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

  • [9th January 2026] The Hindu OpED: GSDP share as criterion for central-State transfers

    PYQ Relevance

    [UPSC 2020] Explain the rationale behind the Goods and Services Tax (Compensation to States) Act, 2017. How has COVID-19 impacted the GST compensation fund and created new federal tensions?

    Linkage: COVID-19 exposed structural weaknesses in the GST compensation mechanism.

    This intensified Centre-State fiscal tensions and revived debates on fair and transparent transfer mechanisms in India’s federal framework.

    Mentor’s Comment

    Debates on fiscal federalism in India often oscillate between equity and efficiency. The article examines whether Gross State Domestic Product (GSDP) can be a fair and reliable basis for sharing Central tax revenues among States, especially in the post-GST era where tax attribution has become complex.

    Why in the News

    The article gains significance amid ongoing debates on Central-State fiscal relations, especially after the implementation of GST, which has weakened the direct link between tax collection and the place of economic activity. The issue is critical because ₹75.12 lakh crore was transferred to States between 2020-21 and 2024-25, and the method used to distribute this amount affects State fiscal autonomy and perceived fairness. A key finding is the very high correlation (0.99) between actual transfers and GSDP, compared to a much weaker link with Finance Commission devolution, making GSDP a stronger alternative measure.

    Introduction

    India’s system of fiscal transfers relies heavily on the recommendations of successive Finance Commissions, which distribute Central tax revenues through tax devolution, grants-in-aid, and Centrally Sponsored Schemes (CSS). However, the post-GST tax regime has disrupted the traditional linkage between tax collection location and economic value creation, raising questions about whether existing criteria adequately capture States’ real contribution to national revenues.

    Why is tax collection an unreliable indicator of State-level contribution?

    1. GST structure: Breaks the link between the location of production and the location of tax collection due to destination-based taxation.
    2. Corporate taxation: Attributes tax payments to the registered office location rather than where economic activity occurs.
    3. Multi-State operations: Dilutes State-wise attribution due to labour migration, inter-State supply chains, and inter-corporate transactions.
    4. Example distortion: Automobile manufacturers pay taxes where offices are registered, not necessarily where factories operate; plantation companies record profits centrally despite dispersed production.
    5. Outcome: Direct tax figures reflect collection points, not value creation.

    Why does GSDP emerge as a credible proxy for tax accrual?

    1. Economic base representation: Captures the size and intensity of economic activity within a State.
    2. Uniform tax base assumption: Assumes broadly similar tax administration efficiency across States.
    3. Empirical validation: Correlation between GSDP and GST collections stands at 0.75 for 2023-24.
    4. High correlation with transfers: Correlation of 0.91 between GSDP and total Central tax transfers.
    5. Policy neutrality: Avoids contentious attribution disputes inherent in GST accounting.

    How do actual transfers align with GSDP shares?

    1. Overall transfers: ₹75.12 lakh crore transferred during 2020-25, including FC devolution, grants, and CSS.
    2. High-alignment States:
      1. Uttar Pradesh: 15.81% transfer share vs 16.85% population share.
      2. Maharashtra: High tax contribution (40.3%) but only 6.64% of transfers, reflecting redistribution.
    3. Mismatch States:
      1. Bihar: Receives 8.65% transfers despite only 4.66% GSDP share.
      2. West Bengal: 6.96% GSDP share vs 6.69% transfers.
    4. Interpretation: Transfers broadly track economic output, not tax collections.

    How does the equity-efficiency trade-off emerge in fiscal transfers?

    1. Redistributive bias: FC criteria prioritize equity over efficiency by favoring population and income distance.
    2. Regional disparities: Persist due to differential expenditure needs and fiscal capacity.
    3. Efficiency trade-off: GSDP-based transfers better reflect contribution but reduce redistributive scope.
    4. Evidence: Correlation between GSDP and FC devolution shares is only 0.58, indicating weak alignment.
    5. Outcome: GSDP balances fairness and efficiency more transparently than current metrics.

