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GS Paper: GS3-12.Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth

  • Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme

    Why in the News?

    The Government has extended the Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme until March 31, 2026, providing relief and policy certainty to exporters.

    About the RoDTEP Scheme:

    • Launch & Context: Introduced on 1 January 2021 under the Foreign Trade Policy 2015–20, replacing the Merchandise Exports from India Scheme (MEIS) after India lost a case at the World Trade Organisation (WTO).
    • Administration: Managed by the Department of Revenue, Ministry of Finance, and implemented via the Central Board of Indirect Taxes and Customs (CBIC).
    • Objective: Refund hidden domestic taxes/duties on exports to ensure goods leave the country free of embedded levies, enhancing competitiveness and ensuring WTO compliance.
    • Coverage: Applicable to all Indian exporters (manufacturers and merchants) including SEZs, Export Oriented Units (EOUs), Advance Authorisation (AA) holders, and Domestic Tariff Area (DTA) units.
    • Timeline: Initially valid till 5 February 2025, restored in May 2025 for AA, EOU, and SEZ exports after industry lobbying, and now extended till 31 March 2026.

    Key Features:

    • Hidden Taxes Covered: Refunds duties such as electricity duty, mandi tax, fuel charges in transport, and local cesses.
    • Rebate Mechanism: Calculated as a percentage of the Free on Board (FOB) value of exports.
    • Refund Mode: Benefits disbursed as electronic scrips (e-scrips), stored in CBIC’s digital ledger.
    • Use of E-Scrips: Can be utilised to pay basic customs duty or transferred to other importers.
    • Sectoral Priority: Focus on labour-intensive industries like textiles, handicrafts, leather, etc.
    • Exclusion: Re-exported goods are not eligible under RoDTEP.
    • Budgetary Control: Operates strictly within annual budget allocations, as clarified by DGFT.
    • Policy Certainty: Extension till 2026 ensures stability for exporters facing global trade headwinds.
    [UPSC 2020] With reference to the international trade of India at present, which of the following statements is/are correct?

    1.  India’s merchandise exports are less than its merchandise imports.

    2. India’s imports of iron and steel, chemicals, fertilizers and machinery have decreased in recent years.

    3. India’s exports of services are more than its imports of services.

    4. India suffers from an overall trade/current account deficit.

    Select the correct answer using the code given below:

    Options: (a) 1 and 2 only  (b) 2 and 4 only (c) 3 only (d) 1, 3 and 4 only*

     

  • [27th September 2025] The Hindu Op-ed: Incentives for shipbuilding must include longterm offtake possibilities

    PYQ Relevance:

    [UPSC 2013] Adoption of PPP model for infrastructure development of the country has not been free from criticism. Critically discuss the pros and cons of the PPP model.

    Linkage: India’s shipbuilding revival package too hinges on state support plus private shipowner participation, much like PPP projects, where delays, cost overruns, and weak ancillary ecosystems mirror the criticisms of PPP in other infrastructure sectors. Thus, the editorial’s concerns on viability and long-term offtake directly resonate with PPP model challenges.

    [UPSC 2022] What are the maritime security challenges in India? Discuss the organisational, technical and procedural initiatives taken to improve the maritime security.

    Linkage: Strengthening indigenous shipbuilding directly supports maritime security, as a larger and modern merchant fleet reduces reliance on foreign vessels, ensures secure energy transport, and complements India’s naval and coastal defence preparedness.

    Mentor’s Comment

    The Government’s announcement of a ₹69,725 crore package to revive India’s shipbuilding ecosystem marks a crucial moment for maritime infrastructure. With India building only a handful of merchant ships in the last decade despite global growth, the new push signals both opportunity and urgency. The challenge lies in transforming policy incentives into real competitiveness, something India failed to do under the 2015 package.

    Introduction

    India aspires to emerge as a global maritime power, but its shipbuilding sector has lagged far behind peers like China, Japan, and South Korea. While lucrative defence contracts have kept select shipyards active, India’s merchant ship production remains negligible. The new package seeks to expand capacity to 4.5 million gross tonnage, modernise yards, and create ancillary clusters. However, unless structural inefficiencies are addressed, ranging from delays in turnaround to absence of long-term offtake, the initiative risks becoming another missed opportunity.

    Why in the News

    The government has announced a massive ₹69,725 crore revival package to replace the expiring 2015 shipbuilding scheme. This is significant because, despite subsidies earlier, India produced only about half-a-dozen merchant ships in 10 years, a glaring failure when global yards deliver ships in just a year. The new plan aims to overcome these bottlenecks by upgrading infrastructure, ancillaries, and financing structures. The contrast between global efficiency (3–4 months keel to launch) and India’s 2–3 years turnaround highlights the magnitude of the problem.

