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

Why in the News?

OpenAI has announced its readiness for a future Initial Public Offering (IPO).

Laws Governing IPOs in India:

SEBI Act, 1992: Empowers SEBI to regulate capital markets and IPO processes.
Companies Act, 2013: Governs company formation, prospectus rules, and disclosure norms.
SEBI (ICDR) Regulations, 2018: Specifies detailed rules on IPO eligibility, pricing, disclosure, and allotment.
Securities Contracts (Regulation) Act, 1956: Regulates the listing and trading of securities on stock exchanges.
SEBI (LODR) Regulations, 2015: Mandates continuous disclosure requirements and corporate governance standards for listed companies.

What is an IPO?

Definition: An IPO is when a private company offers its shares to the public for the first time.
Objective: It marks the company’s move to become a publicly listed company on a stock exchange.
End Goal: Through an IPO, companies raise money from investors, and the public gets a chance to become shareholders.

How is an IPO Listed in India?

Regulatory Filing: A company must file an offer document with SEBI (Securities and Exchange Board of India).
Offer Document Includes:
- Details of the company and promoters.
- Financial history and business goals.
- The reason for raising capital and IPO structure.
SEBI Approval: After review, SEBI gives permission for the listing process to begin.

IPO Eligibility & Pricing:

Eligibility Criteria (SEBI Rules):
- Minimum Rs 3 crore in tangible assets in the last 3 years.
- Minimum Rs 1 crore in net worth each year for 3 years.
- Rs 15 crore average pre-tax profit in at least 3 out of the last 5 years.
Who sets the Price:
- The company and its merchant banker decide the price based on valuation.
- Factors include assets, profits, and future growth.
- SEBI does NOT fix IPO prices.

Who can invest in an IPO?

Eligibility: Anyone 18 years or older with a brokerage account can apply.
Investor Categories:

1. Qualified Institutional Buyers (QIBs): Mutual funds, banks, insurance firms, FPIs, etc.
2. Retail Investors: Individuals investing up to Rs 2 lakh.
3. High Net Worth Individuals (HNIs): Investing more than Rs 2 lakh.

[UPSC 2025] 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

May 30, 2025

Why in the News?

To boost India’s export strength, the government has restored Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme benefits for eligible exports starting June 1, 2025.

Details of the Latest Update:

RoDTEP benefits have now been restored for Advance Authorization (AA) holders, Export-Oriented Units (EOUs), and Special Economic Zones (SEZs).
These categories were previously excluded from February 5, 2025, but are now eligible again from June 1, 2025.
The move ensures a level playing field for all exporters and encourages broad-based export growth.

About the RoDTEP Scheme:

Launch: It started on January 1, 2021, as part of the Foreign Trade Policy 2015–20.
Objective: It helps exporters get refunds for hidden taxes and duties that are not refunded under other schemes.
- Examples of Hidden Taxes: These include taxes like electricity duty, mandi tax, and fuel charges during transport.
Why it was introduced: RoDTEP replaced the earlier Merchandise Export Incentive Schemes (MIES) after India lost a case at the World Trade Organisation (WTO).
Global Compliance: The scheme is WTO-compliant, following the rule that exported goods should not carry domestic taxes.
Administered by: It is managed by the Department of Revenue under the Ministry of Finance.

Eligibility under RoDTEP:

Who can apply: All Indian exporters — whether manufacturers or merchant exporters — are eligible.
Eligible exports: Exports from SEZs, EOUs, and e-commerce platforms are also covered.
Not Eligible: Re-exported goods are not eligible for benefits.
Sector Focus: The scheme gives priority to labour-intensive sectors that earlier benefitted from MEIS.

How the refund works:

Rebate Calculation: The refund is given as a percentage of the export value (Free on Board value).
Mode of Refund: The benefit comes in the form of e-scrips, which are stored in a digital ledger by the Central Board of Indirect Taxes and Customs (CBIC).
Usage of E-Scrips: These e-scrips can be used to pay basic customs duty or be transferred to other importers.

[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*

May 28, 2025

Trade deals will bring opportunities for Indian agriculture. But there will also be challenges

Why in the News?

India achieved record exports of $820.93 billion in FY25, rising 6.5%, but faced growing trade deficits as agriculture lagged, growing only 2.3% yearly despite employing half the workforce.

What was India’s trade performance in FY25?

