Author: CD Staff

NOTE4STUDENTS:

This article takes a deep dive into India’s startup ecosystem, looking at what drives its growth, the challenges it faces, and the government’s efforts to support it. UPSC often asks questions that explore how government policies and economic reforms affect sectors like startups. However, many miss the point by focusing only on the theoretical aspects of these policies, without understanding the practical challenges like funding issues or the fact that investments are often concentrated in a few cities. They also struggle to grasp the bigger picture of how startups contribute to innovation, job creation, and tech progress. This article bridges that gap by bringing theory to life with real-world examples, showing how initiatives like Startup India and the Fund of Funds for Startups actually impact India’s startup scene. It strikes a balance between showcasing the success of startups and acknowledging the difficulties they face, like funding shortages and regional disparities. This approach makes it easier to tackle UPSC questions with a well-rounded, insightful answer.

PYQ ANCHORING & MICROTHEMES:

1. GS-3: The Gati-Shakti Yojana needs meticulous coordination between the government and the private sector to achieve the goal of connectivity. Discuss. [2022]
2. GS 2: The need for cooperation among various service sector has been an inherent component of development discourse. Partnership bridges bring the gap among the sectors. It also sets in motion a culture of ‘Collaboration’ and ‘team spirit’. In the light of statements above examine India’s Development process. [2019]

Microthemes:  Government Schemes and Policies,Structural reforms and Actions

India’s startup ecosystem has experienced phenomenal growth, becoming the world’s third-largest hub for innovation with over 1,30,000 startups today compared to 400 in 2015-16. As per India Startup Ecosystem Report 2024, India is the 3rd largest startup ecosystem in the world with 117 Indian unicorns, only behind the United States & China.

Drivers of the startup ecosystem in India

India’s thriving startup ecosystem is driven by a combination of policy support, technological advancements, market dynamics, and entrepreneurial culture. These drivers enable startups to innovate, scale, and address challenges across various sectors.

Significance of startups in India 

Startups are vital to India’s economic and social transformation, driving innovation, employment, and technological progress across multiple sectors.

CHALLENGES FOR STARTUPS IN INDIA

1. Bootstrapping Challenges and Seed Capital Scarcity

• Limited Early-Stage Funding – Startups, especially in Tier-2 and Tier-3 cities, struggle to secure seed funding.
  • Example: Local Banya, despite its innovative approach, shut down due to lack of funds.
• Angel Drought – Heavy reliance on VC and PE often leads to loss of autonomy, while angel investors remain scarce.
  • Example: KisanHub struggles to secure seed funding despite addressing critical rural issues.
• Startup Winter – In 2023, the Indian startup ecosystem witnessed a 67% drop in funding compared to the previous year.
• Disproportionality – A large portion of funding is concentrated in a few sectors.
  • Example: Since 2014, e-commerce alone accounted for 25% of the funding raised by Indian startups, with fintech and enterprise tech contributing to 52% of total investments.

2. Regional Concentration

• Startup funding remains heavily concentrated in a few urban hubs.
  • Example: Bengaluru alone accounts for ~50% of total Indian startup funding since 2014, while Bengaluru, Delhi-NCR, and Mumbai collectively receive ~89% of investments.

3. Regulatory and Compliance Burdens

• Complex Tax Structures – Frequent changes in GST regulations create compliance challenges.
  • Example: Unclear GST implications on delivery charges impact business operations.
• Regulatory Misalignment – Despite improvements, startups still face bureaucratic red tape, policy bottlenecks, and uncertainty.
  • Example: Fintech startups like PayU face hurdles related to data localization and KYC compliance.

4. Talent Acquisition and Retention

• Brain Drain – A shortage of highly skilled professionals in niche tech fields like AI, blockchain, and data science.
  • Example: Bengaluru faces a shortage of advanced AI professionals despite being a tech hub.
• Attrition Rates – Intense competition leads to frequent job-hopping, affecting team stability.

5. Innovation & Technology Barriers

• Innovation Inertia – Resistance to adopting new technologies.
• Tech Talent Tussle – High demand and competition for skilled developers.
• Data Desert – Limited access to quality market data hampers informed decision-making.
• Scale Scarcity – Difficulty in scaling technological infrastructure efficiently.

6. Market Competition and Saturation

• Overcrowding – Highly competitive sectors lead to price wars and unsustainable growth.
  • Example: Zeppery and Dunzo struggled against dominant players Swiggy and Zomato.
• Competitive Impropriety – International giants with deep pockets create an unfair competitive edge.
• Corporate Governance Issues – Poor management and lack of transparency in startups.
  • Example: Byju’s and Dunzo have faced corporate governance challenges.

