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GS Paper: GS3

  • Investment Friendliness Index (IFI)

    Why in News?

    NITI Aayog launched the Investment Friendliness Index (IFI) to assess and improve the investment ecosystem across States and UTs through competitive and cooperative federalism.

    What is IFI?

    • A data driven index that benchmarks how effectively States and UTs attract and sustain investments by evaluating their policy, regulatory, institutional, and infrastructure ecosystem.

    Background

    • Proposed after the 9th NITI Aayog Governing Council Meeting (2024).
    • Announced in the Union Budget 2025-26.

    Key Features

    • Covers 28 States and 8 UTs.
    • Based on 84 indicators using: Secondary data and Investor perception survey.

    Eight Pillars

    • Infrastructure. Business Climate, Resources, Government Policy, Regulatory Ease, Institutional Environment, Financial Health, and Environmental Resilience

    Performance Categories

    • Top Performers: Above 50
    • Frontrunners: 45 to 50
    • Emerging Performers: 40 to <45
    • Aspiring States: Below 40

    Top Performers

    • Overall: Gujarat, Maharashtra, Tamil Nadu, Goa, Odisha.
    • Hilly & NE States: Uttarakhand.
    • UTs & City States: Goa.

    Significance

    • Promotes competitive and cooperative federalism.
    • Encourages State level reforms and ease of investment.
    • Supports Viksit Bharat @2047 and Viksit Rajya @2047.

    [2019] Which one of the following is not a sub-index of the World Bank’s ‘Ease of Doing Business Index’?

    [A] Maintenance of law and order

    [B] Paying taxes

    [C] Registering property

    [D] Dealing with construction permits

  • Can airport operator own airline? Concerns over fair access

    Why in the News?

    The Centre is weighing a policy relaxation that would let airport operators also own airlines, breaking a long standing separation between the two businesses. IndiGo has called the move a “massive conflict of interest,” setting airport neutrality against a shortage of investors willing to fund a new airline for years before it turns a profit.

    Is this a market access problem or a capital problem?

    1. Capital as the entry barrier: A new domestic airline must survive losses for about seven years against incumbents controlling two thirds of the market; the Adani and GMR groups already have that capital through their airport businesses.
    2. Existing ownership caps: Airport operators at Delhi (GMR, 74%) and Mumbai (Adani, 74%) are barred from holding more than 10% in a scheduled carrier, and the restriction runs in reverse for airlines holding airport stakes.
    3. Government’s stated objective: The Civil Aviation Ministry wants more competition against the IndiGo and Air India duopoly, which together hold over 90% of the domestic market.
    4. Adani’s denial: Adani Enterprises has denied evaluating any airline entry, even as reports say the relaxation follows the group’s own request for an enabling policy.

    Why does vertical integration between an airport and an airline invite regulatory caution?

    1. Airports as natural monopolies: A city typically has one major airport, so it must provide neutral, non discriminatory infrastructure and access to every carrier operating there.
    2. Slot allocation conflict: If the airport operator is also the slot coordinator, competing airlines cannot be certain that slot decisions are free of bias toward the operator’s own airline.
    3. Shared infrastructure dependence: Airlines rely on the airport for parking bays, check in counters, and aircraft stands, and any preferential treatment on these fronts would amount to an anti-competitive practice even without proven discrimination.
    4. The efficiency counter-argument: An airport’s revenue increasingly comes from footfall, so an airport that owns an airline may want more flights at lower fares rather than fewer at higher ones, an incentive that could align with, not against, competition.

    What do international precedents actually demonstrate?

    1. Dubai: Emirates and Dubai Airport are both government owned but kept as separate corporate entities with independent management.
    2. Abu Dhabi: Etihad and Abu Dhabi Airport follow the same government owned but corporately separate structure.
    3. Doha: Qatar Airways and Doha Airport are likewise state owned yet run as distinct entities.
    4. Singapore: Changi Airport and Singapore Airlines are linked only through the state’s investment ecosystem, with separate management and regulatory oversight.
    5. Limits of the comparison: Every one of these examples is a hub airport in a market with virtually no domestic air traffic and airline ownership concentrated in the state; India’s airports and airlines are almost entirely private, and its aviation market resembles Europe’s more than West Asia’s or Singapore’s.

    What safeguards would a relaxation require if it goes ahead?

