Why in the News?
Recently, the U.S. has agreed to temporarily reduce its tariffs on Chinese goods from 145% to 30% for 90 days, while China will lower its tariffs on American products from 125% to 10%.
What are the key terms of the U.S.-China trade truce?
- Tariff Reductions: The U.S. has temporarily lowered tariffs on Chinese goods from 145% to 30%, and China has reduced its duties on American imports from 125% to 10%.
- 90-day Breather: The reprieve is limited to 90 days, giving both sides a window for further negotiations.
- Global Market Response: The announcement led to a 2%-3.8% rise in markets worldwide, reflecting investor relief.
- Exclusion from Previous Pause: Earlier, in April, the U.S. had excluded China from a 90-day reciprocal tariff pause, indicating that this thaw represents a strategic pivot.
|
Why has the U.S. trade deficit with China remained unresolved despite the tariff rollback?
- Temporary and Limited Rollback of Tariffs: The U.S. reduced tariffs from 145% to 30% only for 90 days, which is not a permanent structural solution. Eg: Such short-term measures may ease tensions but do not address long-term trade imbalances rooted in production and consumption patterns.
- Core Issue of Trade Imbalance Not Addressed: The agreement focuses on reducing tariffs but does not compel China to increase imports of U.S. goods or alter its export-driven model. Eg: The U.S. continues to import large volumes of electronics, machinery, and pharmaceuticals from China while exporting relatively fewer goods.
How might the U.S.-China agreement affect India’s position in the China+1 manufacturing strategy?
- Reduced Urgency for Diversification: The easing of tensions may lead global firms to reconsider shifting away from China, reducing momentum behind the China+1 strategy. Eg: Companies that were exploring alternatives like India or Vietnam may delay or reverse their relocation plans.
- India’s Limited Gains from China+1 Exposed: India has not fully leveraged the China+1 opportunity due to infrastructure and policy bottlenecks, making it less competitive. Eg: Despite global supply chain shifts during the trade war, India attracted far less investment than Vietnam or Indonesia in electronics and apparel sectors.
- Renewed Focus on China’s Scale and Efficiency: Investors might return to China due to its unmatched manufacturing scale, efficient logistics, and mature supply chains. Eg: Apple’s decision to continue manufacturing a large share of its products in China despite exploring India illustrates the challenge India faces in replacing China.
| Note: China+1 is a business strategy adopted by multinational companies to diversify their manufacturing operations and supply chains beyond China, by adding at least one other country—hence “China plus one”. |
What challenges does India face in its trade negotiations with the U.S.?
- Retaliatory Tariff Pressures: India has had to respond to U.S. tariff hikes on steel and aluminium with potential reciprocal measures, increasing trade tension. Eg: After the U.S. imposed duties under Section 232, India notified the WTO of its plan to raise tariffs on American products like almonds and apples.
- Pending Comprehensive Trade Agreement: Despite ongoing talks, both countries have struggled to finalize a broad-based trade deal due to divergent priorities and domestic pressures. Eg: Disagreements over market access for U.S. dairy products and medical devices have repeatedly stalled progress on a bilateral trade pact.
- Impact of U.S.-China Trade Developments: A thaw in U.S.-China trade ties may reduce Washington’s interest in deepening trade relations with India, limiting India’s leverage. Eg: If U.S. firms regain confidence in China post-agreement, India may lose the strategic advantage it gained during earlier trade disruptions.
Why must Indian States implement labour and land reforms to reduce dependence on Chinese imports?
What are the steps taken by the Indian government?
- Labour Law Reforms to Boost Ease of Doing Business: The Indian government has amended labour laws to make it easier for industries to hire and fire workers, fostering a more flexible labour market. Eg: The Code on Industrial Relations (2020) consolidates multiple labour laws and provides greater flexibility for businesses to operate efficiently.
- Land Acquisition and Infrastructure Development: The government has streamlined land acquisition processes and enhanced infrastructure to attract investments in manufacturing. Eg: The National Industrial Corridor Development Corporation (NICDC) is developing dedicated industrial zones with improved connectivity and land acquisition processes to boost manufacturing.
|
Way forward:
- Enhance Policy Frameworks: India should strengthen its infrastructure, labor, and land reforms to offer a more competitive and attractive environment for global companies, ensuring it can capitalize on the China+1 strategy.
- Focus on Technology and Skill Development: India must invest in advanced manufacturing technologies and skill development to match China’s scale and efficiency, thus making itself a more viable alternative for global supply chains.
