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

  • SEBI proposes sachetization of mutual funds to boost financial inclusion

    Why in the News?

    SEBI is collaborating with the mutual fund industry to find ways to make monthly SIPs of just Rs 250 possible, aiming to encourage more people from lower-income groups to invest in mutual funds.

    What is Sachetisation?

    • Sachetisation refers to offering products in small, affordable units, making them accessible to a broader consumer base, especially those in price-sensitive segments.
    • The term originated from the FMCG (Fast Moving Consumer Goods) sector, where products like shampoos were made available in small sachets at low prices to cater to low-income consumers.
    • SEBI is now proposing a similar approach for mutual funds, allowing small-ticket investments through SIPs (Systematic Investment Plans) with low monthly amounts (such as Rs 250).

    What are the significances of Sachetisation?

    • Affordable Financial Products: Just as small sachets of consumer goods made them accessible to lower-income groups, small-ticket SIPs in mutual funds can make investment opportunities available to a larger section of the population, particularly those who may not have the financial capacity to invest larger amounts.
    • Promoting Financial Empowerment: By lowering the entry barrier for mutual fund investments, sachetisation can help empower underserved communities and individuals by enabling them to participate in the growing financial markets and benefit from the potential returns.
    • Expanding Reach: This approach would encourage mutual fund companies to expand their reach to remote locations, helping them penetrate rural and low-income markets, and promote a wider culture of saving and investing.
    • Financial Inclusion for the Bottom of the Pyramid: The primary target of sachetisation in mutual funds is low-income groups that have limited access to traditional investment products. By offering small, regular investments, SEBI aims to promote financial inclusion at the grassroots level.

    How does it work?

    • SEBI has proposed introducing small ticket SIPs at Rs 250 per month, which would allow new investors from low-income groups to participate in mutual funds without the burden of higher minimum investment requirements. This contrasts with existing schemes that often require a minimum SIP of Rs 500 or more.
    • Investors can commit to a small ticket SIP for a duration of five years (60 installments), although they have the flexibility to withdraw or stop their investments without restrictions if needed. This structure encourages consistent investment while providing an exit option for investors.
    • To facilitate the success of small ticket SIPs, SEBI plans to implement discounted rates for intermediaries and reimburse certain costs from the Investor Education and Awareness Fund. This will help asset management companies (AMCs) break even more quickly on their investments in these small ticket offerings.
    • The sachetised SIPs will be available under specific mutual fund schemes, excluding high-risk options like small-cap and mid-cap equity schemes, which are deemed unsuitable for new investors from lower-income backgrounds. This targeted approach aims to safeguard these investors while still encouraging their entry into the market.
    • To further promote financial inclusion, SEBI proposes incentives for distributors who successfully guide investors through 24 instalments of the small ticket SIP, thereby enhancing participation and support for new investors in mutual funds.

    Conclusion: The strategy could result in a significant increase in domestic investor participation, contributing to the resilience of India’s equity market and fostering long-term financial stability.

    Mains PYQ:

    Q Comment on the important changes introduced in respect of the Long term Capital Gains Tax (LCGT) and Dividend Distribution Tax (DDT) in the Union Budget for 2018-2019. (UPSC IAS/2018)

  • [23rd January 2025] The Hindu Op-ed: China’s moves must recast India’s critical minerals push

    PYQ Relevance:

    Q) Discuss the multi-dimensional implications of uneven distribution of mineral oil in the world. (UPSC CSE 2021)

    Mentor’s Comment: UPSC mains have always focused on Chinese dominance in Geopolitics (2024) and Mines and Minerals in Indian Economy (2021 & 2022).

     

    Despite having the fifth-largest reserves of rare earths globally, India currently lags in all stages of rare earth development. India heavily relies on China for critical minerals, with significant import percentages for essential resources such as lithium (82%), bismuth (85.6%), and silicon (76%). This dependency poses risks to India’s economic security. The International Energy Agency predicts that demand could double by 2030 and quadruple by 2040.

     

    Today’s editorial emphasizes the challenges posed by the Critical Mineral industry at national and Global level. This content can be used for presenting the challenges in the Indian Economy with respect to Critical Mines and Minerals and Trade issues.