    1. Structural separation: Independent boards and management teams for the airport and airline businesses.
    2. Information firewalls: Protection of competing carriers’ commercially sensitive information from the affiliated airline.
    3. Independent slot coordination: A slot coordinator insulated from the airport operator’s airline interests.
    4. Transparent allocation: Published, non discriminatory gate and terminal allocation policies.

    Conclusion

    The proposal tests whether India should solve a capital shortage in its airline sector by relaxing a structural safeguard designed to keep airports neutral. Global practice offers no true precedent for a private, multi-airline, multi-operator market like India’s, so any relaxation would need enforceable firewalls, not just a change in the equity cap, to prevent slot allocation and infrastructure access from tilting toward the airport operator’s own carrier.

    Back2Basics

    1. Slot coordination: The process by which take-off and landing time slots at a congested airport are allocated among competing airlines; India’s slot coordinators are expected to act as neutral third parties.
    2. Vertical integration: A firm’s ownership of successive stages of a supply chain (here, both the airport infrastructure and an airline that uses it), which competition regulators scrutinise because it can let a firm favour its own downstream business.

    PYQ Relevance

    [UPSC 2014] International civil aviation laws provide all countries complete and exclusive sovereignty over the airspace above the territory. What do you understand by airspace? What are the implications of these laws on the space above this airspace? Discuss the challenges which this poses and suggests ways to contain the threat.
    Linkage: The PYQ examines challenges in aviation infrastructure, market competition, and regulatory frameworks governing the civil aviation sector. The article discusses allowing airport operators to own airlines, highlighting concerns over competition, airport neutrality, and fair access to aviation infrastructure.

  • Ken-Betwa stir claims its first win, activist suspends fast

    Why in News?

    An activist ended an 18-day hunger strike after the Madhya Pradesh government agreed to conduct fresh surveys of families allegedly excluded from rehabilitation under the Ken-Betwa Link Project.

    Key Highlights

    • Jai Kisan Sangathan leader Amit Bhatnagar suspended his indefinite fast after the government accepted the demand for fresh village-level surveys.
    • The issue concerns villages in the Daudhan Dam submergence area in Chhatarpur district, Madhya Pradesh.
    • Protesters alleged exclusion of eligible families from compensation and rehabilitation, flawed surveys, and irregularities in Gram Sabha proceedings.
    • Joint teams of government officials and Jai Kisan Sangathan representatives will conduct fresh surveys.
    • The agitation will continue under the banner of “Nyay Satyagraha.”

    Ken-Betwa Link Project

    • India’s first river interlinking project under the National Perspective Plan.
    • Links the Ken River (Madhya Pradesh) with the Betwa River (Madhya Pradesh and Uttar Pradesh).
    • Comprises the Daudhan Dam, a 221-km canal, and associated infrastructure.
    • Aims to provide irrigation, drinking water, hydropower, and drought mitigation in the Bundelkhand region.

    Concerns

    • Submergence of forest areas, including parts of Panna Tiger Reserve.
    • Displacement and rehabilitation of affected communities.
    • Ecological impacts on river ecosystems and wildlife.

    National River Linking Project (NRLP)

    • Conceived by the National Water Development Agency (NWDA) in 1982.
    • Envisages 30 inter-basin links (16 Peninsular and 14 Himalayan) to transfer water from surplus to deficit basins.

    PYQ (2017, GS3, 10 Marks) Not many years ago, river linking was a concept but it is becoming reality in the country. Discuss the advantages of river linking and its possible impact on the environment.

    [2016] Recently, linking of which of the following rivers was undertaken?

    [A] Cauvery and Tungabhadra

    [B] Godavari and Krishna

    [C] Mahanadi and Sone

    [D] Narmada and Tapti

  • India paid $15 bn of imports in rupees in March-May

    Why in News?

    RBI data shows a sharp rise in rupee-denominated import payments, driven mainly by increased Russian crude oil purchases.

    Key Highlights

    • India settled imports worth ₹1.38 lakh crore (about $14.6 billion) in rupees during March-May 2026, accounting for 7.1% of merchandise imports.
    • This is a sharp increase from ₹42,506 crore (2.4% of imports) in December 2025-February 2026.
    • Russian crude imports reached $17.13 billion, up 30% YoY, aided by temporary US sanctions waivers.
    • Rupee-settled imports have steadily increased:
      • 2023-24: ₹99,680 crore
      • 2024-25: ₹1.13 lakh crore
      • 2025-26: ₹1.72 lakh crore
    • India’s merchandise trade deficit stood at $119 billion in 2025-26.
    • Benefits of Rupee Trade Settlement:
      • Reduces dependence on the US dollar.
      • Saves foreign exchange reserves.
      • Lowers exchange rate risk and transaction costs.
      • Promotes internationalisation of the Indian rupee.
    • Challenges:
      • Limited acceptance of the rupee by trading partners.
      • Persistent trade deficits reduce the recycling of rupee balances.