Mains PYQ:
[UPSC 2018] How would the recent phenomena of protectionism and currency manipulations in world trade affect macroeconomic stability of India?
Linkage: The US-China trade deal, as described in the article arose from a “tense global trade environment” involving “tariffs being ratcheted up by both sides”. This context of rising protectionism and trade tensions between major powers directly relates to the “phenomena of protectionism” mentioned in this PYQ and its potential impact on India’s macroeconomic stability.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Why in the News?
The National Education Policy 2020 does not effectively address the employability issues faced by India’s graduates in the workforce.
What are the key flaws in NEP 2020 regarding employability?
- No Industry Participation in Policy Design: The NEP drafting process excluded industry leaders, leading to poor alignment between education and job market requirements. Eg: Graduates often lack practical skills needed for sectors like AI, renewable energy, or advanced manufacturing.
- Ineffective Skill Training Mechanisms: Although vocational training and multiple entry/exit options were introduced, they often lead to low-quality outcomes without real career growth. Eg: Students trained under NEP frequently end up in low-paying jobs like delivery services, despite completing higher education.
- Weak Implementation and Accountability: Despite ambitious reforms, there is little evidence of measurable improvement in graduate employability over the years. Eg: Employability of graduates was only 42.6% in 2025, showing minimal change from 44.3% in 2023.
Are India’s higher education institutions truly improving?
- Selective Celebration of Rankings: Government highlights QS WUR improvement (11 institutions in top 500) while ignoring low actual rankings (mostly above 100).
- Low Research Quality: India’s CNCI rank rose from 17th to only 16th among G20 nations, showing marginal improvement.
- Misleading Statistics: The 318% “performance growth” touted is percentage-based inflation, not reflecting real innovation or academic excellence.
|
How does India’s GII performance expose its innovation gaps?
- Low Quality of Research Output: Despite improvements in overall GII ranking (from 81 in 2015 to 39 in 2024), India’s Category Normalized Citation Impact (CNCI) — a measure of research quality — remains poor, ranking 16th out of 19 G-20 countries. Eg: While quantity of publications has increased, their global influence and citations remain low, showing a gap in impactful innovation.
- Weak Innovation Clusters: India’s top innovation hubs like Bengaluru, Delhi, and Chennai rank low globally (56th to 84th), and cluster intensityis poor compared to global leaders. Eg: Bengaluru, often called India’s Silicon Valley, ranks only 56th, far behind real Silicon Valley (2nd), indicating weak industrial-scientific synergy.
- Limited High-End Technological Innovation: India lags in patent filings and high-tech outputs compared to nations like South Korea, the U.S., and China. Eg: Samsung Electronics is the top patentee in Bengaluru, not an Indian firm — showing a dependence on foreign innovation in domestic clusters.
Who benefits from international university rankings like QS World University Rankings?
The QS World University Rankings are published by Quacquarelli Symonds (QS), a global higher education company known for providing specialized services in university rankings, student recruitment, and education consulting.
- Universities: High rankings enhance global reputation, attract top students and faculty, and secure more funding. Eg, IIT Bombay benefits from its high QS ranking by attracting international collaborations and research opportunities.
- Students: International rankings help students choose universities with better academic quality, resources, and future career prospects. Eg, students opting for Harvard University often benefit from its global recognition and network.
What are the limitations of using such rankings as indicators of educational quality?
- Overemphasis on Research Output: Rankings often prioritize research publications and citations, which may not reflect the quality of teaching or employability. Eg, IIT Bombay ranks highly globally for research, but the focus on research may overshadow the quality of undergraduate education.
- Neglect of Local Context and Industry Relevance: Global rankings may not consider how well a university serves its local economy or industries. Eg, Jadavpur University in Kolkata is renowned for its engineering programs but is ranked lower globally, despite its significant contributions to local technology and industry development.
What are the steps taken by the Indian Government?
- Promotion of Start-ups and Innovation: The government has launched various initiatives like Startup India and Atal Innovation Mission (AIM) to encourage entrepreneurship and innovation in the education sector. Eg, AIM supports schoolchildren with access to cutting-edge technology and resources to create new ideas.
- Skill Development Programs: Programs like Pradhan Mantri Kaushal Vikas Yojana (PMKVY) aim to provide skill training to youth, improving their employability. Eg, the scheme offers certification in sectors like electronics and manufacturing, ensuring that graduates are job-ready.
|
Way forward:
- Industry-Academia Collaboration: Strengthen partnerships between industries and educational institutions to design curricula that align with market needs, enhance practical training, and provide internships. Eg, tech companies collaborating with universities for real-time software development projects.