    _

    Let’s learn!

    Why in the News?

    China’s recent actions (expanded its export control list by including 28 entities), including potential export restrictions, have heightened fears about India’s reliance on Chinese supplies of critical minerals like lithium, cobalt, and rare earth elements.

    • China controls a substantial portion of the global supply of critical minerals, producing about 60% of rare earth elements, 50% of lithium, and 70% of cobalt.
    • This dominance extends to processing, where China handles approximately 80% of the world’s critical mineral processing, allowing it to influence global prices and availability significantly.

    What are the implications of China’s dominance in the critical minerals supply chain for India’s Economic Security?

    • Supply Chain Vulnerability: India’s heavy reliance on Chinese imports for critical minerals like lithium and cobalt creates significant risks, as China’s control over a large share of global production and processing capacity could lead to supply disruptions or price increases.
    • Geopolitical Leverage: China’s ability to restrict access to critical minerals during geopolitical tensions poses a direct threat to India’s energy transition and economic stability, potentially hindering its renewable energy goals.
    • Need for Strategic Diversification: In response to these challenges, India must pursue strategic partnerships with resource-rich countries and invest in domestic mineral exploration and processing capabilities to reduce dependence on China.
    • Global Competition and Sustainability: As global competition for critical minerals intensifies, India must balance its pursuit of resource independence with sustainable mining practices, ensuring long-term availability while addressing environmental concerns.

     

    What are the key challenges in developing India’s domestic critical mineral production?

    • Limited Exploration and Development: Complex geology, lack of advanced exploration technologies, and regulatory hurdles slow down the discovery and commercial extraction of resources like lithium and cobalt.
    • Processing Capacity Gaps: India lacks sufficient domestic processing and refining facilities for critical minerals. This gap forces the country to depend on foreign processing.
    • Regulatory and Policy Constraints: Existing regulations reserve certain critical minerals for public sector undertakings, limiting private sector participation in exploration and mining.
      • Additionally, the need for an updated list of critical minerals in the Mines and Minerals (Development and Regulation) Act hampers timely exploration efforts.
      • Establishing new exploration and processing activities involves long gestation periods, which can delay India’s efforts to become self-reliant in critical minerals.
    • Skilled Workforce Shortage: There is a shortage of skilled manpower in the materials, minerals, and metals sectors due to gaps in specialized training and advanced skills development.
    • Environmental Concerns: Mining activities can lead to significant environmental degradation, including biodiversity loss, water depletion, and pollution. Addressing these concerns while developing mineral resources poses a challenge for sustainable practices.

    How can India effectively reduce its dependency on Chinese imports for critical minerals?

    • Domestic Exploration and Production: India is focusing on enhancing its domestic mining capabilities by identifying and exploring critical mineral reserves within its territory.
      • For Example, the recent discoveries of lithium deposits in states like Jammu and Kashmir, Rajasthan, and Karnataka highlight the potential for self-reliance in critical minerals essential for renewable energy technologies.
    • Critical Minerals Mission: Government has launched a Critical Mineral Mission aimed at securing domestic production, recycling, and overseas acquisition of critical minerals.
      • This mission includes incentives for private companies to establish processing facilities and aims to reduce import duties on key minerals, thereby promoting local processing and refining.
    • International Partnerships: India is actively seeking to forge strategic partnerships with resource-rich countries, particularly in Africa and Latin America, to secure mineral blocks through government-to-government agreements.
      • This includes investments in countries like Australia, Chile, Ghana, and South Africa to diversify supply sources and mitigate risks associated with over-reliance on China.
    • Regulatory Reforms and Investment: The Indian government is implementing regulatory reforms to attract private investment in the critical minerals sector.
      • This includes auctioning critical mineral blocks to both state-owned and private companies, establishing entities like Khanij Bidesh India Ltd. (KABIL) for overseas acquisitions, and enhancing the National Mineral Exploration Trust (NMET) to support exploration efforts.