    The Scale of the Problem

    1. Negligible merchant shipbuilding: Only half-a-dozen small ships built in the last decade.
    2. Long delays: Turnaround time of 2–3 years in India vs 1 year globally.
    3. Lack of competitiveness: Shipowners avoid Indian yards due to sunk capital and overruns.

    Global Best Practices in Shipbuilding

    1. Korea, Japan, China lead: Prefabricated component blocks welded in large assembly-line yards.
    2. High-capacity cranes: 1,000-tonne cranes enable block movement in foreign shipyards.
    3. Speed & efficiency: Keel-to-waterborne in 3–4 months; full build in about 1 year.

    India’s Bottlenecks

    1. Inadequate infrastructure: Indian yards too small, lack crane capacity and prefab space.
    2. Weak ancillary ecosystem: Absence of robust component manufacturing clusters.
    3. Finance limitations: Benefits of lower interest rates & extended repayment apply only to large vessels.

    Missed Opportunities in Policy Integration

    1. Green fuel projects: Kakinada & Kochi developing production for exports but no linkage with green shipbuilding.
    2. Lack of long-term offtake: Shipowners lack demand visibility; without assured contracts, newbuild investments stall.

    The Way Forward

    1. Cluster-based development: Establish ancillary industries around shipyards for supply chains.
    2. Capacity building: Training institutions on lines of China to create skilled manpower.
    3. Policy synergy: Link green shipping contracts with renewable fuel policies.
    4. Long-term contracts: Use State-owned utilities and oil companies’ chartering needs to guarantee orders.

    Conclusion

    India stands at a decisive moment. A robust maritime ecosystem can secure energy lifelines, generate employment, and project India’s presence as a global power. The ₹69,725 crore package is promising, but unless structural inefficiencies, ancillary gaps, and demand visibility issues are resolved, it risks going the way of the failed 2015 policy. Success lies not merely in incentives but in creating a seamless ecosystem of infrastructure, skills, finance, and guaranteed demand.

    Value Addition

    Data Points and Targets

    1. ₹69,725 crore package: A substantial commitment that signals government seriousness.
    2. Capacity goal: 4.5 million gross tonnage: Puts India on a higher trajectory, though still far below shipbuilding giants like China and South Korea.
    3. Current state: Only half-a-dozen merchant ships built in 10 years, showcasing India’s negligible share in global shipbuilding.

    Policy Continuity and Course Correction

    1. 2015 Shipbuilding Financial Assistance Policy: Provided subsidies and financing incentives but failed to attract private shipowners due to delays and lack of ancillary ecosystem.
    2. 2025 Package: Designed as a replacement, expiring in March 2026 → reflects a policy learning curve and government recognition that capital subsidy alone cannot solve systemic inefficiencies.

    Comparative Insights

    Global benchmarks:

    1. Korea/Japan/China → Keel-to-waterborne in 3–4 months; full build in 1 year.
    2. India → 2–3 years, meaning two additional years of sunk capital for shipowners.
    3. Infrastructure gap: Foreign yards use 1,000-tonne cranes and prefab assembly lines, while Indian yards lack such capacities.

    Linkage with Atmanirbhar Bharat & Make in India

    1. Strategic autonomy: India relies heavily on foreign-built merchant fleets; indigenous shipbuilding aligns with Atmanirbhar Bharat.
    2. Employment multiplier: Shipbuilding is a labour-intensive sector with downstream benefits in steel, electronics, design, and logistics.
    3. Ancillary clusters: Policy push for ecosystem development resonates with the cluster-based growth approach seen in auto and pharma sectors.

    Strategic and Security Relevance

    1. Energy lifelines: India’s crude oil and coal imports (~80% and ~45% dependence respectively) require long-term fleet security.
    2. Green transition: Linkage of shipbuilding with India’s green hydrogen/ammonia exports (Kakinada, Kochi projects) can make India a global hub for green shipping.
    3. Maritime security: A stronger indigenous merchant fleet reduces vulnerability to global freight disruptions and strengthens India’s position in the Indo-Pacific.

    Broader Economic Linkages

    1. Financing ecosystem: Recognising shipbuilding as “infrastructure” lowers cost of credit → aligns with long-term financing reforms.
    2. Trade competitiveness: Owning merchant ships reduces foreign exchange outflow in charter hire and freight payments.
    3. Technology upgradation: Push towards prefab block construction → spinoffs for other infrastructure and defence industries.

  • India at the Crossroads: Navigating WTO Pressures After China’s SDT Exit

    Introduction

    The World Trade Organisation (WTO) has long been a battleground where developing nations, including India and China, defended their need for lenient subsidy caps, longer compliance timelines, and tariff protections. China’s self-exit from Special and Differential Treatment (SDT) concessions, despite retaining its developing country tag, signals a dramatic shift in the global trade order. For India, which has depended on SDT since its 1995 WTO accession, this development comes amid escalating US trade pressures, Trump-era tariff wars, and growing criticism of India’s subsidy regimes. The question is not only about trade but about food security, farmer livelihoods, and future economic strategy.