7. Infrastructure and Technological Barriers

• Deep Tech Innovation Crunch – India lags in cutting-edge tech R&D.
  • Example: India’s R&D spending was just 0.7% of GDP in 2023, compared to 3.5% in the US.
• Rural Digital Divide – Poor internet penetration affects rural startups.
  • Example: Agri-tech startups struggle to scale due to low rural digital adoption.
• Tech Adoption Resistance – Small businesses and rural consumers remain hesitant to adopt new technologies.

8. Customer Acquisition and Retention

• High CAC (Customer Acquisition Cost) – Heavy spending on marketing leads to unsustainable growth.
  • Example: Indian consumers frequently switch platforms, causing high churn rates.
• Consumer Trust Issues – Startups struggle to gain credibility in new markets.

9. Scaling and Sustainability

• Profitability Paradox & Unsustainable Growth Models – Startups prioritize rapid expansion over financial stability.
  • Example: Housing.com faced financial instability due to unsustainable growth.
• Operational Inefficiencies – Adapting to varied consumer behaviors across regions is complex.
• Copycat Competition – Rapid imitation of successful business models dilutes innovation.

10. Cultural and Societal Barriers

• Risk Aversion – Traditional job security preferences deter entrepreneurial ventures.
• Diverse Consumer Base – Customizing offerings to India’s varied cultures, languages, and income groups is challenging.
• Distribution Desert – Reaching Tier-2 and Tier-3 cities requires overcoming logistical hurdles.

WAY FORWARD

1.  Simplify Regulations & Compliance

• Make tax and labor rules easier for startups to follow, reducing bureaucratic headaches.
• Expand regulatory sandboxes beyond fintech to include edtech, healthtech, and cleantech, allowing startups to test innovations safely.

2.  Boost Access to Funding

• Strengthen domestic VC funds and offer better incentives for private investors to support startups.
• Provide special funding for startups in Tier-2 & Tier-3 cities and promote investment in women-led ventures.

3. Stronger Industry-Academia Partnerships

• Encourage collaborative R&D projects between startups and universities to drive innovation.
• Set up sector-specific research hubs focused on deep-tech areas like AI, biotech, and clean energy.

4. Improve Digital & Physical Infrastructure

• Close the urban-rural digital gap so agritech and rural startups can thrive.
• Develop startup-friendly hubs in emerging cities with incubators, coworking spaces, and mentorship programs.

5. Skill Development & Entrepreneurial Training

• Make entrepreneurship a core part of higher education under the National Education Policy (NEP).
• Launch specialized training programs in AI, IoT, blockchain, and green tech to build future-ready skills.

#BACK2BASICS : GOVT. INITIATIVES TO PROMOTE STARUPS

Here’s your information structured in a table format:

NOTE4STUDENTS:

China weaponizes supply chains to exert geopolitical pressure and economic dominance. UPSC may explore questions on trade policies, WTO reforms, and global supply chain vulnerabilities in this respect. It may test conceptual clarity and real-world application. You may struggle linking static knowledge of International Relations since there is no single source for it. This article directly addresses these gaps. It explains China’s supply chain control, trade weaponization tactics, and impact on India with crisp examples. The response measures give a clear roadmap for India’s strategy. The special feature? It connects trade policies with national security, making it a must-read for a multi-dimensional perspective.

PYQs Anchoring:

GS2 : What are the Key areas of reform if the WTO has to survive in the present context of “Trade War” especially keeping in mind the interest of India?  2018

Microthemes: WTO, Regional or global groupings

Recent restrictions on the export of critical manufacturing equipment and the recall of Chinese engineers and technicians from Indian facilities have highlighted China’s strategic weaponization of supply chains. This raises significant concerns as China leverages its dominance in electronic supply chains to exert geopolitical influence.

China’s Presence across Supply Chains

China’s use of E-Supply Chains as a Strategic Tool:

China has systematically built its dominance in global supply chains, allowing it to exert strategic leverage over rival economies. Through its monopoly over key manufacturing technologies and raw materials, China has created an ecosystem where nations remain dependent on its industrial network.

1. Monopoly Over Critical Manufacturing Equipment

• China controls production of high-tech machinery required for semiconductor and electronics manufacturing.
• By restricting exports, it can slow down rival industries and hinder technological self-sufficiency.
• Example: In 2024, China restricted exports of specialized machinery to Foxconn India, delaying iPhone production.

2. Control Over Key Raw Materials

• China dominates global supply of rare earth elements (REEs), crucial for electronics, EV batteries, and defense technology.
• Export bans disrupt industries worldwide, limiting production capabilities in competing nations.
• Example: In 2023, China restricted gallium and germanium exports, affecting semiconductor and military production in multiple countries.

3. Workforce & Knowledge Transfer Restrictions

• China prevents skilled workers from working in foreign factories to limit knowledge transfer.
• This weakens competitors by maintaining China’s technical superiority.
• Example: Chinese engineers at Foxconn India were recalled, creating a skills gap that impacted Apple’s production.