    Which States gain or lose under a pure GSDP-based system?

    1. Major gainers: Tamil Nadu and Karnataka: High production but lower tax attribution due to GST mechanics.
    2. Major losers: Uttar Pradesh, Bihar, Madhya Pradesh: Benefit currently from redistributive weights.
    3. Exception States: Haryana, Karnataka, Maharashtra: GSDP share lower than tax collection due to tax concentration effects.
    4. Inference: GSDP corrects distortions arising from centralized tax accounting.

    Conclusion

    The debate on using GSDP as a basis for Central-State transfers highlights the need to realign India’s fiscal federal framework with the realities of the post-GST economy. While redistribution remains essential for equity, greater reliance on GSDP can improve transparency, efficiency, and trust by linking transfers more closely with economic activity. A calibrated approach, combining GSDP-based devolution with targeted grants, offers a balanced pathway to strengthen cooperative federalism.

  • RBI Announces ₹1 Trillion OMO Purchase

    Why in the News?

    The Reserve Bank of India announced a ₹1 trillion Open Market Operation purchase along with a 5 billion dollar rupee swap to inject durable liquidity into the banking system amid rupee weakness beyond 90 per dollar and foreign capital outflows.

    What is an Open Market Operation Purchase

    • An OMO purchase is when the RBI buys government securities from banks and financial institutions
    • Objective is to inject durable and long term liquidity into the financial system
    • Leads to an increase in bank reserves and eases short term interest rates

    Purpose of OMO Purchases

    • Inject durable liquidity into the banking system
    • Improve monetary policy transmission so lending rates align with repo rate changes
    • Stabilise money market rates such as the Weighted Average Call Rate
    • Support financial stability during periods of currency and capital flow stress

    Significance of the Recent OMO

    • Offsets rupee liquidity drain caused by foreign portfolio outflows
    • Supports monetary transmission during external sector stress
    • Prevents sharp spikes in government bond yields
    • Strengthens lending capacity of banks for businesses and households

    Prelims Pointers

    • OMO is a quantitative monetary policy tool
    • OMO purchase injects liquidity while OMO sale absorbs liquidity
    • Operation Twist reshapes the yield curve
    • Durable liquidity differs from short term tools like repo and reverse repo
    [2013] In the context of Indian economy, ‘Open Market Operations’ refers to 

    (a) borrowing by scheduled banks from the RBI 

    (b) lending by commercial banks to industry and trade 

    (c) purchase and sale of government securities by the RBI 

    (d) None of the above

  • Electronics Components Manufacturing Scheme 

    Why in the News?

    The Ministry of Electronics and Information Technology approved 22 additional projects under the Electronics Components Manufacturing Scheme involving an investment of ₹41,863 crore.

    About Electronics Components Manufacturing Scheme

    • A flagship incentive scheme to promote domestic manufacturing of electronic components, sub assemblies and capital equipment
    • Implemented by the Ministry of Electronics and Information Technology
    • Aims to reduce import dependence in India’s electronics sector

    Target Segments

    • Printed Circuit Boards, Camera modules, Copper clad laminates, Polypropylene films and Electronics capital equipment.

    Performance Linked Features

    • Incentives linked to incremental production
    • Employment generation based payouts
    • Early movers receive higher benefits

    Strategic Manufacturing Targets

    • 100 percent domestic demand for copper clad laminates
    • 20 percent domestic demand for printed circuit boards
    • 15 percent domestic demand for camera modules

    Ecosystem Linkages

    • Complements Production Linked Incentive Scheme for Electronics
    • Supports India Semiconductor Mission
    • Strengthens the electronics manufacturing ecosystem

    Prelims Pointers

    • ECMS focuses on electronics components rather than finished products
    • Copper clad laminates are critical for PCB manufacturing
    • Scheme uses performance based incentives
    • Electronics manufacturing is a priority sector under Atmanirbhar Bharat
    [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

  • Land Acquisition and Infrastructure Development 

     Why in the News?

    At the 50th meeting of PRAGATI, the Cabinet Secretary highlighted land acquisition as a major bottleneck in infrastructure development. The meeting was chaired by Narendra Modi.

    About PRAGATI (Pro Active Governance and Timely Implementation)

    • A digital and institutional mechanism for monitoring major infrastructure projects
    • Chaired by the Prime Minister
    • Ensures coordination among Central Ministries, State governments and local authorities
    • Focuses on expediting project implementation and resolving bottlenecks

    Key Data from 50th PRAGATI Meeting

    • Total projects reviewed Over 3,300
    • Total project value Approximately ₹85 lakh crore
    • Issues raised 7,735
    • Issues resolved 7,156

    Major Causes of Project Delays

    • Land acquisition 35 percent
    • Forest, wildlife and environment clearances 20 percent
    • Right of use or right of way 18 percent
    • Other causes Law and order issues, construction delays, power utility approvals and financial constraints

    Important Observations

    • Several long pending projects initiated as early as the 1990s were completed after PRAGATI was introduced
    • Government has not quantified financial savings from timely monitoring
    • States across political lines have cooperated in resolving issues
    • Complex issues are escalated from Ministry level to PRAGATI for final resolution

    Prelims Pointers

    • PRAGATI is a Prime Minister chaired project monitoring platform
    • Land acquisition is the single largest cause of infrastructure delays in India
    • Environmental and forest clearances are the second biggest bottleneck
    • PRAGATI promotes inter ministerial and Centre State coordination
    [2019] With reference to land reforms in independent India, which one of the following statements is correct? 

    (a) The ceiling laws were aimed at family holdings and not individual holdings. 

    (b) The major aim of land reforms was providing agricultural land to all the landless. 

    (c) It resulted in cultivation of cash crops as a predominant form of cultivation. 

    (d) Land reforms permitted no exemptions to the ceiling limits.

  • Central Excise Amendment on tobacco products

    Why in the news?

    The Centre has notified the Central Excise Amendment Act 2025 along with related tax changes on tobacco products. The changes will come into force from February 1, 2026. The move ends the GST compensation cess on tobacco and revises excise duties to meet fiscal and public health goals.

    Central Excise Amendment Act 2025

    The Act amends the Central Excise Act 1944 to revise excise duties on tobacco and tobacco related products, which continue to remain outside the complete GST framework.

    Key features

    Revision of excise duties

    The Act revises central excise rates to maintain and increase the overall tax burden after the withdrawal of GST compensation cess.

    Revised excise duty rates

    • Unmanufactured tobacco increased from 64 percent to 70 percent
    • Chewing tobacco increased from 25 percent to 100 percent
    • Hookah and gudaku tobacco increased from 25 percent to 40 percent
    • Smoking mixtures for pipes and cigarettes increased from 60 percent to 325 percent
    • Cigarettes increased from ₹200 to ₹735 per thousand sticks to ₹2,700 to ₹11,000 per thousand sticks

    Public health objective

    The higher duties aim to raise real tobacco prices faster than income growth, in line with global public health recommendations to discourage consumption.

    GST restructuring on tobacco

    • Beedis placed under 18 percent GST
    • All other tobacco products placed under 40 percent GST
    • New valuation mechanism introduced
       GST value to be calculated on the retail sale price declared on the package for products such as chewing tobacco, gutkha, khaini and jarda

    GST compensation cess

    What it is

    An additional levy imposed on select goods to compensate States for revenue losses due to GST implementation.

    Key points

    • Introduced in July 2017 along with GST
    • Initially meant for five years till June 2022
    • Extended till March 31, 2026 due to pandemic related revenue shortfall
    • Used mainly to repay about ₹2.7 lakh crore borrowed to compensate States
    • Levied over and above GST and central excise on tobacco
    • Being completely phased out from February 1, 2026

    Items covered under the cess

    • Tobacco and tobacco products
    • Pan masala
    • Aerated and caffeinated drinks
    • Luxury cars
    • Motorcycles above 350 cc
    • Specified firearms

    Prelims pointers

    • Tobacco products remain partly outside the GST framework
    • Central excise continues on tobacco even after GST
    • GST compensation cess ends from February 1, 2026
    • Higher tobacco taxation serves both revenue and public health objectives
    [2017] What is/are the most likely advantages of implementing ‘Goods and Services Tax (GST)’? 