    Rupee Trade Settlement Mechanism (2022)

    • Introduced by the RBI in July 2022.
    • Enables invoicing, payment, and settlement of international trade in Indian rupees through Special Rupee Vostro Accounts (SRVAs).
    • Aims to facilitate trade, reduce dollar dependence, and strengthen the rupee’s global use.

    PYQ (2015, GS3, 12.5 Marks) Craze for gold in Indians have led to a surge in import of gold in recent years and put pressure on balance of payments and external value of rupee. In view of this, examine the merits of Gold Monetization Scheme.

    [2022] With reference to the Indian economy, consider the following statements:
    1. An increase in Nominal Effective Exchange Rate (NEER) indicates the appreciation of rupee.
    2. An increase in the Real Effective Exchange Rate (REER) indicates an improvement in trade competitiveness.
    3. An increasing trend in domestic inflation relative to inflation in other countries is likely to cause an increasing divergence between NEER and REER.
    Which of the above statements are correct?

    [A] 1 and 2 only

    [B] 1 and 2 only

    [C] 1 and 3 only

    [D] 1, 2 and 3

  • Govt. brings ₹3,030-cr. plan to set up three chemical parks

    Why in News?

    The Union Cabinet approved the BHAVYA-Rasayan Scheme to establish three chemical parks, aiming to boost domestic chemical manufacturing and attract private investment.

    Key Highlights

    • Cabinet approved the Bharat Audyogik Vikas Yojana Rasayan (BHAVYA-Rasayan).
    • Three chemical parks of at least 2,000 acres each.
    • Total outlay: ₹3,030 crore.
    • Each park is expected to attract ₹20,000 crore to ₹50,000 crore in private investment.
    • Parks will provide common infrastructure such as CETPs, hazardous waste management, utilities, and logistics.

    Value Addition

    • India is the 6th largest chemical producer globally and 3rd largest in Asia.
    • The sector contributes about 7% of GDP, 14% of industrial output, and 11% of merchandise exports.
    • Chemical parks promote cluster-based manufacturing, reduce logistics costs, improve environmental compliance, and enhance export competitiveness.

    BHAVYA-Rasayan Scheme

    • Union Government scheme approved in July 2026.
    • Outlay: ₹3,030 crore.
    • Objective: Develop integrated chemical manufacturing hubs, attract investment, reduce import dependence, and strengthen Make in India.

    PYQ (2023, GS3, 10 Marks) 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.

    [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, fertilisers 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:
    a) 1 and 2 only
    b) 2 and 4 only
    c) 3 only
    d) 1, 3 and 4 only

  • In Assam, floods shift course. State response is static.

    Why in the News

    Flooding is a chronic feature of Assam’s monsoon, but this year, Upper Assam districts far from the Brahmaputra’s main channel and without a history of severe floods, Sivasagar, Charaideo, Jorhat and Golaghat, have borne the brunt. More than 20 people died within 24 hours on Monday after a wall of water from Nagaland’s Mon district spilled into Assam over open terrain, and the State Government called the devastation unforeseeable.

    What made this year’s floods different from Assam’s usual monsoon pattern?

    1. Districts without flood history hit hardest: The state government has called the scale of devastation in Sivasagar, Charaideo, Jorhat and Golaghat “unprecedented.“
    2. Casualty toll: More than 20 people died within 24 hours on Monday after a wall of water from Nagaland’s Mon district spilled into Assam and surged over embankments.
    3. An unusual drainage path: The floodwater is draining into the Brahmaputra over open terrain rather than through the tributaries as usual.
    4. The government’s stated position: The Assam government told the state assembly that “no one could have been prepared” for the calamity.

    Why is the “unforeseeable calamity” explanation unconvincing?