    Why is this development significant?

    1. First-time shift: China, the world’s second-largest economy, has for the first time announced it will not seek SDT despite being classified as a developing country.
    2. Sharp contrast: Since 1995, SDT flexibilities have been central to India’s WTO negotiations; China’s withdrawal isolates India’s position.
    3. Big stakes: India subsidises around $50 billion annually to low-income farmers and channels over $40 billion into Minimum Support Price (MSP) schemes, directly impacting 1.4 billion people.
    4. Striking implications: If phased AMS (Aggregate Measurement of Support) cuts are enforced, subsidies may fall by 20–30% per decade, with a 10–15% rural income drop and worsening food insecurity.

    How has India historically benefited from SDT?

    1. Tariff flexibility: Allowed India to impose 100%+ tariffs on sensitive goods such as branded medicines, automobiles, and luxury goods.
    2. Agriculture support: Article 6.2 exemptions for low-income farmers and public distribution schemes like MSP ensured food and livelihood security.
    3. Special treatment: Shielded India from disputes, despite often breaching the 10% subsidy cap under AMS rules.
    4. Trade defence: Enabled India to resist developed country pressures, citing its developing nation status.

    What challenges does India face now?

    1. Coercive reduction: Phased AMS cuts threaten to undermine National Food Security Act (NFSA) provisions.
    2. Malnutrition risk: With 35% of children under five malnourished, subsidy rollback could worsen hunger and inequality
    3. Export vulnerability: Without SDT, India’s MSMEs and farmers face tougher competition in global markets.
    4. US/EU pushback: Developed nations already accuse India of trade distortion, citing examples like MSP and high farm subsidies.

    What options does India have?

    1. Recalibrate subsidies: Shift from price support to income support (direct cash transfers), reducing WTO disputes.
    2. Promote Green Box subsidies: Focus on R&D, extension services, and sustainability programs which are WTO-compliant.
    3. Negotiate transitional safeguards: Demand longer compliance windows to cushion the shift.
    4. Defend digital/data sovereignty: Push for data localisation rights and tiered tariff structures in new trade deals.

    What should India’s strategic plan look like?

    1. Phased tariff liberalisation: Gradually reduce non-essential SDT protections while safeguarding food security.
    2. Boost MSME competitiveness: Use the ONDC (Open Network for Digital Commerce) to integrate small businesses into global e-commerce.
    3. Intellectual property balance: Protect generic drug exports while resisting pressure for stronger IP regimes.
    4. Coalition building: Revive alliances like the G33 to collectively defend agricultural and food security concerns.
    5. Domestic reforms: Enhance farm productivity and diversify exports to reduce dependence on SDT shield.

    Conclusion

    China’s withdrawal from SDT marks a turning point in global trade politics. India now faces mounting pressure to reform its subsidy structure, align with WTO disciplines, and balance food security with competitiveness. The way forward lies not in clinging to outdated protections but in crafting innovative, WTO-compliant support systems that secure farmer welfare while projecting India as a responsible global player. Strategic coalition-building, calibrated reforms, and smart diplomacy will decide whether India emerges weakened or empowered in the new trade order.

    PYQ Relevance

    [UPSC 2018] 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?

    Linkage: China stepping back from SDT intensifies calls for WTO reforms in subsidy rules, dispute settlement, and fair treatment of developing nations, directly testing India’s ability to safeguard food security and farmer support while pushing for a more equitable trade order.

    Value Addition

    WTO Agreement on Agriculture (AoA) – Article 6.2 Exemptions

    • Provision: Allows developing countries to provide investment subsidies and input subsidies to low-income or resource-poor farmers without it being counted under the AMS cap.
    • India’s Use: India justifies its fertilizer, electricity, and irrigation subsidies under this clause to protect small farmers who form nearly 85% of the farming community.
    • Relevance: Central to defending India’s MSP and food security programs in global negotiations.

    Aggregate Measurement of Support (AMS)

    • Definition: WTO’s metric for calculating trade-distorting farm subsidies (amber box), capped at 10% of the value of production for developing countries.
    • India’s Issue: With large MSP and food procurement under NFSA, India is often accused of breaching this cap. Example – Rice subsidies have repeatedly attracted scrutiny in WTO disputes.
    • Relevance: Reform of AMS rules is India’s key demand in WTO negotiations, arguing current methodology undervalues developing nations’ needs.