    Key Significant Features of the Mines and Minerals (Development and Regulation) Amendment Act, 2023 

    • Private Sector Involvement: The amendment allows the private sector to explore and mine six critical minerals previously restricted to state agencies, including lithium, beryllium, niobium, titanium, tantalum, and zirconium. This shift encourages private investment and expertise in the mining sector.
    • Exploration Licenses (EL): The introduction of Exploration Licenses enables private companies to conduct reconnaissance and prospecting for critical minerals. This is expected to attract foreign direct investment (FDI) and engage junior mining companies, thereby boosting exploration efforts for deep-seated minerals.
    • Exclusive Auctions for Critical Minerals: The central government is empowered to auction mineral concessions for critical minerals such as rare earth elements, cobalt, and nickel. This streamlined auction process is designed to accelerate production and generate revenue for state governments.
    • Revenue-Sharing Mechanism: If resources are proven after exploration, the state government must conduct an auction for mining leases within six months. The exploration licensee will receive a share in the auction value of the subsequent mining lease, incentivizing exploration activities.

    What role do global market dynamics play in shaping India’s critical mineral policies?

    • Geopolitical Influences: The competitive landscape of critical minerals is heavily influenced by geopolitical tensions, particularly with China, which dominates the supply chain.
      • India’s policies need to be increasingly designed to mitigate reliance on Chinese imports by fostering partnerships with countries like the U.S., Australia, and members of the Quad, aiming for a more diversified and secure supply chain.
    • Investment in Domestic Capabilities: To counteract dependency on imports, India should  implement regulatory reforms to attract private investment in the mining sector.
      • This includes auctioning mineral blocks and promoting initiatives like the National Critical Minerals Mission, which aims to strengthen the entire value chain from exploration to processing.
    • Need for Strategic Sourcing: Global market fluctuations can lead to price volatility for critical minerals, prompting India to develop a carefully crafted import strategy.
      • This strategy focuses on establishing stable relationships with resource-rich nations and diversifying sourcing options to mitigate risks associated with supply disruptions.
    • Fiscal Incentives: A possible remedy is to offer larger upfront fiscal incentives during the exploration phase. In other words, pledging direct capital support early in the construction phase might be to approach critical minerals extraction as a semiconductor fabrication project.

  • What is U.S.’s new rule for exporting AI chips?

    Why in the News?

    The U.S. Bureau of Industry and Security (BIS) created a system with different levels to control the sale and export of AI chips and technology more effectively.

    What is the main objective behind one of the last orders of the Biden administration? 

    • National Security and Foreign Policy: The primary goal of the BIS regulations is to enhance control over the circulation of advanced AI technology and chips to align with U.S. national security and foreign policy interests.
      • The regulations aim to prevent sensitive technologies from reaching adversarial nations, thereby mitigating risks associated with military advancements and cyber operations.
    • Secure Technology Ecosystem: The regulations are designed to cultivate a secure and trusted technology ecosystem that promotes the responsible use and diffusion of AI technologies, ensuring that advanced AI capabilities do not fall into the hands of U.S. adversaries.

    How will the tiered framework for licensing and exporting Artificial Intelligence chips work? 

    • Three-Tier System: The new regulations categorize countries into three tiers based on their relationship with the U.S.:
      • Tier 1: No restrictions for exports to 18 U.S. allies, including Australia, Canada, and Japan.
      • Tier 2: Countries like China and India face caps on volumes and require Validated End User (VEU) authorization for transactions contributing to advanced AI development.
      • Tier 3: Arms-embargoed countries such as North Korea and Iran have no access to advanced AI technology.

    How has the tech industry responded to the move? 

    • Concerns Over Competitiveness: Major tech companies, including NVIDIA and Oracle, have expressed apprehension that these regulations could undermine U.S. competitiveness in the global tech landscape.
      • They argue that restricting access to widely available technologies may not enhance security but instead hinder innovation.
    • Call for Revisions: Industry leaders hope that the incoming administration will reconsider or withdraw these regulations, citing potential disruptions to business operations and global supply chains.

    Will it affect the Indian Economy?