    1. A known river behaviour: The floods’ trajectory is a fallout of Assam’s topography and the Brahmaputra’s well-documented tendency to shift course.
    2. Sediment deposition raises the riverbed: After entering the Assam valley near Pasighat in Arunachal Pradesh’s East Siang district, the sharp reduction in gradient slows the river and causes it to deposit sediment, raising the riverbed and reducing the channel’s flood capacity.
    3. Channel abandonment: The Brahmaputra periodically abandons old channels and carves new ones, making it impossible to confine the river within embankments permanently.
    4. A static strategy for a shifting river: Assam’s flood management strategy continues to rely primarily on embankments despite this known channel-shifting behaviour.

    What triggered the immediate disaster in Nagaland and Assam?

    1. Extreme localised rainfall: Mon district received more than one-third of its average July rainfall in about eight hours on Sunday.
    2. Saturated slopes: Hills in the region were already saturated from heavy rain earlier in the month.
    3. Landslides in Nagaland: The saturated slopes collapsed, triggering landslides that killed nine people in Nagaland.
    4. Resulting surge into Assam: The destruction that followed in Assam was a direct consequence of this upstream rainfall and landslide event.

    What institutional response does this demand?

    1. A shared-system approach needed: The situation underscores the need for an institutional mechanism that treats rivers as shared ecological systems across states, with timely warning and coordinated action.
    2. The Brahmaputra Board’s capacity gap: The Brahmaputra Board has long been hampered by staff shortages and inadequate technical capacity. (Brahmaputra Board is a statutory body set up under the Brahmaputra Board Act, 1980 under the Ministry of Jal Shakti, Department of Water Resources, River Development & Ganga Rejuvenation. The jurisdiction of the Brahmaputra Board includes both the Brahmaputra and Barak Valley and covers all the States of the North Eastern Region, including Sikkim and part of West Bengal, which fall under the Brahmaputra basin.)
    3. A call to reinvigorate the agency: With extreme weather becoming more frequent, the Centre and State Governments need to reinvigorate the Brahmaputra Board.

    Conclusion

    The Brahmaputra’s documented tendency to deposit sediment, raise its bed and shift channels, not an unforeseeable event, pushed this year’s floods into Upper Assam districts with no history of severe flooding. Assam’s embankment-only strategy cannot contain a river that periodically abandons its channels, and the underlying institutional gap, an understaffed, under-resourced Brahmaputra Board, must be addressed before climate change intensifies these ruptures further.

    PYQ Relevance

    [UPSC 2020] Account for the huge flooding of million cities in India including the smart ones like Hyderabad and Pune. Suggest lasting remedial measures.

    Linkage: The PYQ tests the geographical and anthropogenic causes of floods and the need for long-term flood management strategies. The Brahmaputra floods article extends this theme to riverine flooding. It shows that how geomorphological processes such as sediment deposition and channel migration, combined with extreme rainfall, demand basin-wide management rather than an embankment-centric approach.

  • Is FCNR(B) a litmus test for diaspora deposits?

    Why in the News?

    The Reserve Bank of India (RBI) has revived the Foreign Currency Non-Resident (Bank) [FCNR(B)] concessional swap window, last used when Raghuram Rajan was Governor, to defend a rupee that has depreciated 12% year-on-year against the U.S. dollar. The move comes as Foreign Portfolio Investors (FPIs) withdrew ₹2.87 lakh crore from Indian equities between January and the first week of June 2026, already surpassing the ₹1.66 lakh crore pulled out in all of 2025.

    What is Foreign Currency Non-Resident (Bank) [FCNR(B)] account and its concessional swap window?

    1. Definition: It is a fixed-term deposit account for Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs), and Overseas Citizens of India (OCIs) that keeps funds in foreign currencies like USD, GBP, EUR, JPY, AUD, or CAD with tax-free interest and full repatriation.
    2. No Exchange Risk: Funds stay in the original foreign currency from deposit to maturity, protecting from rupee value changes.
    3. The FCNR(B) concessional swap window: It is a special Reserve Bank of India (RBI) facility that allows Indian banks to swap long-term foreign currency NRI deposits at a heavily discounted hedging cost, helping boost India’s foreign exchange inflows.

    What has the RBI designed to attract diaspora capital, and how has the market responded?