4. Supply Chain Disruptions as Geopolitical Leverage

• China manipulates trade policies and export restrictions to pressure dependent nations.
• This gives China an advantage in diplomatic negotiations by leveraging economic dependencies.
• Example: During the U.S.-China trade war, China blocked exports of key components to Huawei and Apple, showcasing its influence in electronics manufacturing.

5. Deep Integration in Global Manufacturing

• Through initiatives like the Belt and Road Initiative (BRI) and foreign industrial investments, China ensures foreign companies remain tied to its supply chains.
• Even with sanctions, global giants like Tesla and Apple continue major operations in China due to its efficient supply network.

6. Technology Dependence & Market Domination

• China’s tight control over supply chains makes it difficult for emerging economies like India to build self-reliant industries.
• Dependency on China for raw materials and technology slows down India’s progress in becoming a global manufacturing hub.
• Example: China’s recall of engineers from Indian Foxconn plants disrupted Apple’s India production goals.

Impact of China’s E-Supply Chain Control on India

China’s dominance in e-supply chains creates multiple risks and vulnerabilities for India. This dependency impacts India’s technological advancements, economic security, and geopolitical standing.

1. Disruptions to Critical Industries

• India depends on China for over 75% of its electronic components.
• Any disruption in China’s exports slows down key industries like telecom, automobiles, and defense.
• Example: The 2020 global chip shortage, worsened by China’s export controls, severely affected India’s smartphone and automobile sectors.

2. Geopolitical & Economic Coercion

• China can delay exports or impose restrictions to exert political pressure.
• Trade weaponization creates instability in India’s economic policies.
• Example: After the Galwan clash (2020), customs clearance delays on Chinese imports disrupted multiple Indian industries.

3. Security Risks in Strategic Sectors

• Dependence on Chinese telecom and defense tech raises cybersecurity and espionage concerns.
• India has responded by banning Chinese telecom firms like Huawei and ZTE from participating in 5G trials.

4. Price Manipulation & Market Volatility

• China controls prices of critical materials like rare earths, semiconductors, and batteries.
• This affects India’s plans to reduce import reliance and boost local manufacturing.
• Example: The 2023 gallium and germanium export restrictions caused major price spikes in India’s semiconductor industry.

5. Hindrance to India’s Manufacturing Growth

• India’s ambition to become a global manufacturing hub faces resistance from China’s strategic restrictions.
• China’s ability to limit access to critical machinery, raw materials, and skilled labor slows India’s industrial growth.
• Example: China’s withdrawal of engineers from Foxconn India affected Apple’s efforts to expand its Indian production base.

6. India’s Strategic Response

To counter China’s dominance, India is actively:

• Strengthening domestic supply chains through Production-Linked Incentives (PLI).
• Partnering with nations like the U.S., Japan, and Australia to reduce Chinese dependency.
• Encouraging domestic semiconductor and rare-earth production to improve economic resilience.

Response Measures undertaken

Global Measures

India-Specific Measures

Conclusion

China’s control over e-supply chains presents significant challenges for India’s economic and technological independence. To mitigate these risks, India must diversify its supply sources, develop domestic capabilities, and strengthen global partnerships. As India advances toward self-reliance, reducing dependence on Chinese supply chains will be critical for its long-term economic security and global standing.

Back to Basics: Understanding Trade Weaponization

Trade Weaponization:

Trade weaponization refers to the practice of using trade policies—such as sanctions, tariffs, export restrictions, and trade barriers—to exert political and economic pressure on rival nations. This approach can be used to gain strategic advantages, weaken competitors, or force policy changes.

Utility of Trade as a Strategic Weapon

Trade is no longer just an economic activity; it has become a tool for geopolitical influence. Powerful economies use weaponized trade tactics—such as sanctions, tariffs, and export restrictions—to pressure rival nations. India, as a major emerging economy, must carefully navigate these challenges to maintain strategic autonomy while ensuring economic stability.

1. Externally Oriented Pressure

• Powerful countries leverage trade restrictions to influence India’s foreign policy.
• India must balance its global strategic partnerships while managing economic dependencies.
• Example: India’s oil imports from Iran sharply declined due to U.S. sanctions, demonstrating how trade weaponization impacts strategic autonomy.

2. Formal and Informal Measures

• Nations may indirectly pressure private companies to limit investments in India, impacting sectors like technology, telecom, and energy.
• This reduces India’s ability to attract foreign investment in high-growth industries.
• Example: U.S.-China trade tensions affected global tech investment, forcing India to take defensive measures, such as banning Chinese apps and scrutinizing Chinese telecom firms.