    • Impact on AI Growth: As India invests heavily in its National AI Mission, which aims to develop infrastructure with over 10,000 GPUs through a ₹10,000 crore investment, the restrictions could pose substantial challenges in scaling up AI capabilities post-2027.
      • The limits on GPU imports may deter innovation and slow down the growth of India’s tech sector.
    • Potential Delays in Infrastructure Development: Major data center providers in India, such as Tata Communications and CtrlS, may face delays or downsizing of their plans due to restricted access to GPUs. This could place Indian companies at a competitive disadvantage compared to their U.S. counterparts.
    • India’s Exclusion from Trusted Allies: India is not included in the list of trusted U.S. allies due to concerns over the leakage of chips to countries like Russia.

    Way forward: 

    • Strengthen Domestic AI Capabilities: India should accelerate the development of indigenous AI technologies and chips to reduce reliance on foreign imports, invest in local R&D and foster partnerships with global tech firms for technology transfer.
    • Diversify Global Alliances: India could strengthen its technological partnerships with countries outside the U.S. and explore alternative markets to source AI chips, ensuring the diversification of its supply chains to mitigate the impact of export restrictions.

    Mains PYQ:

    Q “The emergence of the Fourth Industrial Revolution (Digital Revolution) has initiated e-Governance as an integral part of government”. Discuss. (UPSC IAS/2020)

  • [pib] Diamond Imprest Authorization (DIA) Scheme

    Why in the News?

    The Department of Commerce under the Ministry of Commerce and Industry has launched the Diamond Imprest Authorization (DIA) Scheme to bolster the global competitiveness of India’s diamond sector.

    About the Diamond Imprest Authorization (DIA) Scheme

    • The DIA Scheme permits duty-free import of natural cut and polished diamonds for export purposes.
    • It mandates an export obligation with a value addition of 10%.
    • Objective: To retain India’s leadership in the global diamond industry value chain by facilitating ease of doing business.
    • It will be implemented starting April 1, 2025.
    • Features of the Scheme:
      • Duty-Free Import: Allows duty-free import of natural cut and polished diamonds of less than ¼ Carat (25 Cents).
      • Export Obligation: Requires a minimum 10% value addition to ensure beneficiation.
      • Eligibility: Open to Two Star Export Houses and above; Exporters with annual exports of at least USD 15 million are eligible.
      • Support for MSMEs: Provides a level playing field for smaller exporters, enabling them to compete with larger players.
      • Global Beneficiation Practices: Inspired by beneficiation policies in diamond-mining countries like Botswana, Namibia, and Angola, where manufacturers must establish cutting and polishing facilities.

    India’s Diamond Industry: Current Status

    • India processes over 90% of the world’s diamonds and provides jobs to approximately 5 million people.
    • India contributes 19% of total global diamond exports.

    Challenges:

    • Exports Decline:
      • 2022: Exports valued at $23 billion.
      • 2023: Declined to $16 billion, with further declines anticipated.
    • Rough Diamond Imports: Fell by 24.5%, from $18.5 billion (FY 2021-22) to $14 billion (FY 2023-24).
    • Exports of Cut and Polished Diamonds: Dropped by 34.6%, from $24.4 billion (FY 2022) to $13.1 billion (FY 2024).
    • Inventory Challenges: The gap between net imports of rough diamonds and net exports of cut and polished diamonds widened from $1.6 billion (FY 2022) to $4.4 billion (FY 2024).
    • Returns of Unsold Diamonds: The percentage of unsold diamonds returned to India rose from 35% to 45.6% between FY 2022 and FY 2024.

     

    PYQ:

    [2018] Which one of the following foreign travellers elaborately discussed about diamonds and diamond mines of India?

    (a) Francois Bernier

    (b) Jean-Baptiste Tavernier

    (c) Jean de Thevenot

    (d) Abbe Barthelemy Carre

  • [pib] 9 Years of Startup India

    Why in the News?

    On January 16 (National Startup Day), 2025, India marks 9 successful years of Startup India, a flagship initiative that has revolutionized the entrepreneurial ecosystem in the country.