    1. Concessional swap facility: The RBI is offering banks a swap facility for FCNR(B) deposits with maturities of three to five years, cutting the cost of hedging foreign currency exposure by around 3% against prevailing FX swap rates of 2.8%-3.3% for that tenor.
    2. Deposit window: The scheme covers fresh FCNR(B) deposits mobilised until September 30, 2026, and targets $50-70 billion in inflows.
    3. Higher returns for depositors: Most large banks are offering around 6%, and some smaller or private banks up to 7.1%, under the swap window, compared with 4%-4.4% on U.S. Treasuries.
    4. Response so far: Total foreign currency mobilisation under the scheme has reached $20.72 billion, of which $17.4 billion (84%) has come through FCNR(B) deposits alone.
    5. Currencies covered: Deposits are maintained in the U.S. Dollar, Pound Sterling, Euro, Japanese Yen, Australian Dollar, and Canadian Dollar, with both principal and interest denominated in foreign currency.

    Why has this window become necessary now?

    1. Rupee under pressure: The rupee has depreciated 12% year-on-year against the U.S. dollar as of July 22, reflecting elevated geopolitical risk, a stronger dollar, higher import dependence and recently negative Foreign Direct Investment (FDI).
    2. FCNR(B) inflows had collapsed: Net FCNR(B) inflows fell to $946 million in FY26 from $7.1 billion in FY25, a decline of nearly 86%, before the swap window revived them.
    3. FPI outflows outpacing prior years: Foreign Portfolio Investors (FPIs) withdrew ₹2.87 lakh crore from Indian equities between January and the first week of June 2026, already exceeding the entire ₹1.66 lakh crore withdrawn in 2025.
    4. Unwinding forward positions: Reuters reported on July 22 that the RBI has likely used part of the initial inflows to unwind a portion of its forex forward book. (A forex forward book is the total record of all outstanding forward foreign exchange contracts held by an institution, such as the Reserve Bank of India on Reuters or a commercial bank, representing future agreements to buy or sell currencies at preset rates. It shows whether the entity holds more commitments to buy (long) or sell (short) a specific foreign currency like the U.S. dollar)

    Does this mark a return to crisis-driven fundraising, or a shift to strength-based buffer-building?

    1. Earlier crisis episodes: Resurgent India Bonds (1998) followed the Pokhran-II sanctions, India Millennium Deposits (2000) followed the post-Pokhran sanctions and the dotcom bust, and the first FCNR(B) drive (2013) raised about $34 billion from the diaspora during the “taper tantrum.”
    2. Current fundamentals differ: India’s forex reserves exceed $650 billion, there is no Balance of Payments (BoP) crisis, and the country retains investment-grade macroeconomic fundamentals.
    3. Stated aim now is buffer-building: The RBI’s objective is to build additional buffers against geopolitical uncertainty and volatile capital flows, not resolve an emergency.
    4. Liability trade-off remains: FCNR(B) deposits still add to India’s external liabilities even though they carry no exchange-rate risk for depositors.

    What precondition could undermine the scheme’s sustainability?

    1. Dependence on West Asia: West Asia accounts for nearly 50% of India’s inward remittances, which totalled about $129 billion in 2024, the world’s largest, according to the World Bank.
    2. Remittance growth moderating: Growth from Gulf countries has moderated as governments pursue labour nationalisation policies, oil-price volatility affects fiscal spending, and hiring of expatriate workers slows in some sectors.
    3. Competing Gulf deposit rates: Banks in Gulf countries are offering competitive dollar deposit rates amid war risk and digital-rival competition, making it harder for Indian lenders to compete.
    4. Crowding-out concerns: The RBI and the UAE Central Bank have reportedly held talks on concerns that Indian banks’ dollar deposit drive is crowding out UAE banks.
    5. Access gap for smaller banks: Small and mid-sized private banks without overseas branches or a GIFT City presence are exploring tie-ups with larger Indian banks that have a GIFT City presence.

    Conclusion

    The FCNR(B) revival shows India can mobilise diaspora capital from a position of macroeconomic strength, with forex reserves above $650 billion and no Balance of Payments (BoP) crisis, unlike the crisis-driven 1998 and 2013 fundraising drives. Its success is conditional on a precondition now under strain: continued remittance growth from a West Asia destabilised by war, oil-price volatility and labour nationalisation, even as the deposits themselves add to India’s external liabilities.

    PYQ Relevance

    [UPSC 2016] Justify the need for FDI for the development of the Indian economy. Why is there a gap between MOUs signed and actual FDIs? Suggest remedial steps to increase actual FDI in India.