3. Legal and Political Grey Zone

• Some trade measures bypass international norms, limiting India’s legal recourse in global trade bodies.
• This creates legal ambiguity and economic risks for India.
• Example: Disputes with China at the WTO over steel tariffs highlight India’s challenges in using international platforms to counter trade weaponization.

4. Rising Protectionism

• In response to global protectionist trends, India has implemented defensive trade measures.
• These policies protect Indian industries from predatory pricing and ensure competitiveness.
• Example: Over 30 anti-dumping measures in 2024 on Chinese products showcase India’s efforts to shield domestic businesses from unfair trade practices.

5. Impact on Global Supply Chains

• India faces the challenge of securing critical sectors from foreign influence, especially from China.
• Reducing dependency on high-risk nations is crucial for fostering long-term economic growth.
• Example: India’s participation in frameworks like the Quad highlights its efforts to secure supply chains and strengthen regional partnerships.

6. Foreign Relations and Trade Strategy

• India’s foreign policy is increasingly shaped by economic security concerns.
• Trade disputes, particularly with China, have led India to re-evaluate its global partnerships.
• Example: The Indo-Pacific Economic Framework for Prosperity (IPEF) highlights India’s pivot toward economically secure, like-minded partners.

Key Tactics of Trade Weaponization:

1. Sanctions: Banning trade with specific nations to cripple their economy (e.g., U.S. sanctions on Iran reducing its oil exports).
2. Tariffs: Imposing high taxes on imports to protect domestic industries or retaliate against foreign trade practices (e.g., U.S.-China tariff war).
3. Export Restrictions: Blocking the sale of critical resources or technologies to rival nations (e.g., China restricting rare earth exports to Japan and the U.S.).
4. Economic Coercion: Using trade dependencies to manipulate other nations’ foreign policies (e.g., China slowing customs clearances for Australian imports after political disputes).
5. Supply Chain Disruptions: Controlling key manufacturing hubs to create bottlenecks in global production (e.g., China’s dominance in semiconductor and rare earth production).

Significance of Trade Weaponization:

• Influences Global Politics: Countries use trade to pressure rivals without direct military conflict.
• Affects Economic Stability: Disruptions in trade can lead to supply shortages and price spikes.
• Impacts National Security: Dependence on foreign nations for critical goods can pose risks during conflicts.
• Shifts Trade Alliances: Countries may seek alternative trade partners to reduce dependency on weaponized trade tactics.

NOTE4STUDENTS:

UPSC often frames questions that test conceptual clarity and real-world applications. as in 2018. This shows that UPSC expects aspirants to connect theory with current global events. Simple rote learning of WTO principles isn’t enough. Many aspirants memorize WTO rules but struggle to apply them to modern trade issues like U.S.-China tensions or India’s wheat export ban.  While aspirants know key points, they fail to present them logically—problem, impact, and solution. This article goes beyond theory. The section Understanding the Concept simplifies ‘Beggar-Thy-Neighbor’ policies, making it easy to grasp. Instead of just listing trade policies, it shows how they play out in real-world scenarios and how India must respond.

PYQ Anchoring:

GS 2: What are the key areas of reform if the WTO has to survive in the present context of ‘Trade War’, especially keeping in mind the interest of India? (UPSC IAS/2018)

Microthemes: India & Its Neighborhood – Relations

The US imposed tariffs on imports from China, Canada and Mexico as part of Beggar-thy-neighbour policy. 

Understanding the Concept

A Beggar-Thy-Neighbor Policy is an economic strategy where a country boosts its own economy at the expense of others by restricting trade, devaluing its currency, or imposing protectionist measures. While such policies temporarily benefit domestic industries, they often lead to retaliation, trade wars, and global economic instability.

Key Features of Beggar-Thy-Neighbor Policies

1. Competitive Currency Devaluation – A country weakens its currency to make exports cheaper and imports expensive, stimulating domestic production.
   • Example: China’s yuan devaluation in 2019 made Chinese exports more competitive but triggered tensions with the U.S.
2. High Import Tariffs & Trade Barriers – Governments impose high tariffs, quotas, or regulatory barriers to protect local industries.
   • Example: The U.S.-China trade war (2018-2020) saw heavy tariffs imposed on each other’s goods.
3. Subsidies to Domestic Industries – Government funding and tax breaks make local businesses more competitive at the cost of foreign companies.
   • Example: EU subsidies to European farmers under the Common Agricultural Policy (CAP) have affected global agricultural trade.
4. Export Restrictions on Strategic Goods – Some nations limit the export of key resources, technology, or food supplies to maintain domestic stability.
   • Example: India’s wheat export ban (2022) to curb rising domestic prices impacted global food supply.
5. State-Controlled Currency Manipulation – Countries artificially control their currency exchange rates to maintain trade advantages.
   • Example: Japan’s intervention to weaken the yen made its exports competitive but increased import costs.
6. Unfair Trade Practices – Some countries dump products at extremely low prices to outcompete foreign industries.
   • Example: China’s steel dumping in global markets led to trade disputes with the U.S. and Europe.

