Why in the News?
World Food Safety Day 2025 is observed with the theme “Food Safety: Science in Action.” It highlights India’s progress in food safety, though there are still some gaps to address.
What is the theme of World Food Safety Day 2025?
Theme: “Food Safety: Science in Action”. It emphasizes the importance of applying science to ensure food safety. |
How does it reflect India’s evolving approach to food safety?
- Shift from Adulteration to Risk-Based Framework: Earlier, the Prevention of Food Adulteration (PFA) Act, 1954 focused on whether food was adulterated or not. The Food Safety and Standards Act, 2006 introduced a scientific, risk-based approach through the creation of FSSAI.
- Adoption of International Scientific Standards: India aligned its food regulations with global norms like those of the Codex Alimentarius Commission. Eg: Standards for Maximum Residue Limits (MRLs) and Acceptable Daily Intake (ADI) values are now scientifically defined.
- Efforts to Strengthen Scientific Capacity: India is focusing on generating its own toxicological data and conducting Total Diet Studies (TDS) to suit local needs. Eg: Indian-specific dietary patterns and environmental factors are being considered to improve food safety regulations.
What are Toxicology Studies?
These are scientific assessments that evaluate the harmful effects of chemicals or substances (like pesticides, additives, contaminants) on living organisms, especially humans. |
Why are India-specific toxicology studies important for food safety?
- Reflect Local Dietary Habits: International toxicology data may not match Indian dietary patterns and consumption levels. Eg: An average Indian may consume more rice or spices than Western populations, affecting exposure to contaminants.
- Consider Unique Agricultural Practices: India’s crop varieties, pesticide usage, and farming methods differ from global practices. Eg: Pesticide residues on Indian-grown vegetables may vary significantly compared to Europe, requiring tailored safety limits.
- Account for Environmental and Genetic Differences: Climate, water quality, and genetic factors influence how toxins impact health in India. Eg: Heavy metal contamination in groundwater in Indian regions could cause higher cumulative exposure, not captured by foreign studies.
What is monosodium glutamate (MSG)?
MSG is a flavour enhancer commonly added to food to intensify the umami taste (a savoury flavour). It is the sodium salt of glutamic acid, a naturally occurring amino acid found in many foods. |
How has the regulation of monosodium glutamate (MSG) in India differed from global practices?
- Continued Use of Outdated Warning Labels: While global authorities like JECFA (Joint Expert Committee on Food Additives) have declared MSG safe since 1971, India still mandates a warning label stating it is unsafe for infants. Eg: Most countries have removed such warnings, but India continues them despite scientific consensus.
- Misleading Public Perception: The mandatory label in India has led to consumer fear and confusion, with many believing MSG is inherently harmful. Eg: This is misleading, as natural glutamates (chemically identical to MSG) are found in tomato, mushroom, garlic, and even breast milk.
- Lag in Regulatory Modernisation: India has been slow to align its food safety regulations with global scientific evidence. Eg: Despite MSG receiving an “ADI not specified” status globally (indicating high safety), India still treats it with caution due to legacy regulations.
What can improve food safety risk communication in India?
- Simplify Scientific Language: Communicate complex terms like MRLs (Maximum Residue Limits) and ADIs (Acceptable Daily Intake) in easy-to-understand formats for the public. Eg: Instead of stating “0.1 mg/kg,” explain it as a level safe for lifelong consumption in common quantities of food.
- Replace Misleading Labels with Evidence-Based Information: Outdated or alarming labels should be updated to reflect current scientific understanding. Eg: The MSG warning label in India should be replaced with factual information about its safety, as done in other countries.
- Enhance Public Engagement and Transparency: Build public trust through open communication with consumers, industry, and media to explain regulatory changes and safety updates. Eg: When MRL limits for pesticides were revised, clearer messaging could have prevented public fear and misunderstanding.
Way forward:
- Invest in India-Specific Scientific Research: Conduct localized toxicological studies and Total Diet Studies (TDS) to ensure food safety standards reflect Indian dietary habits, agricultural practices, and environmental conditions.
- Strengthen Risk Communication and Public Awareness: Simplify scientific terms for the public, revise outdated labels, and build transparent engagement with stakeholders to promote informed consumer choices and trust in regulatory decisions.