    Green Box vs Amber Box Subsidies

    • Amber Box: Trade-distorting subsidies (e.g., MSP, procurement at administered prices).
    • Green Box: Non-trade distorting subsidies like agricultural R&D, extension services, crop insurance, and environmental protection.
    • India’s Position: Heavy reliance on amber box through MSP and PDS; however, India is now trying to expand its green box spending on crop diversification, climate-resilient agriculture, and digital extension services.
    • Relevance: Diversifying support to green box can shield India from WTO disputes while modernising agriculture.

    G33 Coalition

    • About: A group of 47 developing countries led by India, China, and Indonesia, advocating flexibility in agriculture negotiations.
    • India’s Role: Spearheads demands for a ‘Special Safeguard Mechanism’ (SSM) and permanent solution for public stockholding (PSH) of food grains.
    • Relevance: Strengthens India’s negotiating leverage by projecting its subsidy and food stockholding as a collective developing-world concern, not just a national exception.

    National Food Security Act (2013) (NFSA)

    • Provision: Legally entitles 75% of rural and 50% of urban population to subsidised food grains through PDS.
    • Conflict with WTO: Heavy procurement at MSP and distribution under NFSA is seen as trade-distorting. Critics argue this exceeds the 10% AMS cap.
    • Relevance: WTO restrictions on subsidies could directly affect India’s food security safety net covering over 800 million people.

    ONDC (Open Network for Digital Commerce)

    • Concept: A government-backed initiative to democratise e-commerce by creating an open-source, interoperable digital network for buyers and sellers.
    • Trade Defence: Seen as India’s strategic response to global e-commerce giants (Amazon, Walmart-Flipkart), ensuring fair competition for MSMEs.
    • Relevance: In WTO’s ongoing e-commerce negotiations, ONDC is a shield for India to resist pressure for blanket liberalisation of digital trade and data flows, while protecting domestic digital sovereignty.

  • Centre to simplify Quality Control Order (QCO) framework

    Why in the News?

    A NITI Aayog panel has proposed easing India’s Quality Control Orders (QCOs) by simplifying certification, assessments, and inspections to support MSMEs amid domestic and global criticism.

    About Quality Control Orders (QCOs):

    • Overview: Issued under the Bureau of Indian Standards (BIS) Act, 2016, QCOs make Indian Standards compulsory for specific products in public interest (health, environment, security, fair trade).
    • Voluntary vs. Mandatory: Normally BIS certification is voluntary, but under QCOs manufacturers/importers must obtain a BIS licence or Certificate of Conformity before production, imports, or sales.
    • Standard Mark: Products under QCOs carry the ISI mark (or Hallmark for jewellery) to indicate conformity.
    • Legal Backing: Governed by BIS (Conformity Assessment) Regulations, 2018; violation punishable with fines or imprisonment.
    • Imports: Applies equally to foreign manufacturers via the Foreign Manufacturers Certification Scheme (FMCS).
    • Coverage: Of ~23,000 BIS standards, only 187 QCOs covering 770 products exist; 84 QCOs covering 343 products issued in the last three years.
    • Example: QCOs for compressors & ACs (2023) boosted compressor output from <2 million (2021–22) to 8 million (2023–24); ACs to 12 million+ units.

    Challenges Related to QCOs:

    • High Costs: Certification involves inspections, documents, and assessments—burdening MSMEs.
    • Non-Tariff Barrier Issues: US, EU, UK, NZ claim India’s QCOs exceed global norms. USTR (2025) flagged BIS marks even for chemicals, requiring site visits.
    • Industry Pushback: MSMEs fear inflationary costs; imports of cheaper raw materials/components restricted.
    • Limited Enforcement: Only 187 of 23,000 standards notified, mainly steel, electronics, chemicals.
    • Implementation Delays: Licence approvals slow; procedures disrupt production and supply chains.
    • Conflicting Views: Some MSMEs benefit (e.g., Birla Aircon turnover jumped ₹7 crore to ₹42 crore after QCO on water coolers), others call it “malign intervention” (NITI Aayog VC Suman Berry).

    Steps Taken by Government:

    • Digitisation: Simplified certification covering 750+ products; licences granted in 30 days.
    • MSME Outreach:
      • Jan Sunwai: Online open-house thrice weekly.
      • Manak Manthan: BIS field initiative for MSME support.
      • Regional Conferences: Led by Department of Consumer Affairs to resolve issues.
    • Capacity Building: Of 50,753 BIS certifications, ~40,000 (≈80%) issued to MSMEs; 24,625 voluntarily obtained for credibility/exports.
    • Trade Readiness: Govt projects QCOs as tools to raise quality and global competitiveness.
    • WTO Consistency: Justified if linked to health, safety, environment, deceptive trade, or security, in line with WTO Technical Barriers to Trade (TBT) Agreement.
    [UPSC 2017] With reference to `Quality Council of India (QCI)’, consider the following statements:

    1. QCI was set up jointly by the Government of India and the Indian Industry.

    2. Chairman of QCI is appointed by the Prime Minister on the recommendations of the industry to the Government.

    Which of the above statements is/are correct?