Historical Examples of Beggar-Thy-Neighbor Policies

1. The Great Depression & the Smoot-Hawley Tariff Act (1930)

• The U.S. imposed high import duties on over 20,000 goods.
• Other countries retaliated, causing global trade to shrink by two-thirds (1929-1934).
• Instead of economic recovery, it worsened the Great Depression.

2. The 1930s Currency Wars

• Nations like the UK and France devalued their currencies to boost exports.
• This led to retaliatory devaluations and a cycle of economic stagnation.

3. The U.S.-China Trade War (2018-2020)

• Both countries imposed tariffs on each other’s goods.
• China devalued the yuan, making exports cheaper but worsening trade tensions.
• The trade war disrupted global supply chains.

4. Japan’s Currency Interventions

• To boost exports, Japan weakened the yen through central bank interventions.
• While exports grew, the cost of imports surged, hurting domestic consumers.

5. India’s Trade Protectionism

• Tariff hikes on electronics and agricultural goods (2018) to promote local manufacturing.
• Restrictions on Chinese imports following border tensions to protect domestic industries.

Impact of Beggar-Thy-Neighbor Policies

Reasons for Global Institutions Discouraging Beggar-Thy-Neighbor Policies:

Way Forward 

With rising economic nationalism and geopolitical tensions, beggar-thy-neighbor policies are likely to persist. However, their long-term sustainability is questionable, as they often harm global economic stability.

Countries must strike a balance between protecting domestic industries and maintaining fair global trade practices. The key lies in fostering innovation, ensuring self-reliance in critical sectors, and strengthening multilateral cooperation.

1. Strengthening Global Trade Rules – WTO reforms can create fairer trade agreements.
2. Bilateral Trade Agreements – Countries can engage in fair trade negotiations rather than imposing unilateral restrictions.
3. Investment in Domestic Competitiveness – Instead of protectionism, countries should improve infrastructure, innovation, and technology.
4. Currency Stability Agreements – International cooperation on exchange rate policies to prevent unfair advantages.
5. Reducing Over-Reliance on Import Restrictions – Instead of banning imports, develop local industries organically.

While Beggar-Thy-Neighbor Policies offer short-term economic benefits, they often lead to trade wars, economic retaliation, and global instability. Instead of relying on protectionism, countries should focus on long-term economic competitiveness through innovation, collaboration, and fair trade practices.

Back to Basics: Understanding Trade Protectionism & Free Trade

To fully grasp the implications of Beggar-Thy-Neighbor Policies, it is essential to understand the fundamental concepts of trade protectionism and free trade.

What is Trade Protectionism?

Trade protectionism refers to government policies that restrict imports and promote domestic industries. These measures aim to shield local businesses from foreign competition.

Key Protectionist Tools:

• Tariffs – Taxes on imported goods to make them more expensive.
• Quotas – Limits on the number of goods that can be imported.
• Subsidies – Financial aid to domestic industries to make them competitive.
• Currency Devaluation – Weakening the national currency to make exports cheaper.
• Import Restrictions – Banning or limiting the entry of specific foreign goods.

What is Free Trade?

Free trade promotes open markets and minimal government intervention, allowing goods and services to move freely across borders.

Key Free Trade Principles:

• Elimination of Tariffs & Barriers – Reducing restrictions on imports and exports.
• Competitive Market Forces – Letting market demand and supply determine prices.
• Encouragement of Global Trade Agreements – Supporting WTO, G20, and regional trade pacts.

Protectionism vs. Free Trade

NOTE4STUDENTS:

India and the European Union (EU) are strengthening ties as Poland assumes the EU Presidency in 2025. UPSC often asks questions from such topics in two ways: direct factual questions in Prelims and analytical ones in Mains. For Prelims, questions may focus on agreements, historical milestones, and policy initiatives. Mains questions usually demand an understanding of India’s foreign policy approach, economic diplomacy, and strategic interests. Many students struggle to connect current affairs with broader themes, leading to superficial answers. They often memorize facts without grasping their relevance, making it difficult to structure well-rounded answers. This article addresses these gaps by breaking down complex negotiations, historical phases, and critical challenges in India-EU relations. It links trade, technology, and strategic autonomy with India’s global positioning, helping readers develop a deeper analytical perspective. The section on “Pain Points in India-EU FTA” is particularly useful, as it simplifies the contentious issues in trade negotiations, making it easier to recall and use in answers. A standout feature of this article is its structured approach. The timeline of India-EU relations, key challenges, and proposed solutions provide a ready-made framework for exam answers. By understanding these insights, students can enhance their ability to write balanced, well-supported answers in UPSC Mains and tackle tricky Prelims questions with confidence.