Total exports (goods + services) reached $820.93 billion, marking a 6.5% increase over FY24.
Merchandise exports contributed $437.42 billion (53% of total exports), while services exports contributed $383.51 billion (47%).
Imports grew by 6.85% to $915.19 billion, with merchandise imports at $720.24 billion (79%) and services imports at $194.95 billion (21%).
The trade deficit widened to $94.26 billion from $78.39 billion in FY24.
The trade-to-GDP ratio stood at a robust 41.4%, reflecting India’s deeper integration with global markets.

How will Trade deals bring opportunities for Indian agriculture?

Reduced Dependence on Price-Sensitive Markets: Trade deals open new and stable markets for Indian agricultural exports, reducing over-reliance on traditional destinations and shielding against price volatility. Eg: The India-UK FTA could boost exports of premium products like Basmati rice, tea, spices, and processed foods to the UK, which is a high-value market with established Indian diaspora demand.

Boost Processed Agricultural Exports: Trade agreements typically reduce tariffs and non-tariff barriers, enhancing competitiveness of value-added and processed agri-products, which fetch higher margins. Eg: Under the India-UK FTA, processed foods and marine products can gain better access, enhancing India’s earnings from exports of ready-to-eat meals, seafood, and organic food products.

Why did agri-export growth slow down over the last decade?

Frequent Export Bans and Restrictions: Domestic policies often imposed export bans or curbs on essential commodities like rice, wheat, sugar, and onions to control inflation, disrupting export momentum. Eg: Restrictions on broken rice exports and duties on Basmati rice led to a 27% fall in rice export volume in FY24.
Global Price Fluctuations: Agri-exports are heavily influenced by global price trends — when world prices fall, Indian exports lose competitiveness and earnings. Eg: Rice export values declined despite volume recovering after lifting restrictions, due to price volatility.
Declining Productivity and Competitiveness: Lack of investment in research, technology, and resource-efficient farming practices lowered growth compared to earlier periods of rapid expansion. Eg: Average annual agri-export growth dropped from 20% (FY05–14) to just 2.3% (FY15–25).

How did rice export restrictions impact trade and prices?

Export Volume Decline: Restrictions like export bans, duties, and minimum export prices caused a sharp drop in rice export volumes. Eg: Rice exports fell by 27% from 22.3 million metric tonnes (MMT) in FY23 to 16.3 MMT in FY24.
Global Price Spike: Reduced supply due to restrictions pushed up global rice prices, affecting international markets. Eg: Imposition of export duties and minimum export price (MEP) on Basmati rice led to a spike in global rice prices.
Value Impact Less Severe than Volume: Despite the fall in export volume, the value of exports dropped only slightly because of higher prices. Eg: Rice export value fell by only 6% even as volumes dropped 27%, showing price effects cushioned revenue loss.

What are the environmental risks of rice exports?

Water Resource Depletion: Rice cultivation requires large amounts of water, which can strain local water supplies. Eg: In regions like Punjab, intensive rice farming has led to groundwater depletion and lowered water tables.
Methane Emissions: Flooded rice paddies emit methane, a potent greenhouse gas contributing to climate change. Eg: In Southeast Asia, vast rice fields are significant sources of methane emissions impacting global warming.
Soil Degradation and Pollution: Continuous rice farming with chemical fertilizers and pesticides can degrade soil quality and contaminate water bodies. Eg: Excessive use of agrochemicals in rice fields in Vietnam has caused soil salinization and river pollution.

What is the status of edible oil imports?

2022–23 (November–October): India imported approximately 16.5 million metric tons of edible oils, marking a 17% increase from the previous year. This surge was driven by lower import duties on key oils like palm, soybean, and sunflower oils.
2023–24 (November–October): Imports declined by about 3.1%, totaling 15.96 million metric tons, due to higher domestic oilseed production and reduced demand amid rising global prices.

The recent reduction in edible oil imports is very small. So, we need to take more steps to further cut down these imports.

How can India cut edible oil import dependence?

Increase Domestic Oilseed Production: Boost cultivation of oilseeds like groundnut, mustard, sunflower, and soybean through better seeds, irrigation, and farmer support. Eg: The “Oilseeds Production Mission” aims to raise domestic output and reduce imports.
Promote Sustainable Farming Practices: Encourage crop diversification and intercropping to improve yields and soil health, reducing reliance on imported oils. Eg: States like Madhya Pradesh have successfully adopted intercropping mustard with wheat to increase oilseed production.
Develop Processing Infrastructure: Invest in modern oil extraction and refining units to enhance local processing capacity and reduce post-harvest losses. Eg: Setting up mega oilseed processing clusters in regions like Rajasthan to strengthen the supply chain and self-reliance.