    About the Startup India Initiative

    • Startup India is a flagship initiative launched by the Government of India on January 16, 2016, to create a robust ecosystem for nurturing startups and innovation.
    • It aims to drive economic growth and generate large-scale employment opportunities, with a focus on empowering entrepreneurs through innovation and regulatory support.
    • The PM first announced the initiative on August 15, 2015, during his Independence Day address at Red Fort, New Delhi.
    • The program aims to establish 75+ startup hubs across India and encourages entrepreneurship in Tier-2 and Tier-3 cities.
      • A related scheme, Stand-Up India, was launched on April 5, 2016, to facilitate loans between ₹10 lakh to ₹1 crore for SCs, STs and women entrepreneurs to establish Greenfield enterprises.
    • The program emphasizes the 3 Cs—Capital, Courage, and Connections, which Prime Minister Modi identifies as essential for entrepreneurial success.
    • It seeks to eliminate restrictive policies, including those related to License Raj, foreign investment proposals, and land permissions, ensuring ease of doing business.

    Definition of a Startup (as per DPIIT)

    • A startup must be registered as a private limited company, partnership firm, or limited liability partnership (LLP) in India.
    • The entity must not have completed 10 years since its incorporation.
    • Annual turnover should not exceed ₹100 crore in any financial year since incorporation.
    • The startup should focus on innovative products or services and demonstrate scalability, potential for wealth creation, or employment generation.
    • Entities formed through splitting or restructuring of existing businesses are not classified as startups.
    • Startup related terminologies analogously used in India:
      • Unicorn: A startup valued at over $1 billion.
      • Decacorn: A startup valued at over $10 billion.
      • Hectocorn: A startup valued at over $100 billion.
      • Soonicorn: A rapidly growing startup expected to become a unicorn soon.
      • Mincorn: A startup valued at less than $1 billion.

    Key Achievements of Startup India

    • India is the third-largest startup hub globally, following the United States and China.
    • DPIIT-recognized startups grew from 500 in 2016 to 1,59,157 by January 2025.
    • Women-led startups accounted for 73,151 entities as of October 2024, with 48% of startups having at least one woman director by December 2023.
    • Startups have generated 16.6 lakh direct jobs from 2016 to October 2024.
    • Over 50% of startups originated from Tier-2 and Tier-3 cities, including emerging hubs like Indore, Jaipur, and Ahmedabad.

    Key Government Initiatives for Startups:

    • Startup India Seed Fund Scheme (SISFS), 2021: Provides financial assistance to early-stage startups for proof of concept, prototype development, product trials, market entry, and commercialization.
      • Total allocated amount: ₹945 crore for startups over a four-year period.
    • Credit Guarantee Scheme for Startups (CGSS), 2022: Offers collateral-free loans to startups through Scheduled Commercial Banks, NBFCs, and SEBI-registered AIFs.
      • Covers loans up to ₹10 crore for eligible startups.
    • Fund of Funds for Startups (FFS), 2016: Established with a ₹10,000 crore corpus to provide funding support to startups through SEBI-registered Venture Capital Funds.
      • By 2024, ₹7,980 crore was committed to 99 Alternative Investment Funds (AIFs), benefiting over 800 startups.
    • BHASKAR (Bharat Startup Knowledge Access Registry), 2024: A centralized platform aimed at streamlining interactions within India’s entrepreneurial ecosystem.
      • Fosters innovation, collaboration, and startup growth through knowledge-sharing and networking.
    • Startup Village Entrepreneurship Program (SVEP): A sub-component of the National Rural Livelihood Mission (NRLM), implemented by the Ministry of Rural Development.
      • Supported 3,02,825 enterprises as of 2024, creating 6,26,848 jobs.
    • TIDE 2.0 (Technology Incubation and Development of Entrepreneurs): Focuses on supporting startups in emerging technologies like AI, IoT, and Blockchain.
      • Established 51 incubators and supported 1,235 startups.
    • GENESIS (Gen-Next Support for Innovative Startups), 2024: Aims to boost startups in Tier-II and Tier-III cities.
      • Total outlay: ₹490 crore over five years, targeting over 1,500 startups.
    • Atal Innovation Mission (AIM): Operates under NITI Aayog to foster innovation and entrepreneurship through the establishment of Atal Incubation Centers (AICs).
      • Provides physical infrastructure and mentorship for startups to scale effectively.
    • Startup Mahakumbh: A flagship event organized to bring together startups, unicorns, investors, and industry leaders.
      • First edition in 2019 saw over 500 participants; the fifth edition is scheduled for March 7-8, 2025, in New Delhi.

