PYQ Relevance:
[UPSC 2020] What is the significance of Indo-US defence deals over Indo-Russian defence deals? Discuss with reference to stability in the Indo-Pacific region.
Linkage: The question regarding Indo-US and Indo-Russian defense deals is relevant because India’s propulsion gap directly influences its choices and reliance on these foreign defense partners for critical military hardware like engines. Addressing the propulsion gap would reduce this dependency, enabling India to better assert its strategic autonomy and contribute to regional stability (such as in the Indo-Pacific) without being constrained by external supply chain pressures or technology transfer limitations from other nations. |
Mentor’s Comment: India’s Advanced Medium Combat Aircraft (AMCA) project is moving ahead quickly and is seen as a big step forward for the country’s aerospace sector. However, the excitement is being held back by a long-standing reliance on foreign engines. This same problem had earlier affected the HF-24 Marut and is now also troubling the LCA and AMCA fighter jet programs. Even after years of work and investment — including the unsuccessful Kaveri engine project and delays in getting engines from GE — India still depends heavily on other countries for engine technology. This not only affects military preparedness but also raises serious concerns about India’s ability to act independently in defence matters.
Today’s editorial analyses the development of Indian fighter aircraft engines. This content would help in GS Paper II (International Relations) and GS Paper III (Science & Technology) in the mains Paper.
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Let’s learn!
Why in the News?
Recently, there is growing excitement around India’s AMCA stealth fighter, seen as a major aerospace milestone. However, concerns remain due to a long-standing reliance on imported engines since the HF-24 Marut.
Why has India failed to develop its own jet engine?
- Technological Challenges in Engine Design: Jet engines require high thrust-to-weight ratios, thermal stability, and advanced metallurgy, which India has struggled to achieve. Eg: The Kaveri GTX-35VS engine, under development since 1989 by DRDO-GTRE, failed to meet performance benchmarks in thrust and thermal management even after 3,000 hours of testing.
- Lack of Core Materials and Manufacturing Capability: India lacks access to critical technologies like single-crystal turbine blades, thermal barrier coatings, and advanced cooling systems, essential for high-performance engines. Eg: Negotiations with GE for F414 engine hit a roadblock because GE refused full transfer of these core technologies despite India’s demand.
- Fragmented and Short-Term Funding: Defence R&D funding in India is project-specific and often lacks a long-term strategic vision, affecting continuity and innovation in complex projects. Eg: Despite spending over ₹2,032 crore on the Kaveri project over 35 years, no operational engine was produced due to inconsistent support and shifting goals.
- Over-Reliance on Foreign Engines: Dependence on foreign suppliers has created a complacency in indigenous R&D, slowing domestic capability-building. Eg: India continues to rely on GE F404 and F414 engines for its LCA Tejas variants, instead of pursuing an urgent push for domestic alternatives.
- Institutional Inertia and Missed International Collaborations: Bureaucratic rigidity and institutional pride have caused India to reject key collaborative opportunities for engine co-development. Eg: A proposed joint project with Safran (France) for developing an engine for AMCA and Tejas MkII was reportedly declined by DRDO.
What is HF-24 Marut?
The HF-24 Marut (meaning “Spirit of the Tempest”) was India’s first indigenously designed and built fighter jet, developed in the 1950s and 1960s by Hindustan Aeronautics Limited (HAL). |
What caused the HF-24 Marut’s underperformance?
- Underpowered Engine: The Marut was equipped with British Bristol Siddeley Orpheus 703 turbojets, which lacked the thrust needed for supersonic performance. Eg: Designer Kurt Tank had envisioned a more powerful engine, but it never materialised, severely restricting the aircraft’s speed and payload capabilities.
- Failure to Acquire Suitable Alternatives: Despite multiple attempts, India could not procure or co-develop a more suitable engine to enhance the Marut’s performance. Eg: Efforts to source a better engine from Egypt and Germany failed, leaving the Marut stuck with the underpowered Orpheus units.