    1. It will replace multiple taxes collected by multiple authorities and will thus create a single market in India. 

    2. It will drastically reduce the ‘Current Account Deficit’ of India and will enable it to increase its foreign exchange reserves. 

    3. It will enormously increase the growth and size of economy of India and will enable it to overtake China in the near future. 

    Select the correct answer using the code given below: 

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

  • [30th December 2025] The Hindu OpED: The quiet foundations for India’s next growth phase

    PYQ Relevance

    [UPSC 2013] Faster economic growth requires increased share of the manufacturing sector in GDP, particularly of MSMEs. Comment on the present policies of the Government in this regard.

    Linkage: It is directly linked to GS-III industrial and MSME reforms. The article shows how compliance reduction, labour reforms, logistics and energy security support MSME-led manufacturing growth.

    Mentor’s Comment

    This article analyses the structural reforms underpinning India’s economic transition as 2025 concludes. It focuses on cumulative, process-oriented governance changes rather than headline reforms. The article evaluates how administrative simplification, legislative consolidation, logistics modernisation, energy reforms, and regulatory certainty together create conditions for sustained private investment and long-term growth.

    Introduction

    As 2025 draws to a close, India’s economic narrative is shaped less by dramatic announcements and more by incremental institutional repair. India crossed $4.1 trillion in nominal GDP, overtook Japan to become the world’s fourth-largest economy, and secured a BBB sovereign rating upgrade after 18 years, signalling durability rather than episodic growth. These developments mark a transition from reform intent to reform absorption.

    Why in the News?

    India’s reform momentum in 2025 is significant because it departs from episodic, personality-driven policy shifts towards systemic, cumulative governance correction. For the first time, reforms span the full policy cycle, legislation, administration, dispute resolution, infrastructure, and energy security, rather than isolated sectors. Over 47,000 compliances were removed, 8.29 lakh approvals processed digitally, and ₹76 lakh crore worth of projects monitored centrally, marking a structural break from discretion-heavy governance. This contrasts sharply with earlier reform phases where intent outpaced implementation. The scale of reforms addresses India’s chronic problems of regulatory uncertainty, logistics inefficiency, and capital hesitation, converting macro-stability into micro-level execution capacity.

    How is India reducing procedural friction in governance?

    1. Compliance Reduction: Eliminates over 47,000 compliances, lowering transaction costs and regulatory fatigue.
    2. Digital Approvals: Processes 8.29 lakh approvals via the National Single Window System, ensuring time-bound decision-making.
    3. Project Monitoring: Tracks 3,000+ projects valued above ₹76 lakh crore through a central monitoring group, improving execution discipline.
    4. Infrastructure Planning: Opens PM GatiShakti National Master Plan to the private sector, enabling coordinated logistics and infrastructure investments.

    How do trade agreements support export-led growth?

    1. UK FTA: Provides duty-free access and clearer mobility pathways for Indian goods, services, and skilled labour.
    2. Oman CEPA: Expands strategic trade coverage across goods, services, and investment corridors.
    3. New Zealand FTA: Extends market access to high-value economies, reinforcing India’s rule-based trade positioning.
    4. Export Scale: Records $825.25 billion in total exports (2024-25), registering over 6% annual growth.

    How is better legislation improving regulatory certainty?

    1. Statute Rationalisation: Repeals 71 obsolete laws through the Repealing and Amending Bill, 2025.
    2. Labour Code Consolidation: Merges 29 central labour laws into four codes, covering wages, industrial relations, social security, and occupational safety.
    3. Securities Reform: Strengthens SEBI’s enforcement capacity, introduces specialised market courts, and ensures time-bound grievance redressal.
    4. Investment Climate: Enhances predictability, supporting long-term portfolio and manufacturing investments.

    How is logistics reform strengthening competitiveness?

    1. Trade Dependence: Accounts for 95% of trade volume and 70% of trade value through maritime routes.
    2. Ports Act, 2025: Replaces colonial-era legislation, introduces modern governance tools, and enables state-level dispute resolution.
    3. Shipping Law Updates: Updates Merchant Shipping and Carriage of Goods Acts to align with contemporary maritime commerce.
    4. Shipbuilding Support: Approves ₹69,725 crore package, including ₹25,000 crore Maritime Development Fund.

    Why are energy reforms central to long-term growth?

    1. Hydrocarbon Reform: Introduces single petroleum lease across project lifecycle, reducing approval redundancies.
    2. Open Acreage Licensing: Offers 25 blocks covering 0.2 million sq km, expanding deepwater exploration.
    3. Energy Security: Launches National Deep Water Exploration Mission focusing on domestic capability development.
    4. Nuclear Push: Allocates ₹20,000 crore for small modular reactors under Nuclear Energy Mission.
    5. Capacity Target: Sets 100 GW nuclear capacity by 2047 and five indigenous SMRs by 2033.
    6. Grid Stability: Strengthens low-carbon baseload power availability and manufacturing resilience.

    Conclusion

    India’s recent reform trajectory underscores a move from headline announcements to steady institutional strengthening. Through regulatory simplification, labour and logistics reforms, and long-term energy investments, the economy is being positioned for sustained, investment-led and manufacturing-driven growth.

  • [29th December 2025] The Hindu OpED: A grand vision and the great Indian research deficit

    PYQ Relevance

    [UPSC 2024] What is the present world scenario of intellectual property rights with respect to life materials? Although India is second in the world to file patents, still only a few have been commercialised. Explain the reasons behind this less commercialization.

    Linkage: This question links global debates on patenting of life forms (biotech, genes, microorganisms) with India’s weak innovation-to-market ecosystem. The article’s focus on low R&D investment, poor industry-academia linkage, risk-averse private sector directly explains why high patent filings in India do not translate into economic value.

    Mentor’s Comment

    India’s aspiration to emerge as a global economic and technological power is constrained by a persistent and structural deficit in research and development (R&D). This article examines the scale, causes, and consequences of India’s underinvestment in R&D, highlights systemic weaknesses across government, industry, and academia, and evaluates the urgency of reform to sustain India’s innovation-led growth ambitions.

    Introduction

    India stands at a critical juncture in its development trajectory, marked by demographic strength and expanding economic scale. However, this ambition is undermined by chronic underinvestment in research and development. Despite housing 17.5% of the world’s population, India accounts for only 3% of global research output and spends merely 0.6-0.7% of GDP on R&D. This structural gap threatens India’s capacity to generate high-value innovation, sustain technological leadership, and translate growth into long-term economic sovereignty.

    Why in the News?

    The issue has gained prominence due to the widening gap between India’s global ambitions and its innovation capacity. While countries such as China, the United States, and Israel invest between 2.4% and over 5% of GDP in R&D, India’s stagnation below 1% highlights a failure to prioritize research as a national mission. 

    How Large is India’s R&D Deficit?

    1. Scale of Investment: R&D expenditure remains at 0.6-0.7% of GDP, far below innovation-driven economies.
    2. Global Comparison: China spends ~2.4%, the US ~3.5%, and Israel over 5% of GDP on R&D.
    3. Corporate Benchmark: Huawei’s 2023 R&D spending of $23.4 billion exceeds India’s total national R&D outlay.
    4. Population-Output Mismatch: India holds 17.5% of global population but contributes only 3% of global research output.

    What Does Intellectual Property Data Reveal About Innovation Weakness?

    1. Patent Filings: India ranked 6th globally in patent filings in 2023 with 64,480 applications, reflecting growth momentum.
    2. Global Share: India accounted for only 1.8% of 3.55 million global patent applications.
    3. Innovation Intensity: Per-million patent filings remain low, placing India 47th globally, indicating limited population-level innovation diffusion.
    4. Structural Insight: Rising filings signal potential, but weak conversion into scalable innovation reflects systemic constraints.