PYQ ANCHORING & MICROTHEMES

1. GS 2: ‘The expansion and strengthening of NATO and a stronger US-Europe strategic partnership works well in India.’ What is your opinion about this statement? Give reasons and examples to support your answer. [2023]

Microthemes: Geopolitics affecting India’s interests

Poland, assuming EU Presidency in 2025, prioritises enhancing European security and deepening ties with India, a key partner in global stability. EU-India relations will strengthen through a new strategic agenda, culminating in a summit. The ongoing “FTA 2.0” negotiations aim for a mutually beneficial, balanced trade agreement. Further, India has unveiled a 6-point plan aimed at fostering a stronger economic partnership with the European Union (EU). 

The Six Broad Principles

• Focus on common values of democracy, rule of law and independent judiciary. 
• Build a commercially meaningful, fair and equitable trade agenda, addressing trade barriers. 
• Exchange best practices and harmonizing standards to achieve zero defect and zero effect production capability. 
• Develop cutting edge technologies, secure critical raw material supply chains and build resilient supply chain. 
• Cooperation in trade and sustainable development conforming to Common But Differentiated Responsibility. 
• Partnership in mutual growth and development.

FTA 2.O

TA 2.0″ refers to a new phase of negotiations between India and the European Union for a Free Trade Agreement. This term indicates a revised and more ambitious approach compared to past talks, which failed after prolonged discussions. The “2.0” version aims to be more balanced, equitable, and mutually beneficial, addressing both global and regional trade challenges with a focus on creating a commercially significant agreement that benefits both parties.

PHASES OF INDIA-EU RELATIONS

PAINPOINTS: INDIA-EU FTA ??

CHALLENGES IN INDIA-EU RELATIONS

NEED FOR STRONG INDIA-EU RELATIONS

1. Countering Authoritarianism: India and the EU, both democracies, face pressure from authoritarian regimes like China (for India) and Russia (for the EU). Strengthening ties would help create a united front defending democratic values and countering autocratic expansionism.
2. Economic Growth: An FTA between India and the EU would boost trade and investment. With the EU as the largest economic bloc and India projected to be the third-largest economy by 2030, they offer mutual benefits such as market access, tech exchange, and alternative supply chains to reduce dependency on China.
3. Technological Collaboration: India’s tech innovation and the EU’s R&D capabilities can drive initiatives in AI, quantum computing, biotech, and space, countering China’s dominance. The EU-India Trade and Technology Council (TTC) can align strategies on emerging technologies, boosting cybersecurity, green tech, and clean energy. India’s sunrise sectors can also revive manufacturing in Europe, benefiting both.
4. Environmental Action: India and the EU can lead global climate action with initiatives on clean energy, carbon reduction, and sustainable development, utilizing India’s renewable potential and the EU’s environmental leadership. Joint investments in green technologies like solar power, electric vehicles, and sustainable agriculture can contribute to global sustainability.

WAY FORWARD

1. Unity Against Authoritarianism: India, Europe, and the US can unite to combat rising authoritarianism, using platforms like Democracy Summits to address global challenges.
2. Leveraging the TTC: The EU-India Trade and Technology Council (TTC) offers an opportunity to align technology goals and foster innovation in key sectors, similar to the US-India initiative on emerging technologies.
3. Strategic Economic Partnership: Beyond an FTA, India and the EU can explore joint ventures in sectors like pharmaceuticals, technology, renewable energy, and critical raw materials.
4. Trade Agreements: The EU could sign an agreement with India similar to the India-EFTA Trade and Economic Partnership Agreement (TEPA) to promote free trade and economic integration.
5. Defense Cooperation: India’s defense partnerships with the US, Russia, and the Quad can be complemented by EU investment in India’s defense sector and advanced technologies for regional security.

#BACK2BASICS: INDIA’S ECONOMIC DIPLOMACY ELEMENTS

CHALLENGES IN INDIAN ECONOMIC DIPLOMACY

The India Meteorological Department (IMD) has warned of another year of extreme heat and above-normal heatwaves. This comes as Delhi recorded its hottest February in 74 years and Mumbai faced two heatwaves even before mid-March.

Heatwaves in India are becoming more severe and frequent, posing serious health risks. IMD predicts a rise in maximum temperatures and more heatwaves in eastern and southern India in the coming days. India must stay prepared to handle these recurring heatwaves.

About Heatwaves

Heatwaves- Heat waves are prolonged periods of excessively hot weather that can cause adverse impacts on human health, the environment, and the economy.

Definition of Heatwave- In India IMD defines heatwave based on the following criteria.

