Content

1. Arbitration Council Of India (ACI)
2. 10,000 Farmer Producer Organisations (FPOs) Scheme

Arbitration Council Of India (ACI)

Legal Foundation

Statutory Origin

• Arbitration Council of India (ACI) is a proposed statutory regulator created through Part IA (Sections 43A–43M) inserted by the Arbitration and Conciliation (Amendment) Act, 2019 to institutionalise arbitration governance in India.
• Parent law, Arbitration and Conciliation Act, 1996, is based on UNCITRAL Model Law, promoting party autonomy, minimal judicial intervention, and globally harmonised commercial dispute resolution standards.
• ACI envisaged as a seven-member body with Chairperson, arbitration experts, and government nominees, aiming to combine domain expertise with regulatory oversight in arbitration governance.
• Despite statutory mandate since 2019, ACI remains unconstituted, reflecting implementation deficit and raising concerns regarding legal reform credibility and governance accountability.

Relevance

GS 2 (Polity & Governance)

• Judicial reforms, ADR mechanisms, institutional arbitration, and legal system efficiency.
• Rule of law, contract enforcement, ease of doing business, and governance accountability.
• Balance between regulatory oversight and arbitral independence.

Mandate and Functions

Core Responsibilities

• ACI frames policies for grading arbitral institutions, setting quality benchmarks, and professionalising arbitration, similar to models in Singapore and UK arbitration regimes.
• Recognises professional bodies for accrediting arbitrators, standardising qualifications, ethics, and competency, addressing weaknesses of India’s ad-hoc arbitration culture.
• Conducts training, workshops, and courses to build arbitration capacity, strengthening legal human capital and supporting knowledge-based dispute resolution ecosystem.
• Maintains depository of arbitral awards and promotes research, enabling data-driven policy-making and evidence-based arbitration reforms.

Reform Context in Indian Arbitration

Evolution Since 1996

• 1996 Act replaced Arbitration Act, 1940, shifting from court-centric litigation to modern arbitration aligned with liberalised economy and global trade requirements.
• 2015 Amendment introduced Section 29A timelines, neutrality disclosures, and narrowed public policy grounds, improving award enforceability and investor confidence.
• 2019 Amendment promoted institutional arbitration, introduced confidentiality (Section 42A) and arbitrator immunity, encouraging structured dispute resolution mechanisms.
• 2021 Amendment removed automatic stay on awards except in fraud or corruption, strengthening enforcement and reducing delay tactics.

Linkage with India International Arbitration Centre (IIAC)

Institutional Ecosystem

• India International Arbitration Centre Act, 2019 established IIAC as an autonomous institution to deliver world-class arbitration services and position India as global arbitration seat.
• IIAC provides empanelled arbitrators, administrative support, and modern facilities at cost-effective rates, reducing dependence on foreign seats like Singapore and London.
• Adoption by CPSEs — ONGC, GAIL, BPCL (2024–25) institutionalises arbitration in public contracts, improving commercial certainty and reducing litigation burden.
• Outreach through conferences, debates, exporter webinars, ADR publications reflects policy push toward mainstreaming institutional arbitration.

Governance and Administrative Significance

Justice Delivery Impact

• With over 5 crore pending cases in Indian courts, arbitration supports Article 39A goal of speedy and affordable justice.
• Institutional arbitration ensures transparent appointments, procedural consistency, and rule-based dispute resolution, strengthening trust in commercial justice systems.
• Predictable dispute resolution improves government contracting, reduces project delays, and enhances administrative efficiency.

Economic Relevance

Investment Climate

• Strong arbitration improves contract enforcement, a key factor influencing FDI inflows and cross-border commercial confidence.
• Global arbitration hubs earn significant legal services revenue; domestic ecosystem can retain high-value dispute resolution expenditure.
• Faster dispute settlement benefits export sectors, supporting India’s expanding global trade ambitions.

Challenges and Criticisms

Structural Gaps

• Non-constitution of ACI weakens reform momentum and creates regulatory vacuum in institutional arbitration quality control.
• Experts warn of excessive government control in ACI potentially undermining independence and party autonomy, core arbitration principles.
• Limited trained arbitrators and uneven institutional capacity restrict India’s competitiveness against global arbitration centres.

Way Forward

Reform Directions

• Expedite ACI constitution with credible arbitration experts, ensuring functional independence and transparency.
• Promote mandatory institutional arbitration clauses in major public contracts to reduce ad-hoc arbitration.
• Expand training, certification, and ethics regulation with global collaborations.
• Scale online dispute resolution (ODR) and digital arbitration platforms aligned with Digital India reforms.

Alternative Dispute Resolution (ADR): Types

ADR refers to non-judicial mechanisms for resolving disputes quickly, cost-effectively, and with minimal procedural complexity. Recognised under the Arbitration and Conciliation Act, 1996.

1) Arbitration

• Dispute decided by a neutral arbitrator or arbitral tribunal.
• Decision (arbitral award) is binding and enforceable like a court decree.
• Can be institutional (e.g., arbitration centres) or ad-hoc.
• Used heavily in commercial and international disputes.

2) Conciliation

• Neutral conciliator actively suggests solutions and settlement terms.
• More interventionist than mediation.
• Settlement agreement has legal status of arbitral award under the 1996 Act.
• Common in commercial and contractual disputes.