    Options: (a) 1 only (b) 2 only (c) Both 1 and 2* (d) Neither 1 nor 2

     

  • What is PM MITRA Park?

    Why in the News?

    Prime Minister recently laid the foundation stone for India’s first PM MITRA (Mega Integrated Textile Region and Apparel) Park in Dhar, Madhya Pradesh.

    About PM MITRA Scheme:

    • Overview: Introduced by the Ministry of Textiles in 2021, the scheme aims to strengthen India’s textile sector by creating 7 world-class integrated parks.
    • Concept: Designed on the vision “Farm to Fibre to Factory to Fashion to Foreign”, each park consolidates the entire textile value chain—spinning, weaving, dyeing, processing, printing, and garment-making—within a single ecosystem.
    • Sites Selected: Tamil Nadu (Virudhunagar), Telangana, Karnataka, Maharashtra, Gujarat, Madhya Pradesh (Dhar), and Uttar Pradesh (Lucknow).
    • Timeline: All parks are targeted to be established by 2026–27, with each covering around 1,000+ acres.
    • Implementation Structure:
      • Special Purpose Vehicle (SPV): Each park will be developed by an SPV jointly owned by the Centre and State Governments, operating in Public–Private Partnership (PPP) mode.
      • Development Capital Support (DCS): Up to ₹500 crore per park provided by the Centre to SPVs.
      • Competitive Incentive Support (CIS): Up to ₹300 crore per park offered to manufacturing units to encourage rapid implementation.

    Key Features and Benefits:

    • Integrated Value Chain: All stages of textile production are located in one hub, reducing transport costs, delays, and inefficiencies.
    • World-Class Infrastructure: Includes incubation centres, design/testing labs, effluent treatment plants, reliable utilities, logistics facilities, and worker hostels.
    • Employment Generation: Each park expected to create ~1 lakh direct and ~2 lakh indirect jobs, especially benefiting women and rural youth.
    • Investment Boost: Scheme aims to attract over ₹70,000 crore in investments in the textile sector.

  • PLI Scheme for White Goods

    Why in the News?

    The Centre has announced reopening of the application window for the Production-Linked Incentive (PLI) Scheme for White Goods, following the strong response and success of earlier rounds.

    Note: White goods refer to large household appliances like refrigerators, washing machines, and air conditioners, so named because they were traditionally white.

    About the PLI Scheme for White Goods:

    • Objective: To create a complete component ecosystem for ACs and LED lights, integrating India into global supply chains and boosting domestic manufacturing.
    • Approval: Cleared by the Union Cabinet in April 2021; implemented by the Department for Promotion of Industry and Internal Trade (DPIIT).
    • Duration: Implemented over seven years (FY 2021–22 to FY 2028–29) with a total outlay of ₹6,238 crore.
    • Incentives: Provides 4–6% incentive on incremental turnover (over base year 2019–20) for both domestic sales and exports, applicable for five years to eligible companies.
    • Eligibility:
      • Applicant must be a company incorporated under the Companies Act, 2013.
      • Eligibility depends on achieving threshold levels of incremental sales and investments.
      • Entities availing benefits under any other PLI scheme for the same products are not eligible.
    • Beneficiaries So Far: 83 companies with committed investment of ₹10,406 crore have been approved under the scheme, covering AC and LED components across the entire value chain.
    • Employment and Exports: Expected to create jobs, expand exports, and enhance self-reliance in components that were earlier imported.
    [UPSC 2023] Consider the following statements:

    Statement I: India accounts for 3.2% of global exports of goods.
    Statement II: Many local companies and some foreign companies operating in India have taken advantage of India’s ‘Production-linked Incentive’ scheme.
    Which one of the following is correct in respect of the above statements?
    (a) Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I
    (b) Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I
    (c) Statement-I is correct but Statement-II is incorrect
    (d) Statement-I is incorrect but Statement-II is correct *

     

  • [10th September 2025] The Hindu Op-ed: The long march ahead to technological independence

    PYQ Relevance

    [UPSC 2023] What is the status of digitalization in the Indian economy? Examine the problems faced in this regard and suggest improvement.

    Linkage: The article highlights that while India has rapidly digitalised its economy, dependence on foreign software, cloud, and hardware exposes vulnerabilities. This reflects the structural problems of inadequate indigenous technology and lack of sovereignty. Achieving technological independence through open-source and hardware self-reliance is a crucial improvement pathway.