    PYQ:

    [2014] What does venture capital mean?

    (a) A short-term capital provided to industries

    (b) A long-term start-up capital provided to new entrepreneurs

    (c) Funds provided to industries at times of incurring losses

    (d) Funds provided for replacement and renovation of industries

  • [pib] Production Linked Incentive (PLI) Scheme 1.1

    Why in the News?

    Union Minister for Steel and Heavy Industries has inaugurated the second round of the Production Linked Incentive (PLI) Scheme for Specialty Steel, termed PLI Scheme 1.1.

    About the PLI Scheme 1.1

    • It is built upon the earlier round of the PLI scheme to enhance domestic manufacturing of high-value steel, reduce imports, and boost India’s global steel market position.
    • 5 specialty steel categories are considered:
      1. Coated/Plated Steel Products for appliances, construction, and automotive sectors.
      2. High Strength/Wear-Resistant Steel for infrastructure, mining, and heavy machinery.
      3. Specialty Rails for railways and metros.
      4. Alloy Steel Products and Steel Wires for industrial uses.
      5. Electrical Steel (CRGO and others): Cold-Rolled Grain-Oriented Steel, essential for power transformers and electrical applications.
    • It covers production from FY 2025-26 to FY 2029-30 and operates within the original budget of ₹6,322 crore.
    • Changes introduced in PLI Scheme 1.1:
      • Investment and capacity thresholds reduced:
        • For CRGO Steel: Investment threshold lowered to ₹3,000 crore; capacity threshold to 50,000 tonnes.
        • Encourages CRGO production as a strategic priority under Atmanirbharta.
      • Carry-forward provision: Excess production in one year can offset shortfalls in another, ensuring optimal incentive distribution.
      • Companies investing in capacity augmentation can participate; thresholds reduced to 50% of original requirements.
      • Simplified guidelines: Revised to improve accessibility and encourage industry participation.

    Bakc2Basics: PLI Schemes 1.0 and 2.0

    PLI Scheme 1.0

    • Launched in March 2020, it aimed to boost domestic manufacturing, reduce imports, and create jobs in key sectors.
    • Initially focused on three industries (mobile manufacturing, electrical components, and medical devices) but later expanded to 14 sectors, including electronics, pharmaceuticals, and textiles.
    • Provided 1%–4% incentives on incremental sales over the base year, with a ₹7,350 crore outlay for IT hardware.
    • Had an estimated investment target of ₹2,500 crore (IT hardware) but did not specify details on job creation.
    • Served as a cornerstone for Atmanirbhar Bharat, promoting self-reliance and innovation in India’s manufacturing ecosystem.

    PLI Scheme 2.0

    • Launched in May 2023, it specifically focuses on IT hardware (laptops, tablets, servers, PCs) to enhance global competitiveness.
    • Comes with a higher budget of ₹17,000 crore (for IT hardware) over a 6-year duration.
    • Incentivizes local manufacturing with ~5% incentives on incremental sales, alongside additional benefits for components like memory modules and SSDs.
    • Targets ₹2,430 crore in investment, ₹3.35 lakh crore in production, and $12–17 billion in exports by 2025–26.
    • Seeks to create 75,000 direct jobs and up to 2 lakh indirect jobs, offering different incentive caps for global, hybrid, and domestic companies.

     

    PYQ:

    [2023] Consider, the following statements:

    Statement-I: India accounts for 3.2% of global export 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

  • [pib] Bharat Cleantech Manufacturing Platform

    Why in the News?

    Union Minister of Commerce & Industry has unveiled the Bharat Cleantech Manufacturing Platform at the Bharat Climate Forum 2025 in New Delhi.

    What is the Bharat Cleantech Manufacturing Platform?

    • It is an initiative aimed at strengthening cleantech value chains in sectors such as solar, wind, hydrogen, and battery storage.
    • It aims to position India as a global leader in sustainability and cleantech manufacturing, creating a compelling business case for international investors.
    • Key features include:
      • Provides a platform for manufacturing scale-up and knowledge sharing.
      • Aims to make India a compelling business destination for cleantech investors.
      • Supports India’s target of 500 GW of clean energy capacity by 2030.