- Focus on Research Quality and Innovation: Increase investment in high-impact research and innovation by improving research infrastructure and promoting collaboration with global leaders. Eg, providing incentives for Indian firms to file patents and innovate domestically.
Mains PYQ:
[UPSC 2016] Demographic Dividend in India will remain only theoretical unless our manpower becomes more educated, aware, skilled and creative. What measures have been taken by the government to enhance the capacity of our population to be more productive and employable?
Linkage: Education and skills to the concept of employability and the realization of India’s demographic dividend. It implies that simply having a young, educated population is not enough; they must be “productive and employable” for this potential to translate into economic benefit, highlighting a potential gap.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Why in the News?
According to the Sample Registration System (SRS) 2021 report, the Total Fertility Rate (TFR) in India remains unchanged at 2.0 children per woman, the same as in 2020. This indicates a continued trend towards population STABILIZATION.
Note:
- The SRS survey is released by the Registrar General of India (RGI).
- It covered 8,842 sample units and a population of 84 lakh across all states.
- Despite the delay in the national Census (last held in 2011), the SRS remains India’s primary source for annual fertility and mortality statistics.
|
About Total Fertility Rate (TFR):
- The TFR is the average number of children a woman is expected to have by the end of her reproductive years (15–49 Age), assuming current age-specific fertility rates remain constant.
- TFR is a crucial demographic indicator used to assess population growth trends.
- A TFR of 2.1 is considered the replacement level, where a population exactly replaces itself from one generation to the next.
- A TFR below 2.1 can lead to negative population growth, an ageing population, and socioeconomic issues such as a shrinking workforce and increased pressure on social welfare systems.
- According to NFHS-5 (2019–21), India’s TFR declined from 2.2 in 2015–16 to 2.0, indicating progress toward population stabilization.
| [UPSC 2024] The total fertility rate in an economy is defined as:
(a) the number of children born per 1000 people in the population in a year.
(b) the number of children born to a couple in their lifetime in a given population.
(c) the birth rate minus death rate.
(d) the average number of live births a woman would have by the end of her child-bearing age. * |
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Why in the News?
In October 2022, 75 Digital Banking Units were launched across remote districts to commemorate India’s 75th Independence Day, but their momentum has declined from past 2 years.
About Digital Banking Units (DBUs):
- DBUs are specialized, fixed-location banking hubs designed to deliver a wide range of digital financial services using modern infrastructure.
- They operate in both self-service and assisted modes, offering customers 24/7 access to banking in a paperless, secure, and cost-effective environment.
- The RBI permits commercial banks with digital banking experience to establish DBUs in Tier I to Tier VI cities, without prior approval unless restricted.
- RRBs, payment banks, and local area banks are not eligible.
- In October 2022, as part of India’s 75th independence anniversary, 75 DBUs were launched across 75 remote districts to promote financial inclusion and bring banking services closer to citizens in semi-urban and rural areas.
Services and Features:
- DBUs offer digital services such as account opening, internet and mobile banking kits, debit and credit card applications, and UPI QR-based merchant solutions.
- Customers can apply online for retail loans, MSME loans, and government-sponsored schemes, with the entire process—from application to disbursal—handled digitally.
- Each DBU operates independently from existing branches and must follow RBI guidelines, including housing in separate premises with automated-only cash services.
- They are equipped with interactive teller machines, cash recyclers, document upload systems, and video KYC facilities.
- A senior bank executive is appointed as Chief Operating Officer (COO) to manage each unit.
Benefits Offered:
- DBUs offer a convenient, paperless banking experience, reducing the need to visit traditional branches.
- They support inclusive banking by expanding access to financial services in underserved regions.
- Customers in remote areas benefit from both automated and assisted service options.
- For banks, DBUs help optimize costs while improving service delivery and outreach.
| [UPSC 2024] Consider the following statements in respect of the digital rupee:
1. It is a sovereign currency issued by the Reserve Bank of India (RBI) in alignment with its monetary policy. 2. It appears as a liability on the RBI’s balance sheet. 3. It is insured against inflation by its very design. 4. It is freely convertible against commercial bank money and cash.
Which of the statements given above are correct?
Options: (a) 1 and 2 only (b) 1 and 3 only (c) 2 and 4 only (d) 1, 2 and 4* |
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Why in the News?