Way forward:

Strengthen Oilseed Ecosystem: Enhance productivity through quality seeds, MSP support, and targeted R&D under national missions like the Oil Palm and Oilseeds Mission.
Build Agro-Processing Capacity: Invest in decentralized, modern oilseed processing units to reduce wastage, improve value addition, and boost farmer income.

Mains PYQ:

[UPSC 2023] What are the direct and indirect subsidies provided to farm sector in India? Discuss the issues raised by the World Trade Organization(WTO) in relation to agricultural subsidies.

Linkage: Agricultural subsidies are a key area of contention in international trade negotiations, particularly within the WTO. Trade deals often involve discussions around reducing or reforming subsidies, which presents both a challenge (potential reduction of support for farmers) and an opportunity (creating a more level playing field or accessing new markets if other countries also reduce subsidies) for Indian agriculture.

May 26, 2025

PLI Scheme for 11 Pharma Products rolled out

Why in the News?

The Department of Pharmaceuticals has invited drug manufacturers to apply for benefits under the Production Linked Incentive (PLI) scheme.

It has invited fresh applications for 11 unsubscribed or partially subscribed pharmaceutical products, including Neomycin, Gentamycin, Erythromycin, Streptomycin, Tetracycline, Ciprofloxacin, and Diclofenac Sodium, to boost domestic production capacity.

About the PLI Scheme:

Launch: The Production Linked Incentive (PLI) Scheme was launched in March 2020.
Objectives: Aimed to boost domestic manufacturing, reduce import dependency, and create employment.
Initial Focus: Targeted three sectors — mobile manufacturing, electronic components, and medical devices.
Expansion: Later extended to 14 key sectors, including pharmaceuticals, textiles, IT hardware, automobiles, and electronics.
Incentive Structure: Offered 1%–4% incentives on incremental sales.
Impact: Attracted large-scale investments and enhanced global competitiveness of Indian industries.

PLI Scheme for Pharmaceuticals:

Target Area: Designed to promote bulk drug and formulation manufacturing in India.
Product Focus: Encouraged domestic production of Key Starting Materials (KSMs), Drug Intermediates (DIs), and Active Pharmaceutical Ingredients (APIs).
Strategic Aim: Aimed to reduce import dependence, particularly on China.
Financial Allocation: Total outlay for the pharmaceutical PLI scheme is ₹6,940 crore.

[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?

Options: (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

May 26, 2025

SPICED Scheme

Why in the News?

The Spices Board of India has decided to disburse ₹130 crore to almost 45,000 beneficiaries in 2025-2026 under the SPICED (Sustainability in Spice Sector through Progressive, Innovative and Collaborative Interventions for Export Development) Scheme.

Back2Basics: Spices Board of India

The merger of the erstwhile Cardamom Board and Spices Export Promotion Council on 26th February 1987, under the Spices Board Act 1986 led to the formation of the Spice Board of India.
The Board functions as an international link between the Indian exporters and the importers abroad with a nodal Ministry of Commerce & Industry.
It is headed by a Chairman, a rank equivalent to Joint Secretary to the GoI.
Headquartered in Kochi, it has regional laboratories in Mumbai, Chennai, Delhi, Tuticorin, Kandla and Guntur.

About SPICED Scheme and its Features:

Launch: It is launched by the Spices Board under the Ministry of Commerce and Industry.
Timeline and Budget: The scheme runs till 2025–26 with a total outlay of ₹422.30 crore, aligned with the 15th Finance Commission period.
Objectives: It aims to boost spice exports, improve cardamom productivity, enhance post-harvest quality, and promote value addition and sustainability.
Funding Support: In 2025–26, about ₹130 crore will be distributed to 45,000 beneficiaries.
Focus Areas: Includes Mission Value Addition, Mission Clean and Safe Spices, promotion of GI-tagged spices, and development of Spice Incubation Centres.
Priority Beneficiaries: Special focus on farmer groups, FPOs, FPCs, SHGs, SC/ST communities, SMEs, and exporters from the North-East.
Monitoring: All activities are geo-tagged for transparency and tracking.