Physiography of regions

• Plain– The maximum temperature recorded at a station is 40 degrees Celsius or more.
• Coast- The maximum temperature recorded at a station is 37 degrees Celsius or more.
• Hills- The maximum temperature recorded at a station is 30 degrees Celsius or more.

Based on Departure from Normal Temperature

• Heat Wave- Departure from normal is 4.5°C to 6.4°C
• Severe Heat Wave- Departure from normal is >6.4°C

Based on Actual Maximum Temperature

• Heat Wave- When actual maximum temperature ≥ 45°C 
• Severe Heat Wave- When actual maximum temperature ≥47°C 

(*Heat Wave is declared if above criteria are met in at least 2 stations in a Meteorological subdivision for at least two consecutive days.)

Status of Heatwaves in India

India has been affected by the Heatwaves since a long time. However, during the last few decades, due to increased instances of climate change, the impact of heat waves has also enhanced quite significantly.

1. States like Rajasthan, Gujarat, Uttar Pradesh, Delhi, Haryana, Punjab, Madhya Pradesh have been affected the most by the Heatwaves.
2. According to IMD, between 1981 and 1990 there were 413 heatwave days in India. However, the heatwave days have increased to 600 days between 2011 and 2020.
3. The number of deaths from heat-related causes increased from 5,457 between 1981 and 1990 to 11,555 between 2011 and 2020.

Causes of heatwaves in India

Heatwaves in India are driven by a mix of natural and human-induced factors. Let’s break them down in simple terms:

Natural Causes:

1. Trapped Hot Air – Sometimes, a high-pressure system stalls over a region, acting like a lid that traps hot air near the surface. With no airflow to disperse the heat, the temperature keeps rising. (Example: The 2015 heatwave in Telangana and Andhra Pradesh, which killed over 2,000 people, was worsened by a stalled high-pressure system.)
2. El Niño & Climate Variability – Events like El Niño disrupt weather patterns, making some areas drier and hotter than usual. (Example: In 2019, an El Niño event led to higher-than-normal temperatures across India, worsening heatwaves.)
3. Drought & Dry Land – When there’s little rain, the soil loses moisture, making it easier for the land to heat up. Dry land absorbs and retains heat more than moist soil. (Example: Rajasthan and Gujarat often face severe heatwaves due to prolonged dry spells.)
4. Hot Winds & Shifting Patterns – Winds can carry hot air from one place to another, worsening heat conditions in areas that aren’t usually this hot. (Example: In North India, hot ‘Loo’ winds from the Thar Desert increase summer temperatures dramatically.)
5. Geography Matters – Some areas are naturally prone to heatwaves due to their location. Landlocked valleys and cities surrounded by mountains trap heat, making the temperatures rise even more. (Example: Delhi’s location between the Thar Desert and the Himalayas makes it prone to extreme heat.)

Human-Induced Causes:

1. Climate Change & Global Warming – Human activities like burning fossil fuels, deforestation, and industrial pollution have increased global temperatures, making heatwaves more frequent and severe. (Example: In the last century, India’s average temperature has risen by nearly 0.7°C, making summers hotter.)
2. Urban Heat Island Effect – Cities filled with concrete buildings, asphalt roads, and fewer trees absorb and retain heat, making them much hotter than surrounding rural areas. (Example: Mumbai and Delhi often experience temperatures 3-5°C higher than nearby villages due to the urban heat island effect.)
3. Deforestation & Loss of Green Cover – Trees and forests naturally cool the environment by providing shade and releasing moisture into the air. Large-scale deforestation for agriculture, urban expansion, and infrastructure projects has reduced this cooling effect, making temperatures rise.
   Example: The loss of forests in Chhattisgarh and Jharkhand for mining has led to rising local temperatures and more frequent heatwaves.
4. Air Pollution & Heat-Trapping Gases – Industrial emissions, vehicle exhaust, and burning crop residues release greenhouse gases and pollutants that trap heat in the atmosphere, worsening global warming.
   Example: The thick smog over Delhi in summer doesn’t just cause breathing issues—it also contributes to trapping heat, making heatwaves last longer.
5. Overuse of Air Conditioners & Cooling Systems – Ironically, while ACs cool indoor spaces, they release heat into the outside environment, increasing temperatures in cities. The more people use cooling systems, the hotter it gets outside.
   Example: Cities like Hyderabad and Bengaluru, once known for their moderate climate, now experience hotter summers due to increased AC usage and rapid urbanization.

In short, while natural weather patterns do play a role, human activities have made heatwaves worse and more common. Addressing climate change and improving urban planning are key to reducing their impact.