- Operational Limitations in Combat: The aircraft performed well in ground-attack roles, such as in the 1971 war, but its overall combat effectivenesswas limited by its propulsion shortfall. Eg: Indian Air Force veterans cited that the engine limitation was the Marut’s Achilles’ heel, preventing it from evolving into a full-spectrum fighter.
How does engine import dependency impact India’s defence?
- Delays in Defence Production and Induction: Dependency on foreign engines leads to project delays when there are supply chain issues or export restrictions. Eg: Delivery of 99 General Electric F404 engines for the LCA Mk1A was delayed by 13 months, pushing back aircraft induction timelines.
- Limited Operational and Strategic Autonomy: India becomes vulnerable to geopolitical pressures and foreign policy decisions of engine-supplying nations. Eg: U.S. reluctance to share core technologies like single-crystal turbine blades restricts India’s ability to upgrade or export its fighter aircraft.
- Constraints on Defence Exports: Exporting platforms equipped with foreign engines requires third-party approvals, limiting India’s potential in global defence markets. Eg: India’s ability to export Tejas is restricted by U.S. controls on the GE F404 engine, limiting defence diplomacy options.
What are the steps taken by the Indian Government?
- Strategic Collaborations for Technology Transfer: India has initiated joint ventures and international collaborations to acquire advanced propulsion technology. Eg: During PM Modi’s 2023 U.S. visit, HAL signed a deal with General Electric to co-produce GE F414 enginesin India for the LCA Mk2 and AMCA programs.
- Revival of Indigenous Engine Projects: The government has revived and restructured efforts to develop indigenous jet engines under DRDO’s GTRE. Eg: The Kaveri engine project was decoupled from the LCA program and is being explored for use in UAVs and future aircraft with potential foreign assistance.
- Promotion of Atmanirbhar Bharat in Defence: The Defence Ministry has prioritized self-reliance in critical technologies, including aero-engines, under the Atmanirbhar Bharat initiative. Eg: Several defence PSUs and private players have been incentivized to develop components and sub-systemsfor aerospace platforms under Make in India schemes.
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What must India do to achieve propulsion self-reliance? (Way forward)
- Establish Strategic Global Partnerships for Technology Transfer: India must engage in joint ventures with trusted international engine manufacturers to acquire critical technologies like single-crystal turbine blades and thermal barrier coatings. Eg: The proposed GE-HAL deal to manufacture the F414 engines in India should ensure full transfer of know-how to avoid long-term dependency.
- Develop an Integrated Indigenous R&D Ecosystem: India needs to create a cohesive framework connecting DRDO, GTRE, academia, and private industry to focus on advanced propulsion R&D with long-term investment. Eg: Encouraging private sector participation in defence through the Innovations for Defence Excellence (iDEX)platform can accelerate jet engine innovation.
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Why in the News?
India’s rising alcohol use is not just a health issue — it is a major national problem affecting many areas. Even though experts say no amount of alcohol is safe, about one in four Indian men drink. Drinking heavily and often is now becoming more common across the country.
What are the key risks of alcohol consumption in India?
- Health Risks and Non-Communicable Diseases (NCDs): Alcohol significantly increases the risk of cancer, liver disease, cardiovascular issues, and mental illnesses. Eg: Chronic alcohol use is a leading cause of liver cirrhosis and is linked to mouth and throat cancers in India.
- Injuries and Accidents: Alcohol impairs judgement and coordination, leading to road accidents, falls, and workplace injuries. Eg: A large number of road traffic fatalities in India are associated with drunk driving, particularly among youth.
- Mental Health and Suicide: Alcohol contributes to depression, anxiety, and is a major risk factor for suicide. Eg: The National Suicide Prevention Strategy (2022) identified alcohol use as a key driver of suicides in India.
- Violence and Crime: Alcohol consumption is linked with domestic violence, sexual assault, and violent crimes. Eg: NFHS-5 data shows higher incidence of domestic violence in households where alcohol is consumed regularly.