Key Facts about Spices Production and Trade:

Global Position: India is one of the largest producers and exporters of spices, cultivating 75 of 109 ISO-listed spices.
Major Producing States: Include Madhya Pradesh, Rajasthan, Gujarat, Andhra Pradesh, Telangana, Karnataka, Kerala, Tamil Nadu, Assam, and others.
Key Spices: India grows and exports pepper, cardamom, chili, ginger, turmeric, coriander, cumin, fennel, celery, nutmeg, and spice oils.
Top Products by Volume: Chili, cumin, turmeric, ginger, and coriander account for 76% of production.
Export Leaders: Chili is the top export earner, generating around $1.1 billion annually. Ginger exports are growing at 27% CAGR.
Export Value: In 2023–24, India exported $4.25 billion worth of spices, capturing 12% of the global spice trade.
Export Destinations: India exported to 159 countries. Key markets include China, USA, Bangladesh, UAE, Thailand, Malaysia, Indonesia, UK, and Sri Lanka — together accounting for 70% of exports.

[UPSC 2019] Among the agricultural commodities imported by India, which one of the following accounts for the highest imports in terms of value in the last five years?

(a) Spices

(b) Fresh fruits

(d) Vegetable oils

May 23, 2025

[12th May 2025] The Hindu Op-ed: A fundamental reset to drive manufacturing growth

PYQ Relevance:

[UPSC 2023] 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: The importance of the manufacturing sector for economic growth and asks about government policies concerning it, including MSMEs. This aligns perfectly with the theme of driving manufacturing growth as discussed in the article.

Mentor’s Comment: Global manufacturing and trade are quickly changing, focusing more on products that use advanced technology and innovation. This shift is being powered by strong research and development (R&D), modern technology, skilled workers, and complex supply chains. Also, the high tariffs recently introduced by the United States are expected to further change how the manufacturing industry works.

Today’s editorial talks about how global manufacturing and trade are changing because of the use of advanced technology and innovation. This topic is useful for GS Paper II (International Relations and Policy Making) and GS Paper III (Manufacturing Sector).

Let’s learn!

Why in the News?

As global changes are set to reshape the manufacturing industry, it is important to focus on technical education, core engineering skills, and new ideas (innovation).

What challenges hinder India’s efforts to match global manufacturing standards?

Low Manufacturing Productivity: India’s manufacturing sector is far less efficient compared to global benchmarks. Eg: In 2023, India’s productivity stood at $8.9K, while the global average was $32K, and the U.S. reached $159K.
Limited R&D Investment: Innovation-driven manufacturing requires substantial R&D support, which remains inadequate in India. Eg: India spends just 0.65% of its GDP on R&D, while China spends 2.4% and South Korea 4.5%.
Skills Mismatch and Weak Technical Education: The gap between academic training and industrial skill requirements slows the shift to high-tech manufacturing. Eg: Most engineering institutions focus on theory, grading, and rote learning, with less than 50% emphasis on practical training.
Underdeveloped Industrial Infrastructure: India lacks world-class manufacturing ecosystems with integrated supply chains and R&D support. Eg: Unlike China’s fully equipped industrial parks, many Indian parks lack plug-and-play facilities, design labs, and testing centers.
Low Per Capita Manufacturing Output: India’s contribution to manufacturing per individual is among the lowest in major economies. Eg: In 2023, India’s per capita value added was $0.32K, while the global average was $2K.

Why must India reform technical education for innovation-led manufacturing?

Lack of Practical Skill Development: Engineering education in India emphasizes theoretical knowledge over hands-on experience. Eg: Less than 50% of curriculum time is dedicated to lab work or industry projects, reducing readiness for real-world manufacturing tasks.
Weak Focus on Creativity and Problem-Solving: Entrance exams and academic culture focus on rote learning rather than fostering innovation. Eg: Students are trained to solve predefined problems, but lack the ability to tackle open-ended, real-world challenges in engineering and design.
Outdated Laboratory and Workshop Infrastructure: Many technical institutions lack modern facilities to train students in advanced manufacturing techniques. Eg: Few colleges have tool rooms, CNC machines, or 3D printing labs, which are standard in global manufacturing training programs.
Disconnect Between Industry Needs and Curriculum: The current syllabus often fails to align with rapidly evolving industrial technologies and skills. Eg: Courses in AI integration, robotics, and IoT in manufacturing are still missing or underdeveloped in most core engineering streams.
Limited Industry-Academia Collaboration: Technical education lacks structured partnerships with manufacturing companies for internships, research, and product development. Eg: Unlike Germany’s dual education model, Indian students rarely work on live industry problems during their course of study.

How do state-specific manufacturing parks boost industrial ecosystems?

Accelerate Industrial Setup with Plug-and-Play Infrastructure: Ready-to-use facilities reduce time and cost for new manufacturing units. Eg: Tamil Nadu’s SIPCOT parks offer land, power, and water connections upfront, attracting auto and electronics manufacturers quickly.
Encourage Localized Skill Development and Employment: Parks drive local job creation and training programs aligned with industry needs. Eg: Gujarat’s Dholera SIR includes skill centers to train youth for electronics, EV, and robotics industries.
Foster Innovation and Prototype Development: Dedicated facilities help companies develop, test, and refine products. Eg: Karnataka’s Aerospace SEZ near Bengaluru hosts R&D labs, testing units, and design centers supporting aerospace startups.
Build Industry Clusters and Supply Chains: Concentration of allied industries creates efficient ecosystems with shared logistics and services. Eg: Andhra Pradesh’s Sri City SEZ houses over 180 companies across sectors like consumer goods and automotive, fostering collaboration.
Attract Investment Through Tailored State Policies: State-specific incentives aligned with local strengths draw both domestic and foreign investors. Eg: Maharashtra’s Aurangabad Industrial City (AURIC) offers tax benefits and sector-specific infrastructure to attract high-tech industries.

Way forward:

Revamp Technical Education and Skilling: Align curricula with industry 4.0 needs, strengthen practical training, and build strong industry-academia partnerships to boost innovation-led manufacturing.
Strengthen Industrial Ecosystems: Expand world-class infrastructure, ensure faster regulatory clearances, and scale up R&D investment to create globally competitive manufacturing hubs.

May 12, 2025

FTA with UK: How a stitch in time can boost India’s textile sector

Why in the News?

On May 6, India and the UK signed an important Free Trade Agreement (FTA), which was called a historic achievement by Prime Minister Narendra Modi. The FTA creates new opportunities for the textile sector, which now needs to match global styles and standards

What are the key benefits of the India-UK Free Trade Agreement (FTA)?

Benefit	Description	Eg
1. Enhanced Market Access	India gains zero-duty access to UK markets for industrial and agricultural goods; UK exporters get reduced tariffs in India.	Indian processed foods earlier faced 10–12% tariffs — now duty-free in the UK. Tariffs on British whiskey reduced from 150% to 40% over 10 years.
2. Boost to Key Domestic Sectors	Labour-intensive Indian sectors like textiles, apparel, toys, and footwear benefit; UK gains in automobiles and spirits.	Indian apparel now gets zero-tariff access to UK. Tariffs on British cars slashed from 100% to 10%.
3. Job Creation & Economic Growth	Trade expansion leads to employment generation and investment in both countries.	India’s textile sector, employing 45+ million people, can boost jobs through increased exports.
4. Diversification of Trade Partners	India reduces dependency on US/EU; UK diversifies beyond EU post-Brexit.	India currently holds just 1.8% share in UK imports — FTA targets major increase.
5. Foundation for Future FTAs	Sets a model for India’s trade negotiations with other major economies like the EU and US.	Learnings from tariff cuts and ESG compliance can aid future deals with EU/US.

How can India improve its Textiles and Apparel sector to capitalize on the FTA with the UK?

Strengthen the Value Chain and Infrastructure: India must address its fragmented and geographically dispersed T&A value chain. Fast-tracking the operationalization of PM MITRA parks can create integrated textile hubs, reduce logistics costs, and improve delivery timelines. Eg: Bangladesh delivers apparel orders in 50 days compared to India’s 63 days — a more integrated value chain can help India match or exceed this efficiency.
Promote Manmade Fibre (MMF) Production: India needs to resolve the inverted GST structure and ease quality norms to boost MMF-based products, which dominate global demand for technical textiles, athleisure, and activewear. Eg: MMF garments are taxed higher at the input stage than at the finished product level, making Indian exports less competitive globally.
Focus on Compliance, Design, and Market Relevance: Indian exporters must align with global fashion trends and strengthen ESG (Environmental, Social, Governance) compliance, especially in anticipation of EU and UK sustainability regulations. Eg: The EU’s Corporate Sustainability Due Diligence Directive (CSDDD) will require traceable, ethical supply chains by 2029 — Indian exporters must prepare accordingly.

Why is the operationalisation of PM MITRA parks important for India’s textile industry?

Integrated Value Chain and Reduced Costs: PM MITRA parks aim to bring together the entire textile value chain — from spinning, weaving, processing to garmenting — in one location, reducing logistics costs, delays, and inefficiencies. Eg: Currently, cotton is grown in Gujarat, yarn spun in Tamil Nadu, and garments stitched elsewhere, leading to high costs and long lead times. An integrated park would streamline this process.
Boost Export Competitiveness: These parks can help scale up production, attract investment, and improve quality standards for global markets like the UK, where India now enjoys zero-duty access under the FTA. Eg: By focusing PM MITRA parks in export-oriented regions like Navsari (Gujarat) and Virudhunagar (Tamil Nadu), India can cater more efficiently to UK and EU demand.

Where does India lag behind in terms of manmade fibre (MMF) production compared to global competitors?

Inverted GST Duty Structure: The GST on raw materials (like MMF yarn at 12%) is higher than on finished products (5%), leading to increased production costs and reduced global competitiveness. Eg: Indian MMF garments are costlier compared to those from Vietnam or Bangladesh, where tax structures are more balanced.
Restrictive Quality Norms and Compliance Issues: Outdated or complex quality standards limit innovation and access to high-performance MMF products demanded in global markets. Eg: Indian firms struggle to meet the quality requirements for technical textiles used in athleisure and activewear segments.
Lack of Investment in High-End Functional Fabrics: India has limited capacity for producing value-added MMF fabrics such as moisture-wicking, stretchable or anti-bacterial textiles, unlike China or South Korea. Eg: While China leads in exporting performance-based textiles, India still focuses on basic polyester products.

Way forward:

Reform Tax Structure & Boost Incentives: Rationalize the GST structure to eliminate the inverted duty issue and offer production-linked incentives (PLI) for MMF textiles to enhance global competitiveness.
Invest in R&D and Modern Manufacturing: Encourage investment in high-performance MMF fabric production, innovation, and compliance infrastructure to meet international standards in technical textiles and sustainability.

Mains PYQ:

[UPSC 2017] Account for the failure of the manufacturing sector in achieving the goal of labor-intensive exports. Suggest measures for more labor-intensive rather than capital – intensive exports.

Linkage: Textiles and Apparel (T&A) sector as a labour-intensive sector that employs over 45 million people and can benefit significantly from the FTA by gaining access to high-end markets. This question directly asks about promoting labour-intensive exports, aligning perfectly with the potential benefits highlighted for the T&A sector through the FTA.

May 12, 2025

[pib] Credit Guarantee Scheme for Startups (CGSS)

Why in the News?

The Department for Promotion of Industry and Internal Trade (DPIIT), under the Ministry of Commerce and Industry, has announced the expansion of the Credit Guarantee Scheme for Startups (CGSS).

About Credit Guarantee Scheme for Startups (CGSS):

The CGSS was launched on October 6, 2022, as part of the Startup India Action Plan.
The scheme is designed to provide collateral-free credit to eligible startups through recognized financial institutions.
It offers credit guarantee cover for loans extended by Scheduled Commercial Banks, All India Financial Institutions (AIFIs), Non-Banking Financial Companies (NBFCs), and SEBI-registered Alternative Investment Funds (AIFs).
The guaranteed coverage is available in 2 formats:

1. Transaction-based (for individual borrowers) and
2. Umbrella-based (for Venture Debt Funds).

The scheme helps startups access funding through instruments such as working capital, term loans, and venture debt.
The DPIIT is responsible for the oversight and implementation of the scheme.
The scheme is operated by the National Credit Guarantee Trustee Company Limited (NCGTC).
A Management Committee (MC) and a Risk Evaluation Committee (REC) have been constituted to supervise and review the operations of the scheme.
It aligns with the objective of encouraging innovation, supporting early-stage entrepreneurship, and driving economic self-reliance.

Key Changes in the Expanded CGSS:

Guarantee ceiling increased from ₹10 crore to ₹20 crore per borrower.
Guarantee cover enhanced to:
- 85% for loans up to ₹10 crore.
- 75% for loans exceeding ₹10 crore.
Annual Guarantee Fee (AGF) reduced from 2% to 1% p.a. for startups in 27 Champion Sectors.
The Champion Sectors are identified under the ‘Make in India’ initiative to strengthen domestic manufacturing and services.