    Linkage: The PYQ examines India’s external capital mobilisation strategy and the role of foreign capital in sustaining macroeconomic stability and economic growth. The FCNR(B) article extends this theme from equity capital (FDI/FPI) to diaspora debt capital. It analyses how the RBI uses FCNR(B) deposits to cushion FPI outflows, stabilise the rupee, augment forex reserves and strengthen external-sector resilience, while highlighting the trade-off of rising external liabilities.

  • Core upgrade: On the Index of Core Industries

    Why in the News?

    The Index of Core Industries (ICI) has been rebased and restructured, joining the Consumer Price Index (CPI), Wholesale Price Index (WPI), Index of Industrial Production (IIP) and national accounts in India’s overdue statistical modernisation cycle. The revised series adds a ninth sector, sharply changes sector weights, and reports a five-month-high growth rate for June 2026. The update, however, exposes a real production shortfall that better statistics cannot fix, and leaves an institutional anomaly in the compilation of core economic indices unresolved.

    What is the Index of Core Industries (ICI)?

    1. Definition: The Index of Core Industries (ICI) is a monthly production volume index released by the Office of Economic Adviser on the DPIIT Portal that measures the output of key foundational infrastructure sectors in India
    2. Predictor of industrial performance: It acts as an early predictor of overall industrial performance well ahead of the broader Index of Industrial Production (IIP) release.
    3. Revised base year: The base year has shifted from 2011-12 to 2022-23 to reflect current economic realities.

    What does the revised Index of Core Industries change, and why now?

    1. New base year and coverage: The ICI has been rebased (2022-23) and now covers nine sectors instead of eight, with iron ore added as the ninth sector.
    2. Correction of double-counting: The measurement of the steel and coal sectors has been revised to remove double-counting present in the earlier series. Only Raw Coal has been retained in the new series of ICI, by excluding Coal Middling and Washed Coal in order to remove double counting, since Coal Middling and Washed Coal are made from Raw Coal.
    3. Reweighting toward electricity: The electricity sector’s weight has risen to more than 30% of the index from less than 20% in the previous series.
    4. Reweighting away from fossil fuels: The coal and natural gas sectors have had their weights nearly halved, to about 5.6% and 3.8% respectively.
    5. Delayed catch-up/Alignment with other Index: The revision aligns the ICI with recent updates to the CPI, WPI, IIP, and National Accounts. Following the earlier practice, the weights of the ICI (2022-23) series have been derived from the weights of the corresponding items of IIP (2022-23) series, which have been pro-rata distributed to 100.

    Does the headline growth number reflect genuine industrial strength or a statistical mirage?

    1. Five-month-high growth: The new series recorded ICI growth of 5% in June 2026.
    2. Base-effect distortion: Iron ore output grew 43.9% and electricity output grew 9.8% in June 2026, but both figures reflect a statistical base effect, since both sectors had contracted in June 2025.
    3. Uncertain durability: It remains unclear whether current growth rates will hold once the base effect wears off in coming months.
    4. Persistent contraction underneath: The crude oil sector has contracted continuously for 18 months and the natural gas sector for 24 months, a real supply-side weakness the new series does not resolve.
    5. The deeper shortcoming: This is a serious shortcoming if India possesses these resources but cannot extract them economically, rather than a case of resource absence.

    Should ICI and WPI be compiled by MoSPI?

    1. The Ministry of Statistics and Programme Implementation (MoSPI) already compiles the Consumer Price Index (CPI) and the Index of Industrial Production (IIP).
    2. However, the Index of Core Industries (ICI) and the Wholesale Price Index (WPI) continue to be compiled by the Ministry of Commerce and Industry.
    3. Methodological Harmonization: ICI weights are derived directly from the IIP basket managed by MoSPI. Unifying them under one roof prevents administrative friction during base-year overhauls and weight redistributions.
    4. Streamlined Deflators: WPI and output-based producer price metrics are heavily relied upon to deflate nominal macroeconomic numbers like Gross Domestic Product (GDP) and IIP. Moving price and production tracking to the nodal statistical ministry improves synchronization.
    5. Institutional Credibility: Centralizing macro data collection reduces inter-ministerial silos, creating a single unified command for official national statistics.
    6. Domain Expertise: The Ministry of Commerce and Industry works closely with industrial stakeholders, trade bodies, and sector-specific experts (like DPIIT), which helps in real-time ground tracking of wholesale prices and core output.

    Conclusion

    The revised Index of Core Industries brings India’s oldest industrial data series current, with a new base year, a ninth sector and reweighted components. But June 2026’s five-month-high growth figure is partly a statistical base effect masking continuous contraction in crude oil and natural gas output. What remains unresolved is not measurement but extraction capability, along with an institutional anomaly by which the WPI and the ICI still sit outside MoSPI, unlike the CPI and the IIP.

  • FDI Allowed in Inventory-Based E-commerce Model for Exports

    Why in News?

    The Department for Promotion of Industry and Internal Trade (DPIIT) has allowed Foreign Direct Investment (FDI) in the inventory-based model of e-commerce for the export of goods manufactured in India, marking the first major relaxation in India’s e-commerce FDI policy.

    What is the New Policy?

    • 100% FDI is now permitted in the inventory-based e-commerce model, only for exports of goods manufactured in India.
    • The relaxation is under the Foreign Trade Policy (FTP), 2023 and related regulations.
    • It does not apply to domestic e-commerce sales.

    Marketplace vs Inventory Model

    • Marketplace Model: The e-commerce platform acts as an intermediary connecting buyers and sellers without owning inventory. 100% FDI under the automatic route is already permitted.
    • Inventory Model: The e-commerce entity owns the inventory and sells directly to consumers. FDI was previously prohibited but is now allowed only for export operations.

    Why is this Significant?

    • Aims to boost India’s e-commerce exports, currently around US$5 billion, compared to China’s US$300 billion.
    • Encourages exports by Micro, Small and Medium Enterprises (MSMEs), artisans, and startups.
    • Supports exports of handicrafts, garments, books, gems and jewellery, and other Made in India products.

    Concerns

    • Monitoring separate inventories for domestic and export sales may be difficult.
    • Experts believe this could become a stepping stone towards permitting FDI in inventory-based domestic e-commerce.

    About DPIIT

    • Full Form: Department for Promotion of Industry and Internal Trade.
    • Ministry: Ministry of Commerce and Industry.
    • Functions:
      • Formulates and administers India’s FDI Policy.
      • Promotes industrial development and ease of doing business.
      • Oversees startup and industrial promotion initiatives.

    [2022] With reference to foreign-owned e-commerce firms operating in India, which of the following statements is/are correct?
    1. They can sell their own goods in addition to offering their platforms as market-places.
    2. The degree to which they can own big sellers on their platforms is limited.
    Select the correct answer using the code given below:

    [A] 1 only

    [B] 2 only

    [C] Both 1 and 2

    [D] Neither 1 nor 2

  • Gati Shakti Cargo Terminals (GCTs)

    Why in News?

    The Government informed Parliament that 142 Gati Shakti Cargo Terminals (GCTs) have been commissioned under the Gati Shakti Multi-Modal Cargo Terminal (GCT) Policy, with approvals granted for 310 additional terminals to strengthen rail-based logistics.

    What is the Gati Shakti Cargo Terminal (GCT) Policy?

    • Launched to promote private investment in rail-linked cargo terminals.
    • Supports the PM Gati Shakti National Master Plan by improving multimodal logistics.
    • GCT locations are selected based on: Industrial demand, Freight potential, Availability of railway infrastructure, and Logistics potential of the region

    Key Highlights

    • 142 GCTs commissioned across India.
    • 310 additional terminals approved.
    • Freight handling capacity: 224 Million Tonnes Per Annum (MTPA).
    • ₹10,000 crore private investment mobilised.
    • Freight handled in 2025-26: 146 Million Tonnes (MT).

    Benefits

    • Reduces first-mile and last-mile logistics costs.
    • Promotes modal shift from road to rail, lowering logistics costs and emissions.
    • Improves wagon turnaround and freight efficiency.
    • Supports sectors such as: Cement, Steel, Power, Mining, Agriculture, Manufacturing, and Automobiles

    Infrastructure Created

    • GCTs provide modern logistics facilities such as: Warehouses, Silos, Cold storage, and Rail-linked cargo handling facilities
    • These improve market access for industries and farmers while generating employment.

    Prelims Value Added

    • PM Gati Shakti National Master Plan was launched in 2021 as a GIS-based digital platform for integrated infrastructure planning.
    • It aims to improve multimodal connectivity by integrating roads, railways, ports, airports, waterways, and logistics infrastructure.
    • MTPA = Million Tonnes Per Annum.