3) Mediation

• Neutral mediator facilitates dialogue; does not impose a decision.
• Voluntary, confidential, and party-driven.
• Outcome becomes binding only if parties sign a settlement.
• Increasingly used in family, civil, and community disputes.

4) Negotiation

• Parties directly discuss to reach a mutually acceptable solution.
• No third-party involvement.
• Most informal and flexible ADR method.
• Often first step before formal ADR.

5) Lok Adalats (People’s Courts)

• Statutory ADR under Legal Services Authorities Act, 1987.
• Focus on compromise and settlement.
• Award is final, binding, and non-appealable.
• Effective in reducing judicial backlog.

6) Online Dispute Resolution (ODR)

• Uses digital platforms, AI tools, and video conferencing.
• Suitable for e-commerce, fintech, and small-value disputes.
• Promoted under Digital India and e-Courts initiatives.

10,000 Farmer Producer Organisations (FPOs) Scheme

Legal–Policy Foundation

Scheme Basis

• Central Sector Scheme on Formation and Promotion of 10,000 FPOs launched in 2020 to collectivise small and marginal farmers, enhance bargaining power, and enable economies of scale in agriculture value chains.
• Implemented by Ministry of Agriculture and Farmers Welfare with support of SFAC, NABARD, NCDC, reflecting convergence model combining credit, capacity building, and market linkage support for farmer collectives.
• FPOs legally registered under Companies Act, 2013 (Producer Company provisions) or Cooperative/Society laws, providing formal institutional identity, limited liability, and democratic member-driven governance structure.
• Scheme aligns with Doubling Farmers’ Income vision, SDG-1 (No Poverty) and SDG-2 (Zero Hunger) by improving farmer income realisation through aggregation and value addition.

Relevance

GS 3 (Agriculture & Economy)

• Agricultural marketing reforms, value chains, and income diversification.
• Economies of scale, agri-exports, and market-led agriculture transition.
• Linkages with e-NAM, food processing, and digital agriculture.

Core Objectives

Functional Goals

• Promote collectivisation of producers for better input procurement, technology adoption, and market access, reducing dependence on intermediaries and improving farm-gate price realisation.
• Strengthen post-harvest management, processing, branding, and exports, shifting farmers from subsistence cultivation toward commercial and value-chain oriented agriculture.
• Facilitate access to institutional credit, as individual smallholders often lack collateral and credit history, but FPOs improve creditworthiness through collective strength.
• Encourage cluster-based business organisations (CBBOs) to provide professional handholding, business planning, and managerial support for initial 5-year nurturing period.

Current Status & Data

Latest Figures

• 10,000 FPOs formed under scheme as of 1 January 2026, marking achievement of major institutional target in farmer collectivisation and rural economic organisation.
• 56.32 lakh farmers enrolled, indicating large-scale mobilisation of agrarian population into formal producer collectives, critical for structural transformation of fragmented landholding system.
• 21.96 lakh women farmers enrolled, reflecting significant gender inclusion, improving women’s role in decision-making, income control, and agri-entrepreneurship.
• 1,175 FPOs with 100% women members demonstrate targeted push toward women-led producer enterprises, aligning with gender empowerment and inclusive rural development goals.

Governance & Administrative Significance

Institutional Impact

• FPOs reduce transaction costs, enable bulk marketing, and improve integration with e-NAM and digital agriculture platforms, strengthening market efficiency and price discovery.
• Support government shift from price support–centric agriculture toward market-led income enhancement, reducing excessive MSP dependency over long term.
• Promote decentralised rural institutions, strengthening grassroots economic democracy and participatory development consistent with cooperative federalism and local empowerment principles.

Economic Significance

Income & Market Impact

• Aggregation through FPOs improves scale economies, lowering per-unit costs of inputs, logistics, storage, and processing, thereby enhancing farmer profitability and competitiveness.
• Facilitates entry into high-value agriculture—horticulture, dairy, fisheries, organic produce—diversifying income sources and reducing monoculture risk.
• Enhances export readiness through quality standardisation and traceability, supporting India’s agri-export targets under Agriculture Export Policy, 2018.

Social & Ethical Dimensions

 Inclusion Value

• Women-centric FPOs improve financial inclusion, leadership participation, and social status of rural women, contributing to gender equity and household welfare improvements.
• Collective model reduces vulnerability of marginal farmers against price shocks, climate risks, and exploitative middlemen structures.

Challenges & Criticisms

Structural Gaps

• Many FPOs face weak managerial capacity, business planning gaps, and market intelligence deficits, affecting sustainability beyond government support period.
• Limited access to working capital and risk finance constrains scaling of operations and value-addition activities.
• Over-reliance on grants risks creating grant-dependent institutions rather than self-sustaining commercial entities.
• Market linkages often remain localised, limiting integration into national and global value chains.

Way Forward

Reform Directions

• Strengthen professional management, agri-business training, and digital literacy for FPO leaders to improve commercial viability.
• Expand credit guarantee mechanisms and blended finance models to attract private investment into FPO ecosystem.
• Integrate FPOs with food processing clusters, ONDC, and e-commerce platforms to widen market access.
• Promote women-led FPO federations to achieve scale, negotiation power, and policy visibility.