Mains PYQ:
[UPSC 2022] Briefly discuss the status and significance of the food processing industry in India.
Linkage: The “status and significance of the food processing industry” in India is directly and fundamentally linked to the country’s food safety standards. For this industry to achieve and maintain a significant status, it must adhere to and uphold rigorous food safety standards. The perception and reality of food safety directly influence consumer trust, market access (both domestic and international), and overall economic contribution of the sector.
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Why in the News?
India has rejected the “scare stories” spread by Pakistan and others about China building dams upstream on the Brahmaputra River, especially the big 60,000 MW Medog Hydropower Project in Tibet.
What is the significance of the Brahmaputra’s flow originating mostly in India?
- Major Contribution to River Flow: Although India has only about 34.2% of the Brahmaputra basin area, it contributes over 80% of the river’s total water flow due to higher rainfall and tributary inflows. Eg: The Indian basin receives an average annual rainfall of 2,371 mm, much higher than Tibet’s 300 mm.
- Flood Management Potential: Control over a major share of the river’s flow gives India better scope to design flood control infrastructure and storage systems to reduce monsoon-related disasters. Eg: Assam CM stated that reduced flow from China could help mitigate annual floods in Assam.
- Strengthened Riparian Rights and Development Planning: India’s dominant share in flow enhances its claim as a principal riparian state, empowering it to undertake hydropower and irrigation projects without heavy external dependency. Eg: India is developing hydropower projects like Dibang and Subansiri in Arunachal Pradesh based on its flow share.
| Note: A “riparian state” refers to a state or country that shares a river or stream border with another state or country. |
What about the Medog Hydropower Project?
The Medog Hydropower Project is an ambitious and controversial initiative by China to construct the world’s largest hydropower dam on the Yarlung Tsangpo River in Tibet. With a planned capacity of 60,000 megawatts (MW) and an estimated cost of $137 billion, the project has significant environmental, geopolitical, and social implications for the region |
Why is China’s proposed Medog hydropower project raising concerns for India?
- Strategic Control Over Water Flow: China’s 60,000 MW Medog dam could allow manipulation of the Brahmaputra’s flow, risking reduced water in dry seasons or artificial floods during monsoons. Eg: Sudden releases from Chinese dams have previously caused flash floods in Arunachal Pradesh and Assam.
- Environmental and Seismic Hazards: The dam’s location in a seismic zone threatens biodiversity, increases landslide risks, and may disrupt sediment flow critical for downstream agriculture. Eg: Trapped sediments can reduce soil fertility, impacting farming in India and Bangladesh.
- Absence of Water-Sharing Agreements: China’s unilateral actions without consultation violate equitable sharing norms, worsening trust deficits. Eg: Unlike the Indus Treaty with Pakistan, no formal pact exists between India and China on the Brahmaputra.
What steps has India taken or proposed to utilise the Brahmaputra’s water potential?
- Development of Hydropower Projects: India is actively constructing and planning large hydropower projects in Arunachal Pradesh to harness the Brahmaputra’s energy potential and establish water-use rights. Eg: Projects like the Dibang Multipurpose Project (2880 MW) and Subansiri Lower Hydroelectric Project (2000 MW) are designed to generate clean energy and regulate river flow.
- Construction of Multipurpose Storage Reservoirs: India is focusing on creating dams and storage facilities to control floods, store monsoon water, and ensure water availability in dry seasons. Eg: The proposed Upper Siang project aims to store floodwaters and generate electricity while supporting irrigation and drinking water needs in the region.
- Promotion of Inland Waterways and River Navigation: The Brahmaputra is being developed as a key navigable waterway under India’s Act East Policy to boost trade and regional connectivity. Eg: The National Waterway-2 (NW-2) on the Brahmaputra facilitates cargo movement between Assam and Bangladesh, promoting economic use of the river.
Way forward:
- Bilateral Water-Sharing Framework: India and China should initiate dialogue to establish a formal transboundary water-sharing agreement, ensuring data transparency, flow regulation, and emergency notification mechanisms—similar to the Indus Waters Treaty.
- Regional Environmental Assessment Mechanism: Promote a joint environmental impact assessment (EIA) involving India, China, and Bangladesh under a multilateral platform like the UN or SAARC, to ensure sustainable and equitable river basin management.
Mains PYQ:
[UPSC 2013} What do you understand by run of the river hydroelectricity project? How is it different from any other hydroelectricity project?
Linkage: The articles talks about the Chinese infrastructure interventions on the Brahmaputra are “hydropower projects with minimal storage”. It also mentions the massive planned Medog project as the world’s largest hydropower facility, and India’s own Upper Siang Project which will generate power and serve as a buffer against flow variations. This question directly relates to a type of hydropower project pertinent to river development and control.
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Why in the News?
Recently, U.K. Prime Minister Keir Starmer’s move to renew relations with the European Union is an important change in post-Brexit policy that has big effects around the world, especially for India.
What is the significance of the new U.K.-EU agreement for India?
- Simplifies Trade and Regulatory Compliance: The agreement harmonizes food standards, fishing rights, and customs coordination between the U.K. and EU, making it easier for Indian exporters to comply with a single set of rules instead of two separate regimes. Eg: Indian pharmaceutical companies supplying over 25% of the U.K.’s generic medicines could benefit from faster unified approvals, reducing costs and delays.
- Strengthens Strategic Diplomatic Relations: Renewed U.K.-EU cooperation offers India a chance to enhance multilateral ties and align foreign policies with key Western partners on issues like defence and Indo-Pacific security. Eg: India’s existing partnerships with France, Germany, and the U.K. on defence modernization could deepen with a coordinated U.K.-EU approach.
- Boosts Talent Mobility and Diaspora Engagement: The agreement’s border and migration cooperation may ease movement for Indian students and professionals across the U.K. and EU, expanding educational and employment opportunities. Eg: In 2024, the U.K. issued over 110,000 student visas to Indian nationals, a number likely to grow with improved mobility frameworks.
How could the U.K.-EU reset impact Indian exports?
- Simplified Compliance and Reduced Costs: A harmonised U.K.-EU regulatory framework will help Indian exporters by simplifying compliance, reducing redundant paperwork, and lowering operational costs across key sectors like pharmaceuticals, textiles, seafood, and agro-products. Eg: Indian seafood exports worth around ₹60,523 crore ($7.38 billion) in FY2024 could face fewer trade barriers due to aligned food standards and fishing policies.
- Challenges for Small and Medium Enterprises (SMEs): While unified standards ease trade, tighter common regulations might pose challenges for Indian SMEs that lack capital and technical expertise, requiring enhanced support from government schemes. Eg: To stay competitive, SMEs must leverage initiatives like the RoDTEP and Production-Linked Incentive (PLI)schemes to upgrade their export capabilities.
Why does the renewed U.K.-EU cooperation matter for India’s global diplomacy?
- Enhanced Multilateral Coordination: A more aligned U.K.-EU foreign policy enables India to strengthen multilateral ties and gain cohesive support on global platforms like the United Nations, G-20, and WTO. Eg: India can push its agenda more effectively in climate finance and digital infrastructure reforms with a united Western bloc.
- Boost to Defence and Security Partnerships: Coordinated defence policies between the U.K. and EU deepen India’s strategic collaborations in defence modernization, technology transfer, and Indo-Pacific security. Eg: Landmark defence deals with Germany and the U.K. on joint development and technology transfer gain momentum through U.K.-EU alignment.
- Stronger Collective Response to Shared Geopolitical Challenges: The reset facilitates trilateral or multilateral engagements addressing shared concerns like China’s assertiveness in the Indo-Pacific region. Eg: India’s partnerships with the U.K., France, and Germany could lead to coordinated strategies to ensure regional stability.
What opportunities does the U.K.-EU alignment offer for Indian migration and talent mobility?
- Improved Mobility for Students and Professionals: The renewed U.K.-EU cooperation on border checks and migration policies could partially restore the movement of Indian students and professionals across both regions. Eg: In 2024, the U.K. issued over 110,000 student visas to Indian nationals, indicating strong educational ties likely to expand.
- Creation of Semi-Integrated Talent Corridors: The alignment may enable semi-integrated talent corridors that facilitate easier access to job markets in the U.K. and EU for skilled Indian workers. Eg: Indian professionals may benefit from more streamlined work permits and mobility agreements within the new U.K.-EU framework.
- Strengthening Migration Pacts with Key EU Countries: India’s existing migration agreements with countries like Germany, France, and Portugal could be embedded within the broader U.K.-EU framework, enhancing their effectiveness. Eg: This could lead to expanded opportunities for Indian workers under more coordinated and stable migration policies.
How should India respond to maximise gains from this U.K.-EU reset?
- Accelerate Reforms and Modernize Export InfrastructureIndia needs to upgrade its export ecosystem by adopting unified standards, improving logistics, and strengthening support schemes like RoDTEP and PLI to enhance competitiveness and meet new regulatory demands. Eg: Indian exporters in sectors like pharmaceuticals and seafood can reduce costs and clearances by aligning with the harmonized U.K.-EU framework.
- Assert Strategic Engagement in Global Governance and Diplomacy: India should deepen its diplomatic ties with the U.K., EU, and key European partners to leverage coordinated foreign policy and defence collaborations, boosting its influence in forums like the UN, G20, and WTO. Eg: India’s strengthened partnerships on climate finance and Indo-Pacific security will enhance its global leadership role.
Way forward:
- Strengthen Export Competitiveness: Invest in upgrading export infrastructure, enhance quality standards, and expand government incentive schemes like RoDTEP and PLI to help Indian exporters meet unified U.K.-EU regulations and remain competitive globally.
- Deepen Strategic and Diplomatic Engagement: Proactively engage with the U.K., EU, and key European nations to build stronger defence, trade, and migrationpartnerships, leveraging the reset to boost India’s global influence and economic opportunities.
Mains PYQ:
[UPSC 2023] The expansion and strengthening of NATO and a stronger US-Europe strategic partnership works well in India.’ What is your opinion about this statement? Give reasons and examples to support your answer.
Linkage: In this article talks about the renewed ties between the UK and the EU — called a “Eurocentric reset” — could open new doors for India. A more united UK-EU foreign policy, especially in areas like defence and the Indo-Pacific, gives India a chance to work more closely with the EU on global matters. This also fits well with the growing strategic partnership between the US and Europe, which benefits India’s position in international affairs.
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Why in the News?
India is thinking about changing the Civil Liability for Nuclear Damages Act, 2010, and the Atomic Energy Act, 1962. These changes would let private companies build and run nuclear power plants.
Why is there a proposal to amend India’s nuclear energy laws?
- To Attract Private and Foreign Participation: Current laws like the Civil Liability for Nuclear Damage Act (CLNDA), 2010, deter foreign companies due to strict liability provisions. Amending them would enable global firms like Westinghouse (U.S.) and Électricité de France (EDF) to invest and supply nuclear technology.
- To Meet India’s Clean Energy Targets: India aims to scale up nuclear capacity from 8 GW to 100 GW by 2047 as part of its low-carbon energy transition. Legal reforms are essential to unlock the necessary investments and partnerships to achieve this scale.
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What are the concerns about foreign investment and liability?
- Foreign Companies Fear Being Blamed After Accidents: They worry they’ll be held legally responsible if something goes wrong, which could cost them a lot of money. Eg: U.S. company Westinghouse and French company Areva stayed away from India’s nuclear sector due to strict liability laws.
- Indian Law Puts All Blame on the Operator: India’s current law makes the plant operator fully responsible, even if the equipment from foreign suppliers fails. Eg: If a part made by a foreign company causes a problem, only NPCIL (Indian operator) is blamed and has to pay.
- Old Accidents Still Raise Worries: Events like the Bhopal Gas Tragedy make people cautious about giving foreign companies a free pass on liability. Eg: In 2012, the NDA opposed changes in law that would reduce foreign companies’ responsibility, citing past disasters.
How will the amendments help achieve 100 GW capacity?
- Enabling Foreign Participation: Amendments will remove liability-related hurdles, allowing global firms to invest and supply technology. Eg: Westinghouse (U.S.) and EDF (France) may enter Indian projects if liability norms align with international standards.
- Boosting Domestic-Private Sector Involvement: Changes in laws like the Atomic Energy Act could allow Indian private companies to build and operate reactors. Eg: Companies like L&T and BHEL may contribute to infrastructure and component manufacturing at scale.
- Attracting Investment in Advanced Reactors (SMRs): Legal clarity could attract funds and partnerships in Small Modular Reactors, helping scale capacity rapidly. Eg: New-age firms working on SMRs may partner with India if assured of returns and limited liability.
What are Small Modular Reactors (SMRs)?
- Small Modular Reactors (SMRs) are compact nuclear power plants that produce up to 300 MW of electricity and are built in factories for easy transport and quicker installation.
- They use advanced, safer designs with features like passive cooling and are ideal for remote areas, industrial use, and integration with renewable energy sources.
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What challenges exist in small modular reactor (SMR) technology transfer?
- Profit-Driven Technology Sharing: Private foreign firms transfer technology only if it’s commercially viable, not for strategic or public interest reasons. Eg: U.S. companies will share SMR tech only if returns outweigh security or IP risks.
- Restrictions by National Governments: Export controls and national security concerns limit what tech can be transferred internationally. Eg: The U.S. government regulates tech transfers; past transfers to China (like AP1000) led to cloning and IP misuse.
- Partial Transfers and Proprietary Control: Even friendly countries often retain core tech and allow only partial local production. Eg: Russia’s Rosatom allowed India to build sub-components of VVER reactors but kept control over critical hot sections.
What is the Convention on Supplementary Compensation (CSC)?
- The Convention on Supplementary Compensation (CSC) is an international treaty that establishes a global fund to provide prompt compensation to victims of nuclear accidents.
- It assigns primary liability to nuclear plant operators while limiting supplier liability, ensuring faster financial support and shared responsibility among participating countries.
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Why is the Convention on Supplementary Compensation (CSC) important for nuclear compensation?
- Ensures Quick Compensation Without Legal Delays: CSC focuses on giving fast financial help to victims of nuclear accidents without long court cases. Eg: After a nuclear incident, funds can be released immediately to affected people, unlike long litigation seen in Bhopal.
- Fixes Responsibility on the Operator Only: CSC channels all liability to the nuclear plant operator, protecting suppliers unless there’s proven misconduct. Eg: If NPCIL runs the plant, it bears full responsibility, not companies like Westinghouse or Rosatom.
- Creates an International Compensation Fund: It sets up a multi-tiered fund (including global contributions) to support countries during large-scale accidents. Eg: A country can access a global pool of money through CSC if the cost of a disaster exceeds national capacity.
Way forward:
- Strengthen Legal Framework to Balance Liability and Investment: Amend India’s nuclear laws to align liability rules with international standards like the CSC, ensuring fair responsibility for operators while providing enough protection to attract foreign and private investments.
- Promote Technology Transfer and Domestic Capacity Building: Create transparent policies and incentives that encourage foreign companies to share advanced nuclear technologies such as Small Modular Reactors (SMRs) with Indian firms, while simultaneously building India’s own manufacturing and operational capabilities to achieve energy targets sustainably.
Mains PYQ:
[UPSC 2018] With growing energy needs should India keep on expanding its nuclear energy programme? Discuss the facts and fears associated with nuclear energy.
Linkage: The article indicate that discussions are ongoing in India to amend its nuclear liability framework (specifically, the Civil Liability for Nuclear Damages Act (CLNDA), 2010, and the Atomic Energy Act (AEA), 1962). The primary reason for these proposed amendments is to allow private companies to build and operate nuclear energy-generation facilities and to expand India’s nuclear energy capacity from 8 GW to 100 GW by 2047, aligning with the country’s clean energy goals.
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Why in the News?
India is one of the world’s top textile exporters and a major manufacturing center, but its textile industry is now at a critical stage.
What challenges affect India’s textile industry globally?
- Geopolitical Tensions: Rising global conflicts and trade restrictions disrupt export routes and reduce India’s textile market access. Eg: The U.S.-China trade war shifted demand to countries like Vietnam, affecting Indian exporters’ global share.
- Fragmented Supply Chains: Lack of coordination between suppliers, weavers, and exporters leads to production delays and higher costs. Eg: During the COVID-19 pandemic, uncoordinated lockdowns at different supply chain points delayed delivery timelines.
- Price Volatility: Unpredictable fluctuations in raw material prices reduce planning efficiency and shrink profit margins. Eg: In 2022, cotton prices spiked globally, affecting the cost structure of Indian textile firms and making exports less competitive.
- Sustainability Compliance: Global markets demand eco-friendly and traceable textile products, which Indian firms may struggle to provide without investing in green technology. Eg: The EU’s push for traceability and environmental standards may restrict access for non-compliant Indian products.
- Changing Consumer Preferences: International buyers now prioritize ethically sourced, durable, and sustainably certified products. Eg: Brands like H&M and Levi’s require sustainability certifications, posing challenges for uncertified Indian manufacturers.
What is Regenerative Farming?
Regenerative farming is an agricultural practice focused on restoring and enhancing soil health, increasing biodiversity, and improving ecosystem resilience. It goes beyond sustainable farming by actively repairing environmental damage caused by conventional agriculture. |
Why is regenerative farming vital for textiles?
- Sustainable Raw Material Sourcing: Regenerative farming ensures a steady and eco-friendly supply of natural fibres like cotton, reducing environmental impact. Eg: In Aurangabad, Maharashtra, over 6,000 farmers under the Regenerative Cotton Program reported higher yields and soil health improvement.
- Climate Resilience: It improves soil health and enhances resistance to climate shocks, ensuring consistent fibre quality. Eg: Regen farms showed better crop survival during erratic rainfall and drought periods, supporting uninterrupted textile production.
- Cost-Effective Production: Reduced dependence on chemical inputs lowers input costs, making raw materials more affordable for textile producers. Eg: Farmers using regen methods observed less fertilizer usage, lowering their overall production cost.
- Enhanced Traceability: Regen farming enables real-time data and certification, ensuring supply chain transparency demanded by global brands. Eg: Cotton grown under traceable regenerative systems is preferred by brands like Patagonia for its verified originand sustainability.
- Rural Livelihood and Inclusion: It creates inclusive rural economies by empowering smallholders, supporting gender equity, and connecting farmers with global markets. Eg: Regen cotton initiatives have led to higher incomes and women participation in farming across India’s cotton belts.
Where is regenerative cotton farming showing success?
Aurangabad, Maharashtra: A notable hub for regenerative cotton farming, where farmers have adopted climate-friendly agricultural practices. Eg: Over 6,000 farmers are part of the Regenerative Cotton Program, resulting in higher yields, reduced use of chemical fertilisers, and more stable incomes. |
How does traceability boost textile exports?
- Product Authenticity: Traceability ensures transparency from raw material to final product, building consumer trust in international markets. Eg: Kasturi Cotton branding enhances India’s image by assuring authentic, high-quality cotton to global buyers.
- Sustainability Compliance: Export destinations demand eco-conscious sourcing. Traceable supply chains show alignment with sustainability standards. Eg: The EU and U.K. emphasize environmentally responsible production under FTAs and Digital Product Passports (DPPs).
- Market Access & Expansion: Traceability helps Indian textiles meet foreign regulatory standards, easing entry into eco-sensitive markets. Eg: India-U.K. Free Trade Agreement (FTA) can boost exports by leveraging traceability credentials.
- Brand Accountability: It shifts perception from just a supplier to a responsible brand, enhancing global brand equity. Eg: Tech-based tracking systems help Indian brands share sustainability stories, increasing appeal in premium markets.
- Competitive Differentiation: Traceable products stand out in global markets with rising demand for ethical fashion. Eg: As per the 2023 Consumer Circularity Survey, over 37% consumers consider traceability a key purchase factor.
| Note: Traceability refers to the ability to track the origin, movement, and history of a product through every stage of the supply chain — from raw material sourcing to manufacturing, distribution, and final sale. |
What are the steps taken by the Indian government?
- PM MITRA Scheme: Establishes Mega Integrated Textile Regions and Apparel Parks to integrate the entire textile value chain, reduce logistics costs, boost competitiveness, and create jobs.
- Promotion of Regenerative Cotton Farming: Supports sustainable farming practices to improve soil health, reduce chemical use, and enhance cotton qualitythrough collaborative platforms.
- Support for Technical Textiles and Innovation: Launches initiatives like the National Technical Textiles Mission to promote R&D and commercialization of high-value technical textiles for sectors like healthcare and defense.
Way forward:
- Adopt Sustainable Practices: Promote widespread use of regenerative farming, traceability technologies, and product circularity to enhance environmental responsibility and global competitiveness.
- Strengthen Innovation and Collaboration: Invest in R&D, encourage public-private partnerships, and leverage trade agreements to boost technological advancement and expand export markets.
Mains PYQ:
[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: Indian textile industry is “one of the world’s largest manufacturing hubs” and projects its growth to $350 billion by 2030, with the potential to add 35 million new jobs. This PYQ directly addresses the importance of the manufacturing sector for economic growth and government policies supporting it, which are crucial for the textile industry to realize its leadership vision and achieve an “economic competitive edge”.
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Why in the News?
India has announced a major cut in import duty — 15% off on fully built electric cars — but only if the makers promise to invest locally and add value within the country. This is part of a new plan called the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI).
What is the SPMEPCI scheme?
The SPMEPCI scheme (Scheme to Promote Manufacturing of Electric Passenger Cars in India) launched in 2024 offers a 15% concessional import duty on electric cars. It requires manufacturers to invest ₹4,150 crore and achieve 25–50% domestic value addition within five years, promoting local EV production and reducing imports. |
How does it aim to promote EV manufacturing in India?
- Investment-Linked Incentives: Offers a 15% concessional import duty on completely built-up (CBU) EVs. Manufacturers must invest at least ₹4,150 crore over 3 years. Eg: A global EV company like Tesla or BYD can benefit from lower import taxes if it sets up a manufacturing plant or R&D unit in India.
- Mandatory Localisation of Production: Companies must achieve 25% Domestic Value Addition (DVA) within 3 years, increasing to 50% in 5 years. Encourages use of local auto components, reduces import dependency, and builds domestic manufacturing capacity. Eg: EV makers could partner with Indian auto component suppliers like Motherson Sumi or Bosch India to meet DVA targets.
- Cap on Imports to Push Local Production: Only 8,000 CBUs annually per manufacturer are allowed under concessional duty for 5 years. Companies must move quickly to set up local production to scale beyond this limit. Eg: After hitting the import cap, a company like Volkswagen may be compelled to start local assembly to meet rising demand and avoid higher duties.
Why is technology transfer critical for India’s EV transition?
- Late Start Requires Catching Up Quickly: India began its EV journey in 2015, about 5 years later than major players like China and the U.S. Without technology transfer, India risks falling behind in innovation and manufacturing capabilities. Eg: China’s early joint ventures helped it quickly develop advanced EV technology, something India needs to replicate.
- Lack of Indigenous Battery Technology: Batteries are the core component of EVs, and India currently lacks the technology to produce advanced batteriesdomestically. Technology transfer will help India build expertise in battery design, manufacturing, and supply chain integration. Eg: China’s vertical integration from mining to battery assembly gave it a competitive edge in pricing and scale.
- Building a Localised EV Ecosystem: Transferring technology via partnerships or joint ventures helps develop local suppliers and skilled workforce. This reduces dependency on imports and supports long-term sustainability of the EV industry. Eg: India’s success in ICE vehicles came through mandated joint ventures which facilitated tech and skill transfer; the same model can be applied to EVs.
How has China’s strategy helped it lead in global EV adoption?
- Early and Ambitious Subsidy Program: Launched the New Energy Vehicle subsidy programme in 2009, much earlier than many countries. This long-term financial support boosted EV production and adoption. Eg: Subsidies encouraged companies like BYD and NIO to rapidly scale EV manufacturing.
- Mandatory Joint Ventures for Technology Transfer: Required foreign EV manufacturers to form joint ventures with Chinese firms until 2022. This ensured technology transfer and domestic capability building. Eg: Tesla initially partnered with local companies to set up manufacturing in China.
- Massive Financial Incentives: China invested around $230 billion over 15 years on EV subsidies, infrastructure, and research—the largest globally. This comprehensive support accelerated industry growth. Eg: Government funding helped develop a vast EV charging network nationwide.
- Gradual Reduction of Import Duties: Reduced import duties on EVs from 25% in 2010 to 15% in 2018. Lower duties made EVs more affordable, increasing domestic demand. Eg: More affordable imports boosted consumer adoption alongside local manufacturing.
- Vertical Integration of Battery Manufacturing: Controls entire battery value chain: mining, processing, manufacturing, and assembly. This integration reduced costs and improved competitiveness against conventional vehicles. