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Subject: Economics

  • Explained: Why farmers prefer growing rice and wheat

    Why in the News?

    The combination of assured government support and scientific advancements in breeding technologies has made rice and wheat the most preferred crops among Indian farmers, while other crops lag due to lack of similar incentives and innovations.

    Why do farmers prefer rice and wheat?

    • Assured Procurement at MSP: The government provides near-guaranteed purchases of rice and wheat at Minimum Support Prices (MSP), reducing market risk. Eg: In Punjab, rice area increased from 29.8 lakh hectares in 2015-16 to 32.4 lakh hectares in 2024-25 due to consistent MSP support.
    • Lower Yield Risk Due to Irrigation and Research Support: Rice and wheat are mostly grown under irrigated conditions and benefit from superior public research, leading to more stable yields. Eg: Wheat variety HD-3385, released in 2023, offers 6 tonnes/hectare yield with resistance to rust diseases and adaptability to different sowing times.
    • Continuous Breeding Innovations and Higher Returns: These crops have seen regular improvements through breeding, enhancing productivity, stress tolerance, and input efficiency. Eg: Genetically-edited rice variety Kamala yields up to 9 tonnes/hectare and matures faster, saving water and fertilizer costs.

    What drives yield growth in these crops?

    • Genetic Improvements and Breeding Innovations: Continuous breeding has led to development of high-yielding, stress-resistant varieties. Eg: Wheat variety HD-3385, released in 2023 by ICAR, yields an average of 6 tonnes/hectare with a potential of 7.3 tonnes, and is resistant to all three major rusts (yellow, brown, and black).
    • Improved Agronomic Practices and Technology Adoption: Advanced farming practices like early sowing, use of fertiliser-responsive varieties, and direct seeding have boosted productivity. Eg: Direct-Seeded Rice (DSR) technology eliminates the need for nursery and transplanting, saving water and labour, and supporting yield levels up to 10 tonnes/hectare in some hybrid varieties.
    • Public Research and Extension Support: Rice and wheat receive consistent support from government research institutions, unlike many other crops. Eg: The CRISPR-Cas edited rice variety Kamala, developed by ICAR in 2024, produces 450-500 grains per panicle (vs. 200-250 in parent variety), yields up to 9 tonnes/hectare, matures 15-20 days earlier, and requires less fertiliser and water.

    How has government policy influenced the cropping patterns in states?

    • Minimum Support Price (MSP) and Procurement Assurances: Farmers prefer crops with assured government procurement at MSP, reducing market risk. Eg: In Punjab, rice area increased from 29.8 lakh hectares in 2015-16 to 32.4 lh in 2024-25 due to near-guaranteed MSP procurement, while cotton area declined from 3.4 lh to 1 lh.
    • Skewed Research and Input Support: Rice and wheat have received consistent research and extension support, unlike pulses or oilseeds. Eg: ICAR has developed multiple improved wheat and rice varieties (e.g., HD-3385, Kamala), while no major breakthrough has happened in cotton since Bt cotton (2002-06).
    • Irrigation Infrastructure Bias: Government investment in irrigation has favoured crops like rice and wheat, making them less yield-risk prone. Eg: In Madhya Pradesh, wheat area rose from 59.1 lh to 78.1 lh and rice from 20.2 lh to 38.7 lh, as irrigation expansion supported these water-reliant crops.

    Which innovations improved rice varieties?

    • Semi-Dwarf and High-Yielding Varieties: Introduction of semi-dwarf varieties reduced lodging and increased fertiliser response and yields. Eg: IR-8, released in 1966, was the first semi-dwarf rice variety, yielding 4.5–5 tonnes/hectare in just 130 days, compared to 1–3 tonnes in traditional varieties over 160–180 days.
    • Gene Editing using CRISPR-Cas Technology: Advanced gene-editing allows precision improvements in yield and stress tolerance. Eg: Kamala, a GE mutant of Samba Mahsuri developed by ICAR in 2024, yields up to 9 tonnes/hectare, matures earlier, and has 450–500 grains per panicle (vs. 200–250 in the original).
    • Abiotic Stress Tolerance Breeding: Development of varieties tolerant to drought, salinity, and heat stress for resilience in changing climates. Eg: Pusa DST Rice 1, a GE version of Cottondora Sannalu, with edited DST gene, shows improved tolerance to drought and salt stress, enabling cultivation in marginal soils.

    Way forward: 

    • Diversify MSP and R&D Focus: Extend assured procurement and research support to pulses, oilseeds, and millets to reduce over-reliance on rice and wheat.
    • Promote Sustainable Practices: Encourage water-saving technologies like direct-seeded rice, crop rotation, and climate-resilient varieties to ensure long-term agricultural sustainability.

    Mains PYQ:

    [UPSC 2024] What are the major challenges faced by Indian irrigation system in recent times? State the measures taken by the government for efficient irrigation management.

    Linkage: Farmers prefer rice and wheat partly because of access to irrigation which reduces yield risk. Challenges and management of irrigation systems directly impact this aspect of their decision-making.

  • [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.

  • 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.

  • [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

     

  • 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

     

  • [pib] Cabinet approves Revised SHAKTI Policy 

    Why in the News?

    The Cabinet Committee on Economic Affairs (CCEA) has approved a proposal under the Revised SHAKTI (Scheme to Harness and Allocate Koyla Transparently in India) Policy to enhance coal availability for Central/State Sector Thermal Power Plants and Independent Power Producers (IPPs).

    About the SHAKTI Policy:

    • The SHAKTI Policy, launched in 2017 by the Ministry of Power, created a transparent mechanism to allocate coal linkages to thermal power plants lacking Fuel Supply Agreements (FSAs).
    • It replaced the earlier nomination-based system with auction-based and tariff-based bidding, enhancing fairness and transparency.
    • While government-owned plants continue receiving coal through nominations, private power producers must obtain coal via competitive bidding.
    • The policy aimed to reduce coal imports, promote the domestic coal industry, and improve energy self-sufficiency.
    • It also intended to revive stressed assets in the power sector, indirectly supporting public sector banks and infrastructure growth.

    Key Features of the Revised SHAKTI Policy (2024):

    • The revised 2024 policy simplifies the system by merging eight criteria into just two windows, enhancing the ease of doing business.
    • Window-I allocates coal at notified prices to central and state government utilities, their joint ventures, and subsidiaries, including those with PPAs under Section 62 of the Electricity Act.
    • Window-II permits coal and imported coal-based producers to acquire coal through premium-based auctions for 12 to 25 years, without requiring a PPA.
    • The policy encourages pithead plants, supports new capacity planning, and allows Imported Coal-Based (ICB) plants to transition to domestic coal, reducing import reliance.
    • Existing FSA holders can now purchase coal beyond 100% of their Annual Contracted Quantity (ACQ) during periods of peak demand.
    • Unrequisitioned surplus electricity can be sold on power exchanges, boosting plant utilization.
    • The policy imposes no additional financial burden on coal companies.
    • Beneficiaries include thermal power plants, Coal India, SCCL, railways, state governments, and end consumers.
    [UPSC 2023] With reference to coal-based thermal power plants in India, consider the following statements:

    1. None of them uses seawater.

    2. None of them is set up in water-stressed district.

    3. None of them is privately owned.

    How many of the above statements are correct?

    Options: (a) Only one (b) Only two (c) All three (d) None*

     

  • Food vs fuel: Surge in ethanol blending and its impacts

    Why in the News?

    India now aims to increase ethanol blending in petrol to 30% to reduce the use of fossil fuels, after reaching its earlier target of 20% for 2025 ahead of time.

    What factors have contributed to the decline in sugarcane production in India since 2022?

    • Red-Rot Disease: A major fungal infection that affects the stalk and reduces crop health and yield. Eg. In Uttar Pradesh and Maharashtra, outbreaks of red-rot significantly reduced sugarcane productivity post-2022.
    • Deficient Rainfall: Inadequate monsoon rains have led to water stress in sugarcane-growing regions. Eg. In Maharashtra and Karnataka, below-normal rainfall in 2023 led to poor crop growth and lower yields.
    • Flowering Issues: Disruption in the natural flowering cycle affects cane maturity and sugar content. Eg. In southern India, unseasonal weather affected flowering patterns, resulting in underdeveloped canes.
    • Soil Depletion (Soil Fatigue): Continuous sugarcane monocropping depletes soil nutrients, lowering productivity. Eg. In western Uttar Pradesh, repeated sugarcane cultivation without crop rotation has led to reduced soil fertility.
    • Crop Diversion: Farmers are shifting to other crops due to uncertain returns and rising input costs. Eg. In Tamil Nadu and Andhra Pradesh, farmers moved to pulses and cotton, reducing the area under sugarcane.

    Why has the Indian government approved a hike in the Fair Remunerative Price for sugarcane?

    • Support for Farmer Income: The hike in FRP is intended to ensure that farmers receive a fair price for their produce, thus supporting their income. Eg: The increased FRP of ₹355 per quintal (up from ₹340) ensures that farmers are adequately compensated, especially as input costs have risen. This makes sugarcane cultivation more attractive to farmers.
    • Addressing Rising Input Costs: The costs of farming inputs, such as fertilizers, labor, and irrigation, have increased, and the FRP hike helps mitigate these expenses for farmers.
      Eg: With the rise in fertilizer prices, the government’s decision to raise the FRP ensures that farmers can continue cultivating sugarcane without facing financial distress due to high input costs.
    • Incentivizing Sugarcane Production: A higher FRP encourages farmers to cultivate more sugarcane, addressing concerns over declining sugarcane production in India.
      Eg: In regions like Maharashtra and Uttar Pradesh, where production has been affected due to reduced farmer interest, the FRP increase motivates farmers to maintain or increase their sugarcane acreage.
    • Ensuring Steady Sugar Supply: Maintaining sugarcane production through higher FRP ensures a stable sugar supply for the domestic market. Eg: With India being one of the world’s largest sugar producers, ensuring adequate sugarcane production is vital to prevent sugar shortages and price hikes, as seen in previous years.
    • Timely Payments to Farmers: The FRP hike ensures that sugar mills can afford to make timely payments to farmers, thus reducing arrears. Eg: In the past, many farmers faced delayed payments from mills. The higher FRP is expected to make it financially feasible for mills to pay farmers on time.

    Which alternatives is the government considering to offset the sugarcane shortfall for ethanol?

    • B-Heavy Molasses: The government has lifted restrictions on B-heavy molasses for ethanol production, increasing supply without extra sugarcane cultivation. Eg: 750,000 metric tons of B-heavy molasses are now available for ethanol production.
    • Cane Juice and Syrup: Sugar mills can now use cane juice and syrup for ethanol, boosting production capacity. Eg: Policy change allows sugar mills to divert more resources into ethanol production from sugarcane juice.
    • Grain-Based Ethanol: The government is encouraging the use of grains like maize and rice for ethanol, diversifying feedstocks. Eg: India has turned to maize for ethanol production, though it has led to increased corn imports.
    • Food vs. Fuel Balance: The government has adjusted policies to prioritize sugar production when needed. Eg: Restrictions were imposed on ethanol production in December 2023 to ensure sufficient sugar supply.
    • Molasses-Based Ethanol Procurement Price: The government has increased the procurement price for molasses-based ethanol to incentivize production. Eg: The procurement price was raised by 3% to ₹58 per liter to boost ethanol supply.

    Way forward: 

    • Promote Crop Diversification and Sustainable Practices: Encourage farmers to adopt crop rotation and diversified farming practices, alongside promoting resilient sugarcane varieties, to reduce dependency on sugarcane monocropping and mitigate soil depletion.
    • Strengthen Ethanol Supply Chain and Support Alternative Feedstocks: Enhance infrastructure for processing alternative feedstocks like maize and rice for ethanol production, while incentivizing the use of B-heavy molasses and cane juice to ensure a steady supply of ethanol without further straining sugarcane resources.

    Mains PYQ:

    [UPSC 2024] What are the causes of persistent high food inflation in India? Comment on the effectiveness of the monetary policy of the RBI to control this type of inflation.

    Linkage: The rise in sugar price, partly due to diversion for ethanol blending, is “pinching the pockets of consumers”. This question directly addresses the causes of high food inflation, which is a significant impact of the “food vs fuel” dynamic where increased demand for crops for fuel can drive up food prices.

  • 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.

     

  • Hydrogen versus Battery: The Cost of Clean Public Transport

    Why in the News?

    In India, a study published in The Lancet found that between 2008 and 2019, breathing in high levels of PM2.5 air pollution for short periods caused around 30,000 deaths each year in 10 major cities—making up about 7.2% of all deaths in those areas.

    What are the major health impacts of urbanisation-related air pollution in Indian cities, as reported by the Lancet study?

    • High Mortality Due to PM2.5 Exposure: Short-term exposure to fine particulate matter (PM2.5) caused nearly 30,000 deaths annually across 10 major Indian cities from 2008 to 2019.
    • Significant Share of Urban Deaths: These pollution-related deaths represented about 7.2% of all deaths in these cities, indicating a severe public health burden directly linked to air quality.
    • City-Specific Impact – Mumbai: Mumbai recorded the highest number of annual deaths due to PM2.5, with approximately 5,100 deaths each year attributed to air pollution.
    • Severe Effects in Eastern and Southern Metropolises: Kolkata and Chennai also showed worrying trends, with 4,678 deaths/year in Kolkata and 2,870 deaths/year in Chennai due to polluted air.
    • Urbanisation Intensifies Health Risks: Rapid urban growth increases traffic congestion and emissions, compounding the effects of air pollution and increasing the risk of respiratory and cardiovascular diseases.

    Why are Fuel Cell Electric Vehicles (FCEVs) considered more suitable for long-distance travel and extreme conditions despite their low adoption?

    • Longer Driving Range: FCEVs offer greater range than battery electric vehicles (BEVs) due to the higher energy density of hydrogen fuel. Eg: Hydrogen-powered vehicles can travel 500–700 km on a single tank, ideal for intercity transport.
    • Quick Refuelling Time: FCEVs can be refuelled in just 5–15 minutes, similar to petrol or diesel vehicles, unlike BEVs which may take hours to recharge. Eg: Hydrogen buses can be quickly refuelled during breaks, making them suitable for continuous long-haul operations.
    • Better Performance in Cold Weather: FCEVs are less affected by cold temperatures, which often reduce the efficiency and range of battery-powered vehicles. Eg: FCEVs are more reliable in regions with harsh winters like high-altitude or Himalayan areas.
    • Lighter Vehicle Weight: Hydrogen fuel cells are generally lighter than large lithium-ion battery packs, improving efficiency and payload capacity. Eg: Fuel cell trucks can carry more cargo weight over rugged terrain compared to heavier BEVs.
    • Ideal for Heavy-Duty and Rugged Use: Due to their durability and efficiency, FCEVs are well-suited for buses, trucks, and long-range vehicles on varied terrains. Eg: Countries like Japan and South Korea are deploying hydrogen buses for public transport in hilly and industrial regions.

    Which countries and regions are leading in global electric car sales and how does India compare?

    Country/Region 2023 EV Sales Market Share Key Highlights
    China 9.05 million 37% of total car sales World’s largest EV market; accounts for ~58% of global EV consumption
    Europe 3.02 million 24% of total car sales Strong adoption in countries like Norway, Germany, and the Netherlands
    United States 1.39 million 9.5% of total car sales Third-largest EV market globally
    India 80,000 ~5% of total car sales Rapid growth; EV sales nearly doubled in 2023; leading in electric three-wheeler sales

    When will hydrogen vehicle costs match battery-electric vehicles?

    • Cost Convergence Expected by 2030: Experts predict that the initial purchase cost of hydrogen Fuel Cell Electric Vehicles (FCEVs) will match that of BEVs by around 2030, due to advancements in hydrogen fuel cell technology and mass production. Eg: A hydrogen-powered bus may cost the same as a battery-electric bus by 2030, narrowing today’s 20–30% cost gap.
    • Technology and Manufacturing Scale-Up: As production scales up, the cost of fuel cells, hydrogen storage systems, and related components is expected to fall significantly. Eg: Mass production of hydrogen tanks and cheaper catalysts could lower vehicle costs similar to how lithium-ion battery costs declined over time.
    • Infrastructure Development and Government Support: Increased investment in hydrogen refuelling infrastructure and government subsidies are crucial for cost parity. Eg: Japan and South Korea are funding hydrogen highways and offering tax incentives to make hydrogen cars more affordable.
    • Operational Costs to Remain High: While initial costs may match BEVs by 2030, running costs are expected to remain significantly higher beyond that due to fuel prices. Eg: Operating a green hydrogen bus currently costs around $0.91/km, compared to $0.17/km for electric buses.
    • Limited Market Segments for Parity: Cost matching is likely only in specific segments like heavy-duty transport, not across all vehicle categories. Eg: Long-haul hydrogen trucks may achieve cost parity with electric trucks sooner than passenger cars due to their high utility.

    What are the steps taken by the Indian Government? 

    • FAME India Scheme: Launched in 2015, it offers financial incentives for EV adoption and charging infrastructure development. Phase II (2019) focuses on public transport EVs and charging stations.
    • PLI Scheme: A ₹26,000 crore initiative to boost domestic EV and hydrogen vehicle manufacturing, reduce imports, create jobs, and support ‘Make in India.’
    • Customs Duty Reduction: Import duties on EVs above $35,000 have been reduced from up to 100% to 15%, with a cap of 8,000 vehicles annually for five years, provided manufacturers commit to local production.
    • NEMMP: The 2013 National Electric Mobility Mission Plan aims to boost EV and hybrid vehicle adoption through technology, infrastructure, and demand generation.
    • State-Level Initiatives: States like Uttar Pradesh, Tamil Nadu, and Delhi have implemented various EV policies, including subsidies, tax waivers, and electric auto rickshaw programs to promote adoption.

    Way forward: 

    • Enhance R&D and Subsidies: Support innovation and provide financial incentives to reduce the cost of hydrogen vehicles and fuel.
    • Build Targeted Infrastructure: Develop hydrogen refuelling stations along key freight corridors and urban hubs.

    Mains PYQ:

    [UPSC 2024] How do electric vehicles contribute to reducing carbon emissions and what are the key benefits they offer compared to traditional combustion engine vehicles?

    Linkage: Electric vehicles (which often implies BEVs) and their role in reducing carbon emissions, aligning with the “clean public transport”.

  • Kaleshwaram Lift Irrigation Project (KLIP)

    Why in the News?

    The National Dam Safety Authority (NDSA) has reported major structural and operational defects in Telangana’s Kaleshwaram Lift Irrigation Project (KLIP), citing “irreparable damage” to three key barrages, including Medigadda.

    Kaleshwaram Lift Irrigation Project (KLIP)

    About Kaleshwaram Lift Irrigation Project (KLIP)

    • KLIP, located on the Godavari River in Telangana, is the world’s largest multi-stage lift irrigation project, inaugurated on June 21, 2019.
    • The project aims to irrigate 45 lakh acres, supply drinking water to Hyderabad, and support industrial use.
    • It plans to lift 240 TMC of water, with 195 TMC from Medigadda, 20 TMC from Sripada Yellampalli, and 25 TMC from groundwater.
    • The infrastructure includes 7 links, 28 packages, a 500 km span, 1,800+ km canal network, 20 reservoirs, and Asia’s largest pump house at Ramadugu.
    • Estimated cost: ₹80,000 crore to ₹1.2 lakh crore.

    Issues with the Project

    • In October 2023, Pillar No. 20 of the Medigadda barrage sank, causing flood-related damages.
    • NDSA’s April 2024 report identified structural distress in all 3 barrages (Medigadda, Annaram, Sundilla) due to poor design, lack of geotechnical studies, and inadequate safety protocols.
    • Overloading of barrages (10 TMC water stored instead of 2 TMC) caused foundation damage.
    • The state incurs ₹16,000 crore annually in loan and interest repayments, despite the project being criticized as a “man-made disaster.”

    Back2Basics: Godavari River

    • The Godavari, also known as Dakshin Ganga, is the largest peninsular river in India.
    • Originates from Trimbakeshwar in Maharashtra, flowing 1465 km to the Bay of Bengal.
    • Its basin spans: Maharashtra, Telangana, Andhra Pradesh, Chhattisgarh, Odisha, and parts of Madhya Pradesh, Karnataka, and Puducherry.
    • Right bank tributaries include Pravara, Manjira, and Maner; Left bank tributaries include Purna, Pranhita, Indravati, and Sabari.

     

    [UPSC 2024] Recently, the term “pumped-storage hydropower” is actually and appropriately discussed in the context of which one of the following?

    Options: (a) Irrigation of terraced crop fields (b) Lift irrigation of cereal crops (c) Long duration energy storage* (d) Rainwater harvesting system