Daily Current Affairs

The NPCI’s new circular on levy charges (GS Paper 3, Economy)

Why in news?

• Recently, the National Payments Corporation of India (NPCI), which governs UPI, in a circular issued directly to banks, intimated that they can now levy charges on merchant transactions made through Prepaid Instrument wallets using UPI.
• NPCI said that the new interchange charges are only applicable for Prepaid Payment Instruments’ (PPI) merchant transactions. The interchange fee, generally associated with card payments to cover the transaction cost, has now brought PPI wallets also under its fold.

 

What are PPIs?

• Prepaid Payment Instruments (PPIs) are payment methods that can be used to purchase goods and services and send/receive money by using the stored value in the wallet.
• Users have to pre-load the wallet with a desired amount. The amount can be loaded/reloaded against cash or through debit to bank account, or by using credit/debit cards, UPI, or any other approved payment method in India. PPIs can only be used in Indian rupees.
• PPIs can be in the form of mobile wallets, physical smart cards, secure tokens, vouchers, or any other method that allows access to prepaid funds.

 

What is PPI interoperability?

• Previously, to use PPI at any merchant, it was necessary that the concerned merchant was engaged directly by the specific PPI issuer (specific network). All PPIs with which the merchant did not have a direct tie-up would get rejected.
• The most prevalent form of PPI used in the country is the mobile wallet, and this restriction meant that customers of one specific mobile wallet could spend the money in the wallet only at specific merchant locations which were directly tied up with the same PPI wallet provider.
• For example, if you had a Paytm or Mobikwik wallet, you could only use it at merchants that accepted Paytm or Mobikwik QR codes. To overcome this limitation of PPIs, the RBI has mandated interoperability among different PPI issuers.
• Subsequently, PPI issuers tied-up with NPCI for issuing (a) interoperable RuPay PPI cards or (b) creating interoperable wallets on UPI rails.
• Prepaid instruments in the form of wallets can now be linked to UPI, thus creating interoperable wallets on UPI rails.

 

How does PPI interoperability through UPI work?

• After linking one’s PPI wallet to UPI, customers can transact using Scan and Pay on all UPI interoperable QR codes.
• This will enable the use of PPI wallets at all merchant locations. The user can also send/receive money to any other wallet user.
• Similarly, a merchant with any UPI QR code can now accept payments from any PPI issuer or mobile wallet.

 

Do merchants have to pay for accepting wallet transaction on UPI?

• The PPI enabled merchants were already paying charges to the PPI issuer for acceptance of mobile wallets or prepaid cards. Now the charges are aligned at a network level with some standardisation. However, each merchant can work with their preferred acquiring entity.
• Now, for using prepaid payment instruments (PPIs) such as gift cards, wallets etc for transactions on UPI, an interchange fee of up to 1.1% has been levied from April 1, 2023. The charges are applicable if the transaction is more than ₹2,000.
• Officially there are no charges to be paid by the customer. However, merchants may pass on the additional burden to customers by way of price increase or some other means.

 

What is the open-source seeds movement?

(GS Paper 3, Economy)

Context:

• Farmers have innovated and shared seeds without any intellectual property rights (IPR) for centuries. They also haven’t sought exclusive rights over seeds and germplasm to prevent others from innovating on the seeds.
• However, with the emergence of the global IPR regime over plant varieties, there was a dire need to ‘open-source’ seeds.

What are plant-breeders’ rights and patents?

• The advent of hybrid seeds, scientific plant-breeding, and some other factors conferred developers of new varieties with the so-called plant breeders’ rights (PBR) and patents, particularly in the U.S.
• In this regime, rights-holders could demand royalty on seeds and legally enforce IPR. In some national IPR regimes, rights-holders can also restrict the unauthorised use of seeds to develop new varieties.
• In 1994, the establishment of the World Trade Organization cast a global IPR regime over plant varieties. The Trade-Related IPR Agreement (TRIPS) required countries to provide at least one form of intellectual property (IP) protection. This consolidation of rights in the seeds sector raised concerns about the freedom to innovate.
• Unlike the Green Revolution, which was spearheaded by public-sector institutions, the genetic revolution in agriculture was led by the private sector, with seeds mostly availed as hybrids or protected by strong IPRs.

 

How is IP protected in agriculture?

• There are two major modes of IPR protection in agriculture — plant-breeders’ rights and patents. Together, they restrict farmers’ rights and the freedom to develop new varieties using germplasm from IP-protected varieties, and have thus increased the number of IP-protected plant varieties.
• The high prices of genetically modified seeds and IP claims triggered many problems and issues, including the State’s intervention in Bt cotton seeds in India.
• As public sector breeding declined and the private sector began to dominate the seed sector, the need for alternatives became keenly felt. This is when the success of open-source software inspired a solution. In 1999, plant-breeder named T.E. Michaels suggested an approach to seeds innovation based on the principles of open-source software.

 

What are ‘open-source seeds’?

• The German NGO Agrecol followed with a similiar initiative in Europe. In Agrecol’s model, the user agrees inter alia to not patent seeds bought under the open-source licence. In the U.S., the open source seeds initiative opted for a pledge based model for sharing seeds.
• In India, the Centre for Sustainable Agriculture (CSA), Hyderabad, developed a model that included an agreement between CSA and the recipient of the seed/germplasm. It is trying to use this approach through three farmer producer organisations engaged in seed production.
• Under India’s Plant Variety Protection and Farmers’ Rights Act 2001, farmers can register ‘farmer varieties’ if they meet certain conditions, and have the right to reuse, replant, and exchange seeds. However, they can’t breed and trade in varieties protected under the Act for commercial purposes.
• One potential application of the open-source approach is to use it in farmer-led seed conservation and distribution systems.

 

Way Forward:

• There are many traditional-variety conservation and sharing initiatives in India involving farmers. Many of them focus on traditional varieties that are unique to specific regions or sites and/or have specific features.
• The model can also be used to promote farmer-led participatory plant-breeding exercises.
• Traditional varieties often lack uniformity and aren’t of excellent quality for seed development and breeding purposes. Open-source principles can help overcome these two challenges by facilitating testing, improvisation, and adoption. All of these will ultimately be beneficial to India’s food security and climate resilience.