production) and help them overcome initial hurdles in developing design ideas.

Conclusion

• A recalibrated policy focused on chip design steered by a capable institution can tolerate a certain failure rate and treat beneficiary start-ups as exploratory risk-taking vehicles to establish India’s foothold in this high-tech sector.