[UPSC 2023] Consider the following statements with reference to India:

1. According to the ‘Micro, Small and Medium Enterprises Development (MSMED) Act, 2006’, the ‘medium enterprises’ are those with investments in plant and machinery between Rs. 15 crore and Rs. 25 crore.

2. All bank loans to the Micro, Small and Medium Enterprises qualify under the priority sector.

Which of the statements given above is/are correct?

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

May 10, 2025

Competition Commission issues norms to assess Predatory Pricing

Why in the News?

The Competition Commission of India (CCI) has introduced new Cost Regulations 2025 to check if companies are selling below cost to unfairly drive out competitors.

About Competition Commission of India (CCI):

The CCI was established on 14 October 2003 and became fully operational in May 2009.
It aims to eliminate anti-competitive practices, prevent abuse of dominant positions, and promote fair competition.
It was formed under the Competition Act, 2002, later amended in 2007, replacing the Monopolies and Restrictive Trade Practices Act, 1969 based on Raghavan Committee recommendations.
The headquarters is located in Kidwai Nagar (East), New Delhi, and the Commission includes 1 Chairperson and up to 6 Members, all appointed by the Central Government.
Members must have at least 15 years of experience in areas such as law, economics, business, finance, or public administration.
Jurisdiction of CCI:
- It is a quasi-judicial statutory body under the Ministry of Corporate Affairs.
- It has the authority to initiate cases suo motu or respond to public/institutional complaints, and can impose penalties for violations.
- Its jurisdiction spans all sectors across India, and it is empowered to frame its own regulations under the Act.

New Cost Definitions under Cost Regulations, 2025:

Under the Cost Regulations 2025, Average Variable Cost (AVC) is used to measure cost, calculated by dividing total variable costs by total output.
Variable cost excludes fixed costs and overheads and varies with production.
Although a sector-specific approach was considered, the CCI adopted a case-by-case evaluation after stakeholder feedback.
The new framework is sector-agnostic, allowing flexibility for diverse industries, including the digital economy, and supports better adaptation to market dynamics.

[UPSC 2020] With reference to Trade-Related Investment Measures (TRIMS), which of the following statements is/are correct?

1. Quantitative restrictions on imports by foreign investors are prohibited. 2. They apply to investment measures related to trade in both goods and services. 3. They are not concerned with the regulation of foreign investment.

Select the correct answer using the code given below:

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

May 10, 2025

UK-India Free Trade Agreement (FTA) signed

Why in the News?

India and the United Kingdom signed a Free Trade Agreement (FTA), ending nearly 3 years of negotiations, with an aim to boost trade and investment between the two nations.

Free Trade Agreement

What is Free Trade Agreement (FTA)?

An FTA is an agreement between two or more countries to reduce or eliminate customs tariffs and non-tariff barriers on trade between them.
Objective: To promote trade by making it easier and more cost-effective for businesses to import and export goods and services.
FTAs can cover goods, services, investment, and intellectual property rights.
By reducing trade barriers, FTAs also benefit consumers by offering a wider range of products at lower prices.
FTAs play a key role in boosting economic growth and job creation by facilitating trade between countries.
India’s FTAs:
- India has signed FTAs with 16 countries or regional blocs as of May 2025.
- These FTAs cover major partners such as Sri Lanka, Bhutan, Thailand, Singapore, Malaysia, South Korea, Japan, Australia, UAE, Mauritius, ASEAN (10 countries), and EFTA (4 countries).

Key terms of the UK-India FTA:

Trade Growth: Expected to boost bilateral trade by £25.5 billion annually by 2040.
Whisky and Gin Tariffs: Tariffs reduced from 150% to 75%, eventually to 40% over 10 years.
Automobile Tariffs: India to reduce automotive tariffs from over 100% to 10%.
Other Goods: Tariffs reduced on cosmetics, aerospace, medical devices, chocolate, and more.
Services and Work Permits: Increased quotas for Indian workers in IT and healthcare, with 100 new visas annually for professionals.
Carbon Tax: Dispute over UK’s proposed carbon tax on metal imports.
Supply Chain Resilience: FTA aims to reduce reliance on China and improve supply chain security.

[UPSC 2017] The term ‘Broad-based Trade and Investment Agreement (BTIA)’ is sometimes seen in the news in the context of negotiations held between India and:

Options: (a) European Union* (b) Gulf Cooperation Council (c) Organization for Economic Cooperation and Development (d) Shanghai Cooperation Organization.

May 7, 2025