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Subject: Economics

  • India aims to become a semiconductor manufacturing hub. What are the challenges faced by the semiconductor industry in India? Mention the salient features of the India Semiconductor Mission.

    Semiconductors are the “oil of the 21st century.” With global chip shortages and geopolitical realignments, India aims to position itself as a semiconductor manufacturing hub through India Semiconductor Mission (ISM).

    Challenges Faced by India’s Semiconductor Industry

    High Capital Intensity – A state-of-the-art fab requires $8-12 billion.

    Complex Supply Chains – Semiconductors involve 300+ inputs, ultra-pure chemicals, specialised gases, and precision tools.

    Skill Gap – Eg-shortage of semiconductor engineers, chip designers, and clean-room technicians

    Insufficient Ecosystem – Lack of component suppliers, semiconductor-grade wafers, lithography equipment, etc.

    Infrastructure Deficits – Fabs require uninterrupted power, and nearly 10 million litres/day of ultra-pure water.

    Global Competition – Taiwan, South Korea, USA, EU offer 40-70% capital subsidies

    Long Gestation Periods (7-10 years) – deter private investment

    Dependence on Imports – India imports 90-95% of its semiconductor needs.

    Salient Features of the India Semiconductor Mission (ISM)

    to build a complete semiconductor and display ecosystem.

    Key Schemes under ISM:

    Display Fabs Scheme: Up to 50% financial assistance

    Compound Semiconductors & ATMP/OSAT Scheme: Up to 50% support

    Design Linked Incentive (DLI) Scheme – Incentives up to .

    Creation of Semiconductor Research Centres – including advanced R&D, talent development, and industry-academia collaboration.

    Development of semiconductor clusters in Gujarat (Dholera), Karnataka, Tamil Nadu, and Uttar Pradesh.

    Single-window facilitation mechanism for all approvals, policy support, and coordination with global leaders.

    Support for compound semiconductors (GaN, SiC), ATMP/OSAT units to build packaging capabilities.

    Focus on trusted supply chains and strategic national security applications.

    Way Forward

    Establish specialised training programs to address projected 350,000 talent shortfall by 2027.

    Boost R&D and Indigenous IP Creation – increase spending to 2.5% of GDP

    Ensure timely incentive disbursal, ease of land acquisition, and high-quality utility infrastructure (power, water, logistics).

    “chip diplomacy”—with partners like the US, Japan, Taiwan, EU, and South Korea.

    Leverage global supply-chain realignments and US-China strategic tensions to attract firms seeking “China+1” diversification.

    India’s ambition to become a semiconductor manufacturing hub is strategically significant for economic resilience, technology sovereignty and future readiness.

    Infrastructure

  • Examine the scope of the food processing industries in India. Elaborate the measures taken by the government in the food processing industries for generating employment opportunities.

    India’s food processing sector is projected to grow from $307 billion (2023) to $700 billion by 2030, driven by rising demand, technological change, and strong policy support.

    Scope of the Food Processing Industry in India

    Large agricultural base

    Second-largest producer of fruits and vegetables.

    Wide product spectrum – Includes dairy, fruits & vegetables, meat, fisheries, beverages, ready-to-eat (RTE), and organic foods.

    Lifestyle Shift – 65% of Indians under 35, rising incomes, urbanization & busy lifestyles have boosted demand for ready-to-eat & processed foods.

    Rapid growth in Organised retail and “shopping mall culture”- better supply chain management. Eg- D-mart

    Export potential – India exports processed foods to 200+ countries

    Nearly 70% of food processing units operate in the unorganised MSME sector – generate rural employment and entrepreneurship.

    Challenges of the Food Processing Sector in India

    Low Level of Processing – Only ~10% of total agricultural produce is processed (vs 60-70% in developed countries).

    Post-harvest losses of 15-20% due to shortage of cold-storage, and transport infrastructure.

    Fragmented Supply Chain – 86% of farmers are small/marginal – limits aggregation

    High Logistics Cost of 13-14% of GDP (vs 8-9% in developed countries).

    Delay in project implementation – Eg- only 25 out of 42 approved Mega Food Parks operational

    Regulatory & Compliance Issues – Complex FSSAI norms and licensing delays discourage small processors.

    Low Exports – 16% of India’s agri-exports are processed products, compared to 25% in the US and 49% in China.

    Micro and small units struggle to access formal credit, collateral, and working capital.

    Skill gap – Only 3% of the food processing workforce is formally trained

    Quality & Safety Gaps – Inconsistent adherence to food safety standards, and limited testing infrastructure. Eg- Rejection of Indian exports by EU.

    Negligible R&D (<0.5% of sectoral GVA) – stall innovation in packaging and product design

    Measures taken by government

    The food processing sector has been recognized as a ‘sunrise sector‘ and a key priority industry under the ‘Make in India’ initiative.

    PM-Kisan SAMPADA (2016) – Central Sector Scheme to build a modern processing ecosystem from farm-gate to retail.

    Mega Food Parks Scheme – Provides land, utilities, common facilities, effluent plants, R&D labs.

    PM Formalisation of Micro Food Processing Enterprises (PM-FME) – Provides 40% credit-linked subsidy, branding support, and training for 2 lakh micro units under the One District One Product (ODOP) approach.

    Production Linked Incentive Scheme (PLISFPI) to boost domestic manufacturing.

    Operation Greens (TOP to TOTAL) – Price stabilization fund for tomato, onion, potato, now expanded to all perishable crops

    100% FDI in food processing and 100% FDI under Government route for retail of food produced in India.

    e-NAM Integration – Linking mandis for better price discovery, quality grading, and seamless movement of produce.

    Food processing included under PSL to improve access to affordable credit.

    National Makhana Board to globally position Indian superfoods like makhana.

    Infrastructure Status (HLIS) – Food parks are included in Harmonized List of Infrastructure – enables concessional loans.

    Collaboration with Invest India for FDI facilitation, market access, regulatory assistance.

    As India moves forward under the Make in India vision, the food processing industry will continue to be a key driver of economic growth, ensuring food security, quality, and global competitiveness.

    Land Reforms

  • What are the challenges before the Indian economy when the world is moving away from free trade and multilateralism to protectionism and bilateralism? How can these challenges be met?

    According to the Economic Survey, the previous global paradigm of ‘stable geopolitics’ and ‘free trade and investment movement’, has been fading and the foundations on which many nations built themselves are now being shaken.

    World Moving from Free Trade & Multilateralism to Protectionism & Bilateralism

    Trade Wars – US-China tariff wars

    WTO Deadlock over Doha Development Agenda

    Rise of Bilateral/Regional Deals – Eg- RCEP

    Green Protectionism – EU’s Carbon Border Adjustment Mechanism (CBAM), US CHIPS Act

    Challenges before the Indian economy

    Fragmentation of Global Trade due to rise in tariffs, sanctions etc threaten export-oriented sectors. Eg- IT Industry

    Volatile Capital Flows

    Energy security challenges due to sanctions on Russia (40% share)

    Currency Depreciation

    Technology Barriers – New protectionist tools like data localisation rules of EU.

    Employment Impact – Labour-intensive sectors like textiles, gems, and automobiles face slowdown.

    Way Forward

    Internal Measures

    Ease of Doing Business – The Economic Survey (2024-25) key recommendation is ‘to get the domestic economic engine purring by pulling all the levers of deregulation’.

    Raising the investment rate to around 35% of GDP from the current level of ~ 31%.

    Boost domestic demand through high public capex

    Build resilience in semiconductors, defence, and critical minerals under Atmanirbhar Bharat.

    External Measures (Global Integration)

    Diversify Export Markets – Expand trade with Africa, Latin America, Central Asia, and ASEAN.

    Conclude Balanced FTAs – With EU, Canada, Australia.

    Strengthen IMEC, INSTC, and Chabahar Port for secure and cost-effective routes.

    Global South Leadership in WTO to revive dispute settlement and ensure fair rules.

    A self-sustained growth strategy is imperative for India’s long-term economic sovereignty.

  • Distinguish between the Human Development Index (HDI) and Inequality-adjusted Human Development Index (IHDI) with special reference to India. Why is the IHDI considered a better indicator of inclusive growth?

    The Human Development Index (HDI), introduced by UNDP in 1990, measures a country’s progress in terms of health, education, and income. The Inequality-adjusted Human Development Index (IHDI), introduced in 2010, refines HDI by factoring in inequality of distribution of these achievements.

    India’s Human Development Performance

    Human Development Index (HDI)

    Rank improved from out of 193 countries.

    Since 1990, HDI improved by 53%, outpacing global and South Asian averages.

    Inequality-adjusted Human Development Index (IHDI)

    India suffers a 30.7% loss due to inequality.

    Poorest 40% hold only 20.2% of income, while the richest 10% hold 25.5%.

    Why IHDI is a Better Indicator of Inclusive Growth

    Accounts for Inequality – Unlike HDI, IHDI reduces scores based on income, education, and health disparities, showing the real distribution of gains.

    Closer to Ground Reality – Reflects what people actually experience, not just national averages. For India, 30.7% loss of human development due to inequality.