    Why is the Government the Primary R&D Funder in India?

    1. Funding Composition: Government contributes ~63.6% of R&D expenditure.
    2. Private Sector Share: Industry accounts for only ~36.4%, unlike developed economies where private industry dominates.
    3. Institutional Spread: Central government, state governments, higher education institutions, and public sector units drive most R&D.
    4. Structural Outcome: Excessive public dependence limits market-oriented, disruptive, and commercially scalable research.

    Why is Private Sector Participation in R&D Limited?

    1. Investment Pattern: Industry prioritises incremental innovation over disruptive research.
    2. Technology Strategy: Preference for technology licensing over indigenous development.
    3. Risk Profile: Aversion to long-term, uncertain R&D investments.
    4. Policy Environment: Limited incentives and delayed approvals reduce private R&D appetite.

    What Explains the Academia-Industry Disconnect?

    1. Institutional Silos: Universities operate in isolation from market-driven needs.
    2. Research Orientation: Academic research remains largely theoretical.
    3. Collaboration Deficit: Weak mechanisms for joint industry-academia research projects.
    4. Comparative Gap: Unlike the US, Indian firms rarely fund university-led applied research.
    5. Innovation Flow Failure: Absence of structured pathways from laboratories to marketplaces.

    How Does Brain Drain Deepen the R&D Crisis?

    1. Human Capital Output: India produces a large number of PhDs and engineers annually.
    2. Talent Migration: Skilled researchers migrate due to better funding, infrastructure, and career prospects abroad.
    3. Domestic Constraints: Limited high-end research facilities and lower salary benchmarks.
    4. Administrative Barriers: Bureaucratic delays restrict research autonomy and efficiency.

    What Structural Bottlenecks Impede Long-Term Research?

    1. Project Approval Delays: Excessively long sanctioning timelines.
    2. Fund Release Issues: Staggered and unpredictable disbursement cycles.
    3. Execution Impact: Disrupts continuity of long-term and mission-oriented research programmes.
    4. Systemic Outcome: Weakens confidence in India’s research ecosystem.

    What is the Proposed Path Forward?

    1. National Investment Target: Raising R&D expenditure to at least 2% of GDP within 5-7 years.
    2. Fiscal Strategy: Large-scale public spending combined with tax incentives and grants.
    3. Private Sector Goal: Increasing industry share to 50% of total R&D expenditure.
    4. Institutional Reform: Launch of the ₹1 lakh crore Research Development and Innovation (RDI) Fund.
    5. Mission Orientation: Focus on semiconductors, AI, quantum computing, advanced materials, and green energy.
    6. Outcome Framework: Long-term funding with measurable national security and economic outcomes.

    What Role Must Universities Play in India’s Innovation Ecosystem?

    1. Institutional Transition: Shift from teaching-centric to research-intensive institutions.
    2. Funding Expansion: Increased support for PhD programmes and competitive research grants.
    3. Faculty Development: Creation of globally competitive research positions.
    4. Infrastructure: Investment in advanced laboratories and incubation ecosystems.
    5. Collaboration Platforms: Institutionalised industry-sponsored research chairs and innovation hubs.

    Why is Intellectual Property Culture Critical?

    1. Process Simplification: Faster patent filing and approval mechanisms.
    2. Enforcement Strengthening: Improved IP protection to incentivise innovation.
    3. Financial Incentives: Attractive returns for inventors and commercialised research.
    4. Innovation Outcome: Conversion of research outputs into economic assets.

    Conclusion

    India’s ambition to emerge as a global innovation leader cannot be realised without correcting its structural deficit in research and development. Persistently low R&D investment, excessive reliance on government funding, weak private sector participation, and a fragile academia-industry interface have limited the conversion of knowledge into marketable innovation. Unless India decisively shifts towards mission-oriented research, strengthens intellectual property culture, and creates robust pathways from laboratories to markets, its demographic and economic potential will remain underutilised. A sustained, well-governed, and adequately financed R&D ecosystem is therefore indispensable for achieving technological self-reliance and long-term economic sovereignty.