    About the Bharat Climate Forum 2025

    • The Forum was organized in New Delhi as a platform for policymakers, industry leaders, and stakeholders to discuss climate action and clean energy solutions.
    • The forum aims to align India’s clean energy initiatives with global climate goals, particularly under the United Nations Framework Convention on Climate Change (UNFCCC) and the Paris Agreement.
    • A key focus of the forum was the launch of the Bharat Cleantech Manufacturing Platform, designed to promote sustainable development and clean energy adoption in India.
    • Discussions emphasized India’s commitment to achieving 500 GW of clean energy capacity by 2030 and highlighted the progress India has made in meeting its Nationally Determined Contributions (NDCs).
    • The forum celebrated India’s early achievement of its 2022 renewable energy targets, with renewable energy capacity reaching 200 GW eight years ahead of schedule.
    • The event focused on the 3S principles—Speed, Scale, and Skill—as cornerstones of India’s renewable energy program, ensuring swift implementation, large-scale adoption, and skill development.

     

    PYQ:

    [2020] Describe the benefits of deriving electric energy from sunlight in contrast to conventional energy generation. What are the initiatives offered by our government for this purpose? 

  • Production Linked Incentive (PLI) Scheme Versions 1.0 vs 2.0 Comparison

    PLI 1.0

    PLI 2.0
    Launch Year March 2020 May 2023
    Objective Promote domestic manufacturing, reduce imports, create jobs Enhance IT hardware manufacturing, increase global competitiveness
    Budget ₹7,350 crore (for IT hardware) ₹17,000 crore (for IT hardware)
    Duration 4 years 6 years
    Incentive Structure 1% – 4% of incremental sales over the base year ~5% of incremental sales over six years
    Sectors Covered
    • Initially focused on 3 sectors: Mobile manufacturing, electrical components, and medical devices.
    • Later expanded to 14 sectors, including: Specified electronic components, critical key starting materials (pharma), auto components, pharma drugs, specialty steel, telecom and networking, electronics/technology products, white goods (ACs, LEDs), food products, textiles (MMF/technical textiles), high-efficiency solar PV modules, advanced chemistry cell (ACC) batteries, drones
    		 Primarily IT hardware (laptops, tablets, servers, PCs)
    Component Incentives No additional incentives for specific components Additional incentives for local component manufacturing (e.g., memory modules, SSDs)
    Expected Investment ₹2,500 crore (estimated) ₹2,430 crore (estimated)
    Employment Generation Not specified in detail 75,000 direct jobs, up to 2 lakh indirect jobs
    Production and Export Targets Not explicitly stated ₹3.35 lakh crore production; $12-17 billion exports by 2025-26
    Eligibility and Caps Domestic companies with minimum investment of ₹20 crore Global, hybrid, and domestic companies with caps (₹4,500 crore for global, ₹2,250 crore for hybrid, ₹500 crore for domestic)

     

  • WEF released Future of Jobs Report, 2025

    Why in the News?

    According to the World Economic Forum’s (WEF) Future of Jobs Report 2025, global macro trends, including technological advancements, demographic shifts, and the green transition, will create 170 million new jobs by 2030.

    About the Future of Jobs Report, 2025

    • It is based on insights gathered from over 1,000 leading global companies, collectively representing 14 million workers across 22 industry sectors and 55 economies worldwide.
    • It provides critical insights into emerging and declining job roles, skills trends, and the overall impact of global changes on the labour market.

    What are the key findings of the report?

    • The report projects 170 million new jobs globally by 2030, with a net increase of 78 million jobs after accounting for 92 million displaced roles.
    • Fast-growing roles include AI and machine learning specialists, big data experts, FinTech engineers, and farmworkers, driven by technological advancements and the green transition.
    • Clerical jobs like data entry clerks and cashiers are declining due to automation.
    • Employers anticipate 39% of skills will change by 2030, with growing demand for AI proficiency, creative thinking, and resilience.
    • Businesses are focusing on reskilling, with 85% investing in upskilling programs.
    • Collaboration among governments, academia, and industries is vital to bridge the skills gap and align with future job demands.

    About World Economic Forum (WEF):

    • The WEF is an international NGO for Public-Private Cooperation.
    • It was established in January 1971 by German engineer and economist Klaus Schwab.
    • Important reports published by WEF include: Global Competitiveness Report, Global Risks Report, Global Gender Gap Report, Global Social Mobility Report, Energy Transition Index, and Travel & Tourism Competitiveness Report, among others.

     

    PYQ:

    [2019] The Global Competitiveness Report is published by the:

    (a) International Monetary Fund

    (b) United Nations Conference on Trade and Development

    (c) World Economic Forum

    (d) World Bank

  • India Secures 14.3% of Global Remittances in 2024: World Bank

    Why in the News?

    In 2024, India received a record $129.1 billion in remittances which marked the highest share for any country since 2000 as per the World Bank.

    What are the Trends in Remittances flow?

    • Record Inflows: In 2024, India received an estimated $129.1 billion in remittances, marking the highest amount ever recorded for any country in a single year.
    • Global Share: India accounted for 14.3% of global remittances, the highest share since the turn of the millennium.
    • Growth Rate: The growth rate of remittances in 2024 was approximately 5.8%, a significant increase from 1.2% in 2023.
    • Top Recipients: Following India, Mexico and China received the largest remittances, with Mexico at $68 billion and China at $48 billion.

    What are the Factors Responsible for High Remittances in India?

    • Large Diaspora: India has one of the largest diaspora populations globally, with over 18 million Indians living abroad, contributing significantly to remittance inflows.
    • Shift to High-Income Countries: There has been a trend of Indian migrants moving to high-income economies such as the United States, United Kingdom, and Australia, where job opportunities are more abundant.
    • Diverse Skill Levels: Indian migrants include highly skilled professionals (in sectors like IT and healthcare) as well as semi-skilled and unskilled labourers, broadening the scope for remittance generation.
    • Recovery of Job Markets: The recovery of job markets in high-income countries post-pandemic has driven an increase in remittance flows as employment opportunities have improved.

    What is the significance of high Remittances?

    • Economic Support for Households: Remittances serve as a crucial source of income for many families in India, supporting their daily needs and contributing to overall household welfare.
    • Impact on National Economy: In 2024, remittances constituted approximately 3.3% of India’s GDP, highlighting their role in bolstering the economy.
    • Comparison with Other Financial Flows: Remittances have outpaced other forms of external financial flows, such as Foreign Direct Investment (FDI) and Official Development Assistance (ODA), indicating their importance for funding current account deficits and fiscal shortfalls in low- and middle-income countries.
    • Long-Term Growth Trends: Over the past decade, remittances to low-and-middle-income countries have increased by 57%, underscoring their growing significance as a stable source of income compared to declining FDI.

    What are the negative impacts of brain drain?

    Even though remittances are good for the country, they have negative signals for any country like brain drain. 

    • Loss of Skilled Labor: Brain drain leads to a significant depletion of skilled professionals in the home country, resulting in shortages in critical sectors such as healthcare, education, and technology.
      • This loss hampers the country’s ability to innovate and develop, as there are fewer qualified individuals to drive progress and maintain essential services.
    • Economic Consequences: The exodus of skilled workers results in decreased tax revenues for the home country, which can limit public spending on infrastructure and social programs. This financial shortfall can stunt economic growth and development, exacerbating existing challenges within the economy.
    • Impeded National Development: Countries experiencing brain drain may face slower overall development due to the loss of human capital. This can create a cycle of underdevelopment, where the lack of skilled labour leads to reduced investment opportunities and further emigration, perpetuating the cycle of talent loss and economic stagnation.

    Way forward: 

    • Enhance Domestic Opportunities: Strengthen education, healthcare, and innovation ecosystems to retain skilled professionals by providing competitive salaries, career growth, and improved living standards.
    • Engage Diaspora Strategically: Leverage the Indian diaspora for knowledge transfer, investments, and partnerships, creating pathways for their contribution to national development while maintaining ties with homegrown talent.