- Economic and Social Burden: Alcohol use contributes to ₹6.24 trillion in societal costs (2021), including healthcare, lost productivity, and law enforcement. Eg: The burden of alcohol-related diseases adds pressure to India’s public health system, particularly in rural areas.
Why is a national alcohol policy necessary?
- Fragmented and Inconsistent State Regulations: Alcohol laws, legal drinking age, pricing, and prohibition vary widely across States, causing regulatory confusion and uneven implementation. Eg: Bihar enforces prohibition, while States like Kerala promote toddy as a “natural beverage” under its Akbari Policy.
- Public Health Emergency: Rising alcohol consumption is linked to cancer, mental illness, suicides, and injuries, posing a major national health burden. Eg: In 2021, alcohol-related harm caused 2.6 million DALYs and cost India ₹6.24 trillion in societal losses.
- Lack of Centralised Coordination and Accountability: Regulatory responsibility is scattered across multiple ministries with no unified approach, weakening policy impact. Eg: Demand reduction is handled by the Ministry of Social Justice, while supply and harm reduction are spread across Health, Finance, and Home Affairs ministries.
Who regulates alcohol demand and supply in India?
- State governments: Regulate production, distribution, pricing, sale, and consumption.
- Ministry of Social Justice: Leads demand reduction (e.g., Nasha Mukta Bharat Abhiyan).
- Ministries of Home Affairs, Finance, and Health: Handle supply and harm reduction.
- No single authority: Regulatory efforts are scattered and lack coordination.
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How do marketing and digital platforms influence alcohol use?
- Surrogate Advertising and Brand Promotion: Despite legal restrictions, alcohol brands use surrogate advertising, brand sponsorships, and strategic product placements to maintain visibility. Eg: Alcohol brands often sponsor music festivals and sports events, indirectly promoting their products to younger audiences.
- Social Media and Algorithmic Amplification: Social media algorithms boost alcohol-related content (ARC), while “alcohol influencers” glamorize drinking and normalize it among youth. Eg: Platforms like Instagram and YouTube promote posts showing alcohol as part of a luxury lifestyle, increasing its social appeal.
- Attractive Packaging and Retail Tactics: Use of sleek bottles, premium branding, and Happy Hour deals enhance the aspirational value of alcohol and make it more appealing. Eg: Pre-mixed cocktails and flavoured spirits are marketed to attract young and first-time users.
Way forward:
- Formulate a Unified National Alcohol Control Policy: Develop a comprehensive, evidence-based policy that aligns efforts across States and Central ministries, focusing on public health, harm reduction, and regulation of digital content.
- Invest in Public Awareness and Education: Launch large-scale awareness campaigns highlighting the health risks of alcohol, similar to tobacco control programs, to shift social norms and perceptions. Eg: Educating youth on links between alcohol and mental illness, cancer, and poverty can reduce its aspirational appeal.
Mains PYQ:
[UPSC 2024] In a crucial domain like the public healthcare system, the Indian State should play a vital role to contain the adverse impact of marketisation of the system. Suggest some measures through which the State can enhance the reach of public health care at the grassroots level.
Linkage: This article explicitly highlights alcohol consumption as a significant public health issue in India, leading to injuries, mental illness, non-communicable diseases like cancer, and contributing to approximately 2.6 million Disability-Adjusted Life Years (DALYs) in 2021.
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Why in the News?
The revised plan for the Green India Mission (GIM), released by the Centre on June 17, is an important step forward in India’s fight against climate change.
What are the achievements of the Green India Mission since its launch in 2014?
- Large-scale Afforestation Activities: GIM facilitated tree plantation and afforestation across 11.22 million hectares between 2015–16 and 2020–21. Eg: Afforestation under state schemes in Andhra Pradesh and Telangana helped increase green cover.