  • Shipbuilding Financial Assistance Scheme and Shipbuilding Development Scheme  

    Why in the News?

    The Ministry of Ports Shipping and Waterways notified operational guidelines for the Shipbuilding Financial Assistance Scheme (SBFAS) and the Shipbuilding Development Scheme (SbDS).

    Shipbuilding Financial Assistance Scheme (SBFAS)

    • Objective Strengthen domestic shipbuilding and global competitiveness
       • Valid till 31 March 2036
       • Financial assistance 15 to 25 percent per vessel based on vessel category
       • Graded support for small normal large normal and specialised vessels
       • Stage wise disbursement linked to milestones
       • Shipbreaking Credit Note provides 40 percent of scrap value for vessels scrapped in Indian yards
       • Provision for National Shipbuilding Mission

    Shipbuilding Development Scheme (SbDS)

    • Focus on long term capacity and capability creation
       • Greenfield shipbuilding clusters and brownfield yard expansion
       • India Ship Technology Centre under Indian Maritime University
       • Greenfield clusters get 100 percent capital support via 50 50 Centre State SPV
       • Brownfield projects get 25 percent capital assistance
       • Includes Credit Risk Coverage Framework for pre shipment post shipment and vendor default risks
    Consider the following pairs: [2023]

    1. Kamarajar Port: First major port in India registered as a company. 

    2. Mundra Port: Largest privately owned port in India. 

    3. Visakhapatnam Port: Largest container port in India. 

    How many of the above pairs are correctly matched? 

    (a) Only one pair 

    (b) Only two pairs 

    (c) All three pairs 

    (d) None of the pairs

  • Quality Council of India 

    Why in the News?

    • The Quality Council of India recently announced a comprehensive set of next generation quality reforms aimed at strengthening India’s quality ecosystem across healthcare, laboratories, MSMEs, and manufacturing sectors.

    About Quality Council of India (QCI)

    • Non profit autonomous organisation
    • Registered under the Societies Registration Act XXI of 1860
    • Established in 1997
    • Set up jointly by the Government of India and Indian industry

    Industry Associations Involved

    • ASSOCHAM
    • Confederation of Indian Industry
    • Federation of Indian Chambers of Commerce and Industry

    Administrative Control

    • Functions under the Department for Promotion of Industry and Internal Trade
    • Department under the Ministry of Commerce and Industry

    Key Functions of QCI

    • Acts as the national accreditation body of India
    • Provides a framework for independent third party assessment of Products
    • Promotes adoption of quality standards related to
    • Quality Management Systems
    • Food Safety Management Systems
    • Product certification and inspection bodies
    • Plays a key role in propagation and adherence to quality standards across sectors
    • Leads the National Quality Campaign for a nationwide quality movement

    Boards and Divisions under QCI

    • National Accreditation Board for Testing and Calibration Laboratories (NABL)
    • National Accreditation Board for Hospitals and Healthcare Providers (NABH)
    • National Accreditation Board for Education and Training (NABET)
    • National Accreditation Board for Certification Bodies (NABCB)
    • National Board for Quality Promotion (NBQP)
    With reference to ‘Quality Council of India (QCI)’, consider the following statements: (2017)

    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? 

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

  • GCGs keep India’ technology job market alive as IT lags

    Introduction

    Global Capability Centres are offshore subsidiaries of multinational corporations established to handle technology, engineering, analytics, and innovation functions. In India, GCCs are increasingly replacing traditional IT services firms as the primary creators of high-value technology jobs. Their rapid expansion signals a structural transformation in the nature of work, skill demand, and geographic dispersion of technology employment.