The Centre for Earth Sciences and Himalayan Studies (CESHS) has successfully drilled India’s first geothermal production well in Dirang, located in Arunachal Pradesh’s West Kameng district.
This could potentially make Dirang the first geothermal-powered town in the country.
What is Geothermal Energy?
- Geothermal energy is derived from heat stored in the Earth’s interior, primarily from the decay of radioactive elements.
- It can be utilised for electricity generation, heating, and industrial applications.
- It is considered a renewable energy source as the Earth continuously generates heat.
|
About Dirang Geothermal Project:
- This project in West Kameng, Arunachal Pradesh, is the first successful geothermal drilling site in Northeast India.
- It is led by CESHS under the Arunachal Pradesh Department of Science and Technology, with support from the Ministry of Earth Sciences.
- It is a medium-to-high enthalpy zone (~115°C), with a fault between quartzite and schist, enabling efficient, low-impact drilling.
- The site was selected after two years of geochemical and structural surveys, and can support applications like agricultural drying, space heating, and controlled storage.
- International partners include the Norwegian Geotechnical Institute, Geotropy ehf (Iceland), and Guwahati Boring Service for execution.
India’s Geothermal Landscape:
- The Geothermal Atlas of India (2022) identifies 381 thermally anomalous sites across the country.
- India has an estimated geothermal potential of 10,600 MW, enough to power over 10 million homes.
- Geothermal energy offers base load power, unlike intermittent solar and wind sources.
- The first operational plant was a 20 kW binary cycle pilot in Manuguru, Telangana, developed by SCCL.
- A 25 MW project in Khammam remains stalled due to tariff issues with the Andhra Pradesh Electricity Regulatory Commission.
- In Puga Valley, Ladakh, ONGC resumed work in 2024 on a 1 MW pilot plant, after a 2022 hot water leak raised safety concerns.
- In Dholera, Gujarat, geothermal energy is used for cooking and air conditioning at a temple, showing direct-use feasibility.
- India has signed MoUs with Iceland (2007) and Saudi Arabia (2019), and included geothermal energy in the 2023 RETAP agreement with the United States.
| [UPSC 2013] Consider the following: (1). Electromagnetic radiation (2). Geothermal energy (3). Gravitational force (4). Plate movements (5). Rotation of the earth (6). Revolution of the earth
Which of the above are responsible for bringing dynamic changes on the surface of the earth?
Options: (a) 1 only (b) 2 and 3 only (c) 1, 2 and 3 (d) None* |
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Why in the News?
India extended critical financial assistance to the Maldives by rolling over a $50 million Treasury Bill, continuing its support under a government-to-government arrangement since 2019.
About Treasury Bill:
- A T-Bill is a short-term debt instrument issued by the GoI through the Reserve Bank of India (RBI).
- They are part of Government Securities (G-Secs) and are used to raise short-term funds.
- They are zero-coupon securities, meaning they do not carry periodic interest payments.
- Instead, they are issued at a discount and redeemed at face value upon maturity.
- They were first introduced in India in 1917.
- They are ideal for investors seeking safety and liquidity over short periods.
Features of the T-Bills:
- Tenures Available: 91-day, 182-day, and 364-day maturity periods.
- Issued at a Discount: T-Bills are sold at a lower price than their face value. The return (yield) is the difference between purchase price and face value.
- Minimum Investment: Starts at ₹25,000, and in multiples of ₹25,000 thereafter.
- Zero-Coupon Nature: No interest payments during the tenure. Investors earn via the discounted purchase price.
- Risk-Free Investment: Backed by the Government of India, making it virtually risk-free.
- High Liquidity: Due to short tenure, T-Bills can be easily converted to cash.
- Auction Mechanism: Sold through competitive and non-competitive bidding at RBI auctions.
- Taxable Gains: Returns are treated as short-term capital gains and are taxable.
- Sensitive to Inflation: Fixed returns can be impacted by rising inflation, reducing real returns.
| [UPSC 2018] Consider the following statements:
1.The Reserve Bank of India manages and services GoI Securities but not any State Government Securities.
2.Treasury bills are issued by the GoI and there are no treasury bills issued by the State Governments.
3.Treasury bills offer are issued at a discount from the par value.
Which of the statements given above is/are correct?
Options: (a) 1 and 2 only (b) 3 only (c) 2 and 3 only * (d) 1, 2 and 3 |
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now