- Support to Vulnerable States: Funds were allocated based on ecological vulnerability and restoration potential. Eg: ₹624.71 crore released to 18 states between 2019–24, with ₹575.55 crore utilised.
- Carbon Sequestration Contribution: Contributed to creating an additional carbon sink of 2.29 billion tonnes of CO₂ equivalent between 2005–2021. Eg: Forest restoration in Jharkhand and Chhattisgarh aided national climate goals.
- Integration with Climate Goals: GIM aligned with India’s international commitment to restore 26 million hectares of degraded land by 2030. Eg: Activities under GIM complement India’s UNFCCC goals on land restoration and carbon capture.
- Livelihood Enhancement through Forest-Based Interventions: Helped improve livelihoods of forest-dependent communities via sustainable forestry practices. Eg: Community plantation models in Odisha created jobs and promoted conservation.
What are the key elements of the revised Green India Mission roadmap?
- Landscape-level restoration: Focus on saturation-based, area-specific restoration in vulnerable landscapes like the Aravallis, Western Ghats, Himalayas, and mangroves.
- Integration with flagship projects: Syncing with initiatives like the Aravalli Green Wall project (cost: Rs 16,053 crore, coverage: 6.45 mha across 29 districts and 4 states).
- Aravalli protection: Targeting 8 lakh hectares for forest, water system and grassland rejuvenation to curb sandstorm intrusions and pollution in NCR and Punjab.
- Western Ghats focus: Addressing illegal mining and deforestation through afforestation and abandoned mine rehabilitation.
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Why was the Green India Mission’s roadmap revised?
- To Address On-Ground Climate Impacts: The revision was made to respond to changing climate conditions and the increasing urgency of land degradation and desertification. Eg: Inclusion of the Aravalli Green Wall Project to counter desert expansion from the Thar region.
- To Incorporate Feedback from States and Scientific Bodies: The revised plan reflects inputs from implementing states and scientific institutions, ensuring region-specific solutions. Eg: Feedback led to the addition of eco-restoration of abandoned mining areas in the Western Ghats.
- To Focus on Region-Specific Restoration Practices: The update prioritises landscape-specific and ecologically appropriate restoration in vulnerable ecosystems. Eg: Special emphasis on Himalayas, mangroves, and degraded zones for carbon sequestration and biodiversity conservation.
What key regions will it now focus on?
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Who is implementing the Green Wall project?
- Central Government Leadership: The Centre (Government of India) is spearheading the initiative, allocating funding and coordinating implementation across states. Eg: The project’s ₹16,053 crore budget and planning is directed by central agencies in collaboration with local authorities.
- Collaboration with States and Scientific Institutions: Implementation involves three states (Haryana, Rajasthan, Gujarat), one UT (Delhi) and guidance from the Wildlife Institute of India (WII), using ecological data to target 12 degradation gaps in the Aravalli range. Eg: WII studies identified dust-prone regions; restoration covers 8 lakh hectares across 29 districts in these states.
How will GIM address land degradation and carbon sequestration?
- Restoration of Degraded and Open Forests: GIM focuses on restoring impaired open forests, which is a cost-effective and high-impact method for carbon dioxide (CO₂) sequestration. Eg: As per the Forest Survey of India (FSI), restoring 15 million hectares can sequester 1.89 billion tonnes of CO₂.
- Region-Specific Ecological Interventions: The revised roadmap includes landscape-specific afforestation and eco-restoration in vulnerable areas like the Aravallis, Western Ghats, Himalayas, and mangroves. Eg: Under the Aravalli Green Wall Project, 8 lakh hectares will be restored to combat desertification and reduce dust pollution.
- Expansion of Natural Carbon Sinks: GIM aligns with India’s climate commitment to create an additional carbon sink of 2.5 to 3 billion tonnes of CO₂ by 2030. Eg: By integrating schemes and intensifying plantation efforts, GIM aims to expand forest and tree cover up to 24.7 million hectares, capturing 3.39 billion tonnes of CO₂.
Way forward:
- Integrated Landscape-Based Planning: Adopt a holistic, ecosystem-specific approach by aligning GIM with other environmental programs (e.g., CAMPA, MGNREGS) for coordinated restoration and afforestation efforts.
- Enhanced Monitoring and Community Participation: Use technology (GIS, remote sensing) for real-time progress tracking, while empowering local communities and forest-dependent groups for sustainable upkeep and livelihood generation.
Mains PYQ:
[UPSC 2020] Examine the status of forest resources of India and its resultant impact on climate change.
Linkage: This question directly relates to the core objectives and context of the Green India Mission (GIM). The GIM, launched in 2014, is a crucial component of India’s efforts to combat climate change by increasing forest and tree cover and restoring degraded ecosystems. The revised roadmap for GIM emphasizes not only increasing and restoring forest and green cover but also tackling land degradation and desertification, which are significant environmental issues in India.
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Why in the News?
Union Transport Minister announced a new FASTag-based Annual Pass system for private non-commercial vehicles (cars, jeeps, vans) to ensure smoother travel across National Highways.
What are FASTags?
- FASTag is a contactless toll payment system that uses Radio Frequency Identification (RFID) technology to enable automatic toll collection at National Highway toll plazas.
- Managed by the National Highways Authority of India (NHAI) and National Payments Corporation of India (NPCI), it was launched in 2014 and became mandatory in 2021 for all four-wheeled vehicles.
- It is a sticker affixed on a vehicle’s windshield, linked to a prepaid wallet or savings account. Toll charges are automatically deducted when the vehicle passes through an electronic toll gate.
- It enhances convenience, reduces traffic congestion, and promotes digital payments across India’s highway network.
- As per the Motor Vehicles Rules, FASTags are mandatory for all new four-wheelers and necessary for renewal of fitness certificates and national permits.
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About the FASTag Annual Pass Scheme:
- Overview: It is a new initiative announced by the Ministry of Road Transport and Highways to provide cost-effective and hassle-free travel for private non-commercial vehicles.
- Implementation: The pass will be effective from August 15, 2025, and is optional, intended for cars, jeeps, and vans (not for commercial vehicles).
- Objectives: The scheme is designed to reduce per-trip costs (as low as ₹15/toll) and provide savings of up to ₹7,000 annually for frequent travelers.
- Benefits: It allows unlimited passage at National Highway (NH) and National Expressway (NE) toll plazas for either:
- One year, or
- 200 toll crossings, whichever is earlier.
Key Features:
- Eligibility: Applicable only for non-commercial private vehicles with a valid, active FASTag linked to a registered vehicle number.
- Activation: Can be activated via the Rajmargyatra mobile app or NHAI website with a one-time payment of ₹3,000 for FY 2025–26.
- Validity: Covers 200 trips or one year and then reverts to regular FASTag mode unless renewed.
- Trip Count:
- Point-based plazas: Each pass counts as one trip per crossing.
- Closed toll systems: Entry and exit combined count as one trip.
- Transfer Restrictions: The pass is non-transferable and valid only for the vehicle on which the FASTag is registered.
- Coverage: Valid only at NH and NE toll plazas managed by the Centre. It does not apply to state highway or local toll plazas.
- Fee Revision: The base fee may be revised annually starting April 1 every year.
- Existing Users: No need for a new FASTag if one is already affixed and active. The pass can be added on top of the existing tag after eligibility verification.
| [UPSC 2023] With reference to India’s projects on connectivity, consider the following statements:
1. East-West Corridor under Golden Quadrilateral Project connects Dibrugarh and Surat.
2. Trilateral Highway connects Moreh in Manipur and Chiang Mai in Thailand via Myanmar.
3. Bangladesh-China -India -Myanmar Economic Corridor connects Varanasi in Uttar Pradesh with Kunming in China. How many of the above statements are correct? Options: (a) Only one (b) Only two (c) All three (d) None* |
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Why in the News?
INS Arnala, the first Anti-Submarine Warfare Shallow Water Craft (ASW-SWC), was officially commissioned into the Eastern Naval Command at the Naval Dockyard, Visakhapatnam.
About INS Arnala:
- What is it: INS Arnala is the first Anti-Submarine Warfare Shallow Water Craft (ASW-SWC) commissioned into the Eastern Naval Command on June 18, 2025, at Visakhapatnam.
- Behind the name: It is named after the historic Arnala Fort near Vasai, Maharashtra.
- Development: The vessel was designed by Garden Reach Shipbuilders & Engineers (GRSE) and built in partnership with L&T Shipbuilders under a Public-Private Partnership (PPP) model.
- Project: It marks the beginning of the induction of 16 ASW-SWC class ships, aimed at enhancing India’s shallow water anti-submarine capabilities.
Key Features:
- Propulsion: 77.6 metres long; first Indian Navy warship powered by a Diesel Engine-Waterjet combination.
- Indigenous Content: Over 80% indigenous systems, with contributions from BEL, L&T, Mahindra Defence, and over 55 MSMEs.
- Arsenal: Equipped with a single centreline rocket launcher, lightweight torpedoes, anti-torpedo decoys, and mine-laying systems.
- Sensor Suite: Incorporates Hull-Mounted Sonar (Abhay), Low-Frequency Variable Depth Sonar (LFVDS), and Underwater Acoustic Communication System (UWACS).
- Multi-role Capability: Designed for ASW operations, Search and Rescue (SAR), low-intensity maritime operations, and subsurface surveillance in shallow coastal waters.
Significance:
- Strategic Defence Upgrade: Replaces ageing Abhay-class corvettes and significantly strengthens India’s anti-submarine warfare posture.
- Enhanced Coastal Security: Ideal for detecting midget submarines and Unmanned Underwater Vehicles (UUVs) in waters less than 30 metres deep, where larger warships struggle to operate.
- Make-in-India Milestone: Demonstrates India’s growing self-reliance in defence manufacturing and contributes to the Aatmanirbhar Bharat initiative.
| [UPSC 2016] Which one of the following is the best description of ‘INS Astradharini’, that was in the news recently?
Options: (a) Amphibious warfare ship (b) Nuclear-powered submarine (c) Torpedo launch and recovery vessel* (d) Nuclear-powered aircraft carrier |
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Why in the News?
Amid intensifying war with Israel, Iran’s Parliament began drafting a Bill to exit the Nuclear Non-Proliferation Treaty (NPT).
About Nuclear Non-Proliferation Treaty (NPT):
- Overview: It is a global agreement aimed at preventing the spread of nuclear weapons, promoting peaceful nuclear energy, and advancing nuclear disarmament.
- Enforcement: It was opened for signature on June 12, 1968, and came into force on March 5, 1970.
- Nature of the Treaty: It is the only binding international treaty that requires NWS to pursue disarmament.
- Categorization of States: The treaty distinguishes between Nuclear Weapon States (NWS) and Non-Nuclear Weapon States (Non-NWS).
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- Definition of NWS: Countries that had tested nuclear weapons before January 1, 1967 (US, UK, France, Russia, China).
- Obligations: NNWS agree not to manufacture or acquire nuclear weapons; NWS pledge not to transfer nuclear weapons or assist non-NWS in acquiring them.
- Peaceful Use Clause: All parties are allowed to develop nuclear energy for peaceful purposes, under IAEA safeguards.
- Monitoring Agency: The International Atomic Energy Agency (IAEA) verifies compliance through inspections and reporting.
- Withdrawal Clause: Article 10 allows a country to withdraw with 3 months’ notice if national interests are jeopardized.
India and NPT:
- India is NOT a signatory to the NPT and has consistently refused to join, calling it discriminatory.
- India argues that the treaty legitimizes nuclear weapons in the hands of five countries while denying them to others.