    Why in the News

    Global Capability Centres (GCCs) have emerged as the primary drivers sustaining India’s technology job market amid a hiring slowdown by large IT services firms. During October-December FY26, GCCs recorded 5-7% sequential growth and 48% workforce expansion plans, contrasting sharply with muted IT hiring. India currently hosts 1,850 GCCs employing nearly 2 million professionals, with projections of 2,400 GCCs by 2030, employing over 3 million workers and generating a $25 billion market size. The transition of GCCs from cost-arbitrage centres to strategic hubs for AI, R&D, and specialised digital work marks a qualitative shift in India’s technology employment trajectory.

    What are Global Capability Centres (GCCs)?

    1. Global Capability Centres (GCCs) are wholly-owned offshore units of multinational corporations established to deliver core, high-value functions such as technology development, data analytics, research and development, finance, risk management, and enterprise AI solutions.
    2. Ownership structure: Operate as captive centres under direct control of parent multinational firms.
    3. Functional role: Handle strategic and mission-critical operations, not routine outsourcing tasks.
    4. Evolutionary shift: Transitioned from cost-arbitrage back offices to innovation, R&D, and decision-support hubs.
    5. Indian context: India hosts the world’s largest concentration of GCCs due to its skilled workforce, digital infrastructure, and cost competitiveness.
    6. Economic significance: Contribute to high-skill employment, technology transfer, and integration into global value chains.

    Why are GCCs sustaining technology hiring when IT services firms are slowing?

    1. Hiring resilience: Demonstrated 5-7% sequential growth during Q3 FY26 despite industry-wide slowdown.
    2. Workforce expansion intent: 48% of GCCs reported active workforce expansion plans for the coming year.
    3. Structural insulation: Operate as captive centres aligned to parent firms’ long-term strategies rather than cyclical client demand.

    How has the role of GCCs evolved beyond cost arbitrage?

    1. High-value pivot: Transition from back-office operations to specialised, strategic, and hyperactive roles.
    2. Capability creation: Function as centres of AI adoption, enterprise AI transition, and advanced analytics.
    3. Talent positioning: Serve as strategic cores for high-end talent and R&D, not merely support units.

    What is the scale and future trajectory of GCC expansion in India?

    1. Current footprint: 1,850 GCCs employing ~2 million professionals.
    2. Projected growth: 2,400 GCCs by 2030, employing over 3 million workers.
    3. Economic value: Expected to generate $25 billion market size by 2030.
    4. Enterprise integration: Increasing integration into global decision-making and innovation pipelines.

    How are GCCs reshaping India’s technology geography?

    1. Non-metro diffusion: Growth spreading beyond Tier I cities to Nagpur, Indore, Coimbatore, and other Tier II-III cities.
    2. Quarterly growth rate: Non-metro GCC employment grew at 8-9% per quarter.
    3. Workforce decentralisation: Expansion supports regional talent absorption and reduces metropolitan concentration.

    Why do GCC jobs command higher salaries than IT services roles?

    1. Compensation premium: GCCs offer 12-20% higher salaries compared to IT services firms.
    2. Skill intensity: Higher pay reflects demand for specialised, AI-driven, and leadership roles.
    3. Leadership expansion: Leadership talent pool in GCCs grew from 88,600 to 90,700 between Dec 2024 and Dec 2025.

    How does GCC growth compare with traditional IT services employment?

    1. Net additions: GCCs added 3,400 leaders, increasing total leadership strength from 44,000 to 47,400.
    2. Growth rate: 7.7% growth in GCC leadership roles compared to 2.4% growth in IT services.
    3. Structural contrast: Indicates stronger long-term expansion prospects for GCC-driven employment.

    Conclusion:

    The rise of Global Capability Centres marks a structural shift in India’s technology economy from volume-led IT services to value-driven, innovation-centric employment. While GCCs strengthen India’s position in global digital and AI value chains, sustaining long-term and inclusive growth will depend on aligning skill development, regional dispersion, and workforce readiness with this high-end transformation.

    PYQ Relevance

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

    Linkage: The question assesses the depth, quality, and inclusiveness of digitalisation in India’s economic transformation. The expansion of GCCs as AI- and data-driven enterprise hubs reflects advanced digitalisation, while also exposing gaps in skill readiness and digital inclusion.