    Reveals Hidden Gaps – Exposes divides across region, caste, class, and gender that HDI alone masks. Eg- gender gap in Labour Force Participation Rate

    Guides Policy Better – Eg- targeted schemes like PM Poshan Abhiyan or Eklavya Model Schools

    Captures Inter-generational Equity – By highlighting disparities, it stresses need for equal opportunities for long-term human development.

    Comparative Value – Countries with similar HDI can differ widely in IHDI, revealing which societies are more inclusive.

    Supports SDGs – Aligns with SDG 10 (Reduce Inequality) and SDG 1 (No Poverty) by showing inequality-adjusted outcomes.

    As Amartya Sen observed, “Development is about expanding freedoms.” HDI shows progress, but IHDI shows whether that progress is fairly shared.

    Government Budgeting

  • Discuss the rationale of the Production Linked Incentive (PLI) scheme. What are its achievements? In what way can the functioning and outcomes of the scheme be improved?

    The PLI scheme, launched in 2020, covers 14 key sectors and provides direct incentives on incremental sales of goods manufactured in India. It aims to raise manufacturing’s contribution to 25% of GDP.

    Rationale of the PLI Scheme

    Boost domestic manufacturing by overcoming the historic 16-17% manufacturing share in GDP.

    Reduce import dependence, especially in critical sectors like electronics, APIs, and solar modules.

    Integrate India into global value chains (GVCs) by attracting global manufacturers.

    Encourage scale, competitiveness, and technology transfer through incentive-based production expansion.

    Generate employment in labour-intensive and high-potential sectors.

    Promote sunrise industries (EVs, semiconductors, telecom, batteries) to position India in future technologies.

    Enhance Exports – Position India as a competitive player in global value chains.

    Achievements So Far

    achieved by PLI beneficiaries (mid-2025).

    Over 12 lakh direct and indirect jobs created.

    India became the 2nd-largest mobile producer, with 97% domestically made.

    Third-largest pharmaceutical producer globally. 50% of total pharma production is exported.

    Automotive Sector – Boosted EV components, hydrogen technologies, and high-tech auto manufacturing.

    Achieved 60% import substitution in telecom equipment.

    Issues

    Falling Manufacturing Share in GDP (from 15.4% to 14.3%) since PLI launch.

    >10% of allocated funds disbursed.

    Delays in Incentive Disbursement

    94% of incentives to pharmaceuticals and mobile-phone manufacturing

    Limited Achievement of Targets only 37% of scheme’s goal.

    Exclusion of MSMEs due to high eligibility thresholds

    Way Forward

    Faster disbursal of incentives to reduce uncertainty and improve industry cash flows.

    Move from scale-based incentives to design, R&D, and innovation incentives (chips, batteries).

    Enhance MSME participation through cluster-based PLI, separate PLI window for MSMEs

    Rationalise value-addition norms – realistic localisation targets.

    Improve coordination between Centre and States to reduce procedural delays.

    Strengthen monitoring, transparency, and impact evaluation through real-time dashboards

    Couple PLI with ease-of-doing-business reforms and plug-and-play infrastructure

    As PM Modi stated, “Aatmanirbharta is the cornerstone of building a Viksit Bharat.” Strengthening PLI can help realise this objective.

  • Match List-I with List-II and select the correct answer using the codes given below the lists

    Match List-I with List-II and select the correct answer using the codes given below the lists:
    List-I (Person) – List-II (Area).
    List-I(Person) List-II(Area)

    A. Sabyasachi Mukherjee 1. Microfinance loans

    B. Aniruddha Bahal 2. Pharmaceuticals

    C. Vikram Akula 3. Fashion designing

    D. Yusuf Hamied 4. Investigative journalism

    A B C D A B C D
    (a) 1 2 3 4 (b) 3 4 1 2
    (c) 1 4 3 2 (d) 3 2 1 4

  • Consider the following statements

    Consider the following statements:
    1. The first telegraph line in India was laid between Kolkata (formerly Calcutta) and Diamond Harbour.
    2. The first Export Processing Zone in India was set up in Kandla.
    Which of the statements given above is/are correct ?

  • Consider the following statements

    Consider the following statements :
    1. Infant mortality rate takes into account the death of infants within a month after birth.
    2. Infant mortality rate is the number of infant deaths in a particular year per 100 live births during that year.
    Which of the above statements is/are correct ?

  • Consider the following pairs

    Consider the following pairs :
    1. ABN Amro Bank :USA
    2. Barclays Bank :UK
    3. Kookmin Bank :Japan
    Which of the above pairs is/are correctly matched ?

  • Consider the following

    Consider the following:
    1. Fringe Benefit Tax
    2. Interest Tax
    3. Securities Transaction Tax
    Which of the above is/are Direct Tax/Taxes ?