- India conducted its first nuclear test in 1974 (Smiling Buddha) and maintains a “No First Use” policy.
- Despite being outside the NPT, India is regarded as a responsible nuclear power and adheres to non-proliferation norms.
Non-members of NPT, Countries Planning to Leave:
- Non-signatories:
- India and Pakistan have never signed the treaty, but both possess nuclear weapons.
- Israel is also a non-signatory and maintains strategic ambiguity about its nuclear weapons.
- South Sudan remains a non-signatory without known nuclear ambitions.
- Countries that withdrew or are planning to:
- North Korea signed in 1985, withdrew in 2003, and went on to develop nuclear weapons.
- Iran, though a signatory since 1970, has recently threatened to withdraw, citing IAEA censure and security concerns linked to its tensions with Israel.
- If Iran leaves, it would end IAEA inspections and raise fears of a nuclear arms race in the Middle East.
| [UPSC 2018] What is/are the consequence/consequences of a country becoming the member of the ‘Nuclear Suppliers Group’?
1. It will have access to the latest and most efficient nuclear technologies.
2. It automatically becomes a member of “The Treaty on the Non-Proliferation of Nuclear Weapons (NPT)”. 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 |
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Why in the News?
SEBI has introduced key regulatory relaxations to ease IPO norms and incentivize startups to shift their legal base back to India through reverse-flipping.
About Reverse-Flipping:
- Reverse-flipping refers to the process by which Indian startups that were earlier incorporated abroad shift their domicile back to India, making India their legal and operational headquarters.
- It allows Indian companies to access domestic capital markets, reduce compliance complexity, and align with the evolving global tax and regulatory environment.
- This shift helps startups tap Indian stock exchanges, reduce reliance on foreign jurisdictions, and benefit from a favorable Indian regulatory ecosystem.
Types of Reverse-Flipping
- Share Swap Arrangement:
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- In this structure, shareholders of the foreign parent company exchange their shares for shares in the Indian subsidiary.
- This process may trigger capital gains tax under the Income Tax Act, 1961, especially for Indian shareholders.
- Inbound Merger (Cross-Border Merger):
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- The foreign parent company merges with its Indian subsidiary, with the Indian entity becoming the surviving legal structure.
- If all conditions under the Foreign Exchange Management Act (FEMA), the Companies Act, 2013, and National Company Law Tribunal (NCLT) are met, this merger route can be tax-neutral.
Key Features:
- Domestic Listing Access: Startups gain access to Indian IPO markets and valuations.
- Simplified Compliance: Reduced legal and regulatory complications from operating across jurisdictions.
- Investor Incentives: SEBI now allows foreign venture funds and AIFs to be counted towards minimum promoter contribution in public issues.
- ESOP Relaxation: SEBI has allowed promoters/founders to retain Employee Stock Option Plans (ESOPs) granted one year prior to the filing of the Draft Red Herring Prospectus (DRHP).
- Capital Market Boost: The move supports India’s goal to become a global startup and financial hub by encouraging reverse-flipping.
- Tax & Legal Alignment: Shifting domicile can help startups comply better with Indian tax and business laws.
Note:
Employee Stock Option Plans (ESOPs) are structured benefit schemes that grant employees the right to purchase shares of their company at a predetermined price—known as the exercise price—after completing a specific period. |
| [UPSC 2025] Consider the following statements:
Statement I: As regards returns from an investment in a company, generally, bondholders are considered to be relatively at lower risk than stockholders.
Statement II: Bondholders are lenders to a company whereas stockholders are its owners.
Statement III: For repayment purpose, bondholders are prioritized over stockholders by a company.
Which one of the following is correct in respect of the above statements?
(a) Both Statement II and Statement III are correct and both of them explain Statement I *
(b) Both Statement I and Statement II are correct and Statement I explains Statement II
(c) Only one of the Statements II and III is correct and that explains Statement I
(d) Neither Statement II nor Statement III is correct |
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