    Mentor’s Comment

    On India’s 79th Independence Day, Professor P.J. Narayanan reminds us that freedom today is no longer defined by political borders alone, but by technological sovereignty. As cyber wars, AI dependency, and cloud vulnerabilities reshape geopolitics, India must undertake its own “long march” towards self-reliance in both software and hardware. This article critically explores the risks of dependence, the promise of open source, and the urgent need for collective will to achieve true independence.

    Introduction

    India’s hard-won political freedom was achieved through decades of struggle, but in the 21st century, sovereignty extends beyond flags and constitutions. Technology is now the true battlefield, with wars fought in cyberspace, economies run by software, and critical infrastructure dependent on a handful of global corporations. This dependence poses a strategic vulnerability. The call for technological independence, therefore, is not just a matter of pride but of survival and security.

    The renewed urgency of technological sovereignty

    India’s 79th Independence Day has highlighted a pressing reality: while politically independent, the nation remains technologically dependent on foreign companies that control critical digital infrastructure. With modern conflicts increasingly fought through cyberspace, and with real incidents of cloud service disruptions causing harm, the vulnerability is no longer hypothetical. For the first time, technology dependence is being discussed in terms of national sovereignty, marking a paradigm shift from past concerns that were limited to strategic sectors.

    The Geopolitical Risks of Technology Dependence

    1. Cyber wars: Modern conflicts are less about bombs and more about software, drones, and cyberattacks.
    2. Critical infrastructure: Banks, trains, and power grids are run on ICT largely controlled by a few foreign firms.
    3. National diktat risks: If cloud/AI services are switched off under pressure from foreign governments, India’s economy and security could face paralysis.
    4. Real precedent: A recent stoppage of cloud services to a company proved this is not a theoretical danger.

    Defining technological sovereignty in the Indian context

    1. Lack of foundational software: India has no indigenous operating system, database, or foundational software it can fully trust.
    2. Open-source pathway: Linux, Android, and Hadoop show that community-driven, transparent solutions are possible.
    3. Challenge of sustainability: Success requires long-term support, continuous updates, and a large user base.
    4. Role of IT professionals: India’s tech community must unite to develop, maintain, and secure indigenous systems.

    Hardware sovereignty as the bigger challenge

    1. Semiconductor fabs: Require massive, long-term investments and expertise in design, manufacturing, and supply chains.
    2. Strategic prioritisation: India should start with specific hardware components, chip design, and assembly even if fabrication remains outsourced.
    3. Global lessons: Countries like Taiwan and South Korea built expertise over decades through patient national strategies.

    Open-source solutions for technological independence

    1. Gift of society: Open-source is not about opposition, but about self-support and resilience.
    2. Current limitations: Even though Android, Linux, and Hadoop are open-source, control lies with centralised cloud companies.
    3. Social movement: Just as India’s freedom was driven by collective will, a people-led movement for open-source adoption is needed.
    4. Business viability: The model must go beyond government/private funds and become self-sustaining, with people explicitly paying for trusted software.

    Immediate steps towards technological sovereignty

    1. Assemble crack teams: Develop client-side tools (database, email, calendar) and server-side tools (cloud, web, email).
    2. Product model: Teams must function like professional product-development units, not academic research groups.
    3. Mission approach: A dedicated national mission should be set up for implementation, backed by strong engineers and project managers.
    4. Enabling role of government: Focus on building a self-sustaining ecosystem with business incentives and regulatory support.

    Conclusion

    The 20th century saw India march towards political freedom; the 21st century demands a march towards technological freedom. Dependence on foreign systems is a strategic vulnerability that could cripple the nation in times of crisis. With its talent pool, thriving IT ecosystem, and democratic will, India has both the capacity and urgency to achieve technological sovereignty. The call of the hour is collective resolve, sustained investment, and a mission-driven approach.

  • Jan Vishwas Bill 2.0

    Why in the News?

    • The Jan Vishwas (Amendment of Provisions) Bill, 2025 was introduced in the Lok Sabha to further the government’s agenda of decriminalisation and rationalisation of laws.
    • This is the second Jan Vishwas Bill; the first (2023) decriminalised 183 provisions in 42 Acts.

    About the Jan Vishwas Bill 2.0:

    • Introduced in Lok Sabha (August 2025) as the second Jan Vishwas reform.
    • Seeks to amend 16 Central Acts across 10 ministries/departments.
    • Builds on the Jan Vishwas Act, 2023, which decriminalised 183 provisions in 42 Acts.
    • Aims to promote trust-based governance, ease of living, and ease of doing business.
    • Currently referred to a Lok Sabha Select Committee for examination.

    Key Features of the Bill:

    • Scope: Proposes amendments to 355 provisions:
      • 288 decriminalised (technical/procedural defaults).
      • 67 rationalised (ease of living).
    • Acts covered: RBI Act (1934), Drugs & Cosmetics Act (1940), Motor Vehicles Act (1988), Electricity Act (2003), Legal Metrology Act (2009), MSME Development Act (2006), Apprentice Act (1961), and others.
    • First-time Offences: Introduces “warning” and “improvement notice” in 76 offences (e.g., non-standard weights, MVA violations).
    • Decriminalisation: Removes imprisonment clauses for minor defaults, replacing them with fines or warnings.
      • Example: Electricity Act → imprisonment replaced with fines between ₹10,000 and ₹10 lakh.
    • Penalty Rationalisation: Automatic 10% increase in penalties every 3 years for repeat offences.
    • Objective: Ensure deterrence without overburdening courts and without repeated legislative amendments.

    Why was the Bill brought in?

    • Over-criminalisation in Indian laws:
      • 882 central laws; 370 contain criminal provisions for 7,305 offences (Vidhi Centre).
      • Many are trivial or outdated (e.g., penalties for routine acts like exercising pets incorrectly).
    • Business barriers:
      • ORF (2022) → Over 50% of 1,536 business laws carry jail terms; 37.8% of 69,233 compliances carry imprisonment clauses.
      • Creates fear among entrepreneurs, stifling growth.
    • Judicial pendency:
      • 3.6 crore criminal cases pending in district courts (Aug 2025).
      • 2.3 crore are over 1 year old.
      • Minor offences clog the system, delaying trials of serious crimes.
    • Governance reform agenda:
      • Aligns with PM Modi’s commitment to remove “unnecessary laws” (reiterated in Independence Day 2025 speech).
      • Supports ease of living and ease of doing business as core NDA governance planks.
    [UPSC 2012] What is/are the recent policy initiative(s)of Government of India to promote the growth of the manufacturing sector?

    1. Setting up of National Investment and Manufacturing Zones

    2. Providing the benefit of ‘single window clearance’

    3. Establishing the Technology Acquisition and Development Fund

    Select the correct answer using the codes given below:

    Options: (a) 1 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3*

     

  • Minimum Public Shareholding (MPS)

    Why in the News?

    SEBI has released a consultation paper proposing changes in Minimum Public Shareholding (MPS) and Minimum Public Offer (MPO) norms for listed companies.

    What is Minimum Public Offer (MPO)?

    • Meaning: When a company launches an Initial Public Offer (IPO), it must sell a minimum number of shares to the public.
    • Analogy: Like a new shop ensuring enough goods are displayed for customers — otherwise trading is thin and controlled by a few.

    What is Minimum Public Shareholding (MPS)?

    • Concept: A company is like a cake. Promoters (founders/owners) usually keep most of it, but SEBI mandates at least 25% must be shared/sold with the public.
    • Purpose:
      • Broader ownership and participation.
      • Fairer prices by reducing manipulation.
      • Greater accountability of companies.

    What SEBI is proposing?

    • Flexibility: Large companies find it difficult to release big chunks of shares at once; rules will be eased.
    • Extended Timelines:
      • Companies valued at ₹50,000–1,00,000 crore now get up to 10 years (instead of 5) to meet 25% MPS.
      • They must reach 15% in 5 years first, then 25% in 10 years.
    • Reduced Burden: For very large companies, the initial Minimum Public Offer (MPO) will be lowered.

    Significance of the Move:

    • Market Stability: Selling too many shares too quickly is like flooding the market — prices may fall even if the company is strong.
    • Benefits:
      • More big companies will list in India.
      • Investors can enter gradually without sudden shocks.
      • Encourages fund-raising while maintaining fair trading.
    [UPSC 2024] Consider the following statements:

    I. India accounts for a very large portion of all equity option contracts traded globally, thus exhibiting a great boom.

    II. India’s stock market has grown rapidly in the recent past, even overtaking Hong Kong’s at some point in time.

    III. There is no regulatory body either to warn small investors about the risks of options trading or to act on unregistered financial advisors in this regard.

    Which of the statements given above are correct?”

    Options: (a) I and II only * (b) II and III only (c) I and III only (d) I, II and III

     

  • Balancing code and commerce in U.K. trade compact

    India–U.K. Comprehensive Economic and Trade Agreement (CETA), especially its Chapter 12 on Digital Trade, marks a shift from cautious digital policy to strategic global engagement. It brings major trade gains, but also sparks debate on data sovereignty and oversight. Chapter 12 of India–U.K. CETA exchanges some regulatory control for greater digital market access. Gains include mutual recognition of e-signatures, duty-free digital exports, and innovation-friendly provisions, while concerns focus on limited source-code checks and voluntary data sharing.

    Digital Gains from the Agreement

    1. Recognition of Electronic Signatures and Contracts: Both nations commit to mutual recognition, reducing paperwork for SaaS firms and lowering entry barriers for SMEs.
    2. Paperless Trade & E-Invoicing: Eases cross-border documentation and payments, enhancing trade efficiency.
    3. Zero Customs Duties on Electronic Transmissions: Preserves a Commerce Ministry–estimated $30 billion software export pipeline.
    4. Regulatory Sandboxes for Data Innovation: Encourages pilot projects that allow payments and data-driven firms to test tools under supervision, boosting credibility abroad.
    5. Duty-Free Access for Indian Merchandise: Nearly 99% of exports could enter the U.K. duty-free; textile tariffs dropping from 12% to zero will aid hubs like Tiruppur and Ludhiana.
    6. Openings in British Public Procurement: Expands market opportunities for Indian IT suppliers.
    7. Social Security Waivers: Reduces payroll costs for short-term assignments abroad by about 20%.

    Digital Costs and Concerns

    1. Source-Code Inspection Restrictions: Ban on routine checks; regulators can only demand access in investigations or court cases.
    2. Voluntary Government Data Sharing: No binding obligation; India decides what data to release, and in what format.
    3. No Automatic MFN for Data Flows: Only a forward review mechanism exists if stricter data rules appear in other agreements.
    4. Review Timelines: First formal review in 5 years; critics suggest 3-year reviews to match rapid AI developments.
    5. Domestic Readiness Gap: Digital Personal Data Protection Act, 2023 rules are pending notification; absence of clear internal processes could weaken negotiation leverage.

    Balancing Sovereignty and Openness

    1. Security Exceptions Preserved: National supervision over critical infrastructure like power grids and payment systems remains intact.
    2. Good Governance Safeguards: Prevents disguised restrictions on trade under the guise of regulation.
    3. Trusted Labs Proposal: Accrediting secure labs to review sensitive code could bridge the trust gap.
    4. Audit Trails for Cross-Border Data Flows: Ensures accountability follows the data.
    5. Institutionalised Consultations: Open, pre-negotiation dialogue to anticipate and address stakeholder concerns.

    Steps for Future Digital Treaties

    1. Integrate market openness with regulatory oversight
    2. Set three-year review cycles to adapt to technological change
    3. Develop domestic readiness before external commitments
    4. Maintain a balance between security and trade facilitation

    Conclusion

    The India–U.K. digital trade compact is both a leap and a litmus test. It affirms India’s readiness to engage strategically in global digital commerce while underscoring the necessity of robust domestic regulation. The real challenge is not in signing such pacts but in ensuring that sovereignty, security, and innovation move forward together.

    Value Addition

    Reports / Data

    1. Commerce Ministry (2024): India’s software exports via electronic transmissions valued at $30 billion annually.
    2. UNCTAD Report on Digital Economy (2023): India among top 5 global economies in digital services exports.
    3. NASSCOM 2023: Digital public infrastructure (UPI, Aadhaar, DigiLocker) key enablers of India’s digital leap.

    Case Studies / Examples

    1. UPI in G20 (2023): India pushing UPI internationalisation – similar to how digital trade pacts expand India’s reach.
    2. Singapore & Australia FTAs: Precedent for including digital trade rules, but U.K. CETA is India’s first binding digital chapter.
    3. Textile exports from Tiruppur/Ludhiana: Example of how tariff elimination + digital facilitation = trade gains.

    Concepts & Theories

    1. WTO-plus Agreements: Regional/bilateral pacts that go beyond WTO commitments (like CETA’s Chapter 12).
    2. Data Sovereignty vs Digital Openness: Core tension between national control over data and global free flows.
    3. Regulatory Sandboxes: Innovation-friendly regulatory spaces balancing innovation & oversight.

    Quotes for Enrichment

    1. Nandan Nilekani: “India has built digital public goods at population scale, something no other democracy has attempted.”
    2. UNCTAD: “The digital economy is now the fastest growing trade frontier, but also the most contested.”

    PYQ Relevance

    Though there is no direct PYQ, the digital trade compact can be used in many questions like

    [UPSC 2023] What is the status of digitalization in the Indian Economy? Examine the problems faced in this regard and suggest improvement.

    Linkage: The India–U.K. CETA’s digital trade provisions—like e-signatures, paperless trade, and zero customs duty—highlight India’s progress in integrating digitalization into global commerce. At the same time, issues like restricted source-code access, weak data protection readiness, and voluntary data sharing mirror the broader problems of digitalization in India. Thus, the pact underlines both India’s digital gains and the urgent need for domestic reforms and safeguards to fully leverage such agreements.

    Mapping Micro Themes

    1. GS-2: Trade diplomacy, sovereignty.
    2. GS-3: Digital trade, AI regulation, cybersecurity.
    3. GS-4: Transparency, public trust.