Impact of heatwaves in India

1. Danger to Human Health – When temperatures rise too fast, our bodies struggle to cool down, leading to heat cramps, exhaustion, heatstroke, and even fatal conditions like hyperthermia. The elderly, children, and outdoor workers are the most vulnerable.
   Example: In 2023, India recorded over 200 deaths due to heatstroke, especially in states like Uttar Pradesh and Bihar.
2. Strain on Electricity & Power Supply – As people crank up their air conditioners and fans, electricity demand surges, often pushing power grids to the brink of collapse, causing blackouts.
   Example: During Delhi’s extreme heatwaves, power cuts leave people struggling without cooling, worsening the crisis.
3. Economic Losses & Reduced Productivity – Heatwaves slow down work, especially in outdoor jobs like farming, construction, and factory work. Workers lose energy faster, and businesses see a drop in efficiency.
   Example: A study by the International Labour Organization (ILO) found that at 34°C, workers lose up to 50% of their work capacity, leading to massive economic losses.
4. Water Shortages & Conflicts – Extreme heat causes rivers, lakes, and reservoirs to dry up, worsening India’s already severe water crisis. This often leads to disputes between states over water-sharing.
   Example: The Cauvery Water Dispute between Karnataka and Tamil Nadu intensifies during heatwaves due to reduced river flow.
5. Threat to Food Security – Higher temperatures increase the risk of droughts, making it harder for crops to grow. Farmers need more irrigation water, which further strains water resources. This results in lower yields and rising food prices.
   Example: In 2022, wheat production in North India dropped significantly due to an unexpected heatwave, driving up wheat prices nationwide.

HEATWAVE MANAGEMENT STRATEGY IN INDIA

Way forward: Mitigation measures that can be taken 

• Providing cool shelters: Similar to cyclone and disaster relief centres, public cooling centres can be built where people can go to cool off during extreme heat.
  • The concept has been explored in Barcelona, Paris and Rotterdam among others. 
• Improving the built environment: By making them more heat-resilient through the incorporation of better insulation and ventilation systems in buildings, planting more trees etc.
• Utilising indigenous knowledge: Usage of indigenous protective methods against heat waves and strokes must be tapped, documented, and researched.
• Inclusion of regulative provisions: For example, making it mandatory for components like passive ventilation and cool roof technologies in the Building bylaws to increase thermal comfort.
• Capacity building for health care professionals: at the local level to recognize and respond to heat-related illnesses.

#BACK2BASICS : 

OTHER DECLARATIONS BY IMD: 

• Marine Heatwaves (MHW): It is defined when seawater temperatures exceed a seasonally-varying threshold (usually the 90th percentile) for at least 5 consecutive days.
  • MHWs have increased by up to four-fold in the tropical Indian Ocean, aided by rapid warming in the Indian Ocean and strong El Niños.
• A warm night: It’s declared only when the maximum temperature remains 40°C or more. It is defined based on departures of actual minimum temperatures as follows:
  • Warm night: minimum temperature departure is 4.5°C to 6.4°C
  • Very warm night: minimum temperature departure is >6.4°C.
• Hot and Humid Weather: When observed maximum temperatures over any station remains 3°C above normal along with the above normal relative humidity, it is termed as Hot & Humid Weather over that station.

NDMA GUIDELINES ON HEATWAVES

• Avoid going out in the sun, especially between 12.00 noon and 3.00 p.m.
• Drink sufficient water as often as possible.
• Wear lightweight, light-coloured, loose, and porous cotton clothes. Use protective goggles, an umbrella/hat, shoes or chappals while going out in sun.
• Avoid alcohol, tea, coffee and carbonated soft drinks, which dehydrate the body.
• Avoid high-protein food and do not eat stale food.
• Use ORS, homemade drinks like lassi, torani (rice water), lemon water, buttermilk, etc. which helps to rehydrate the body.
• Keep animals in the shade and give them plenty of water to drink.
• Keep your home cool, use curtains, shutters or sunshade and open windows at night.
• Use fans, damp clothing and take bath in cold water frequently.

Heat Action Plan

• A Heat Action Plan (HAP) is a comprehensive strategy developed by governments or organisations to mitigate the health risks associated with extreme heat events.
  • It includes measures to protect vulnerable populations, provide information and resources, and coordinate responses during heatwaves.
• They outline short-term measures, including alerts and inter-departmental coordination, to reduce human casualties. HAPs entail long-term strategies like infrastructure upgrades such as cool roofs and enhanced greenery to prepare for future heat waves based on data analysis.
• Odisha first developed a Heat Action Plan in 1999 following more than 2,000 Heat Wave deaths in 1998. Following this, the first city-level Action Plan was developed by Ahmedabad in 2013 following the severe Heat Wave in 2010.
• The NDMA and IMD are working with 23 States to develop HAPs. There is no centralised database on HAPs, but at least 23 HAPs exist at the State and city level, with a few States, such as Odisha and Maharashtra, laying out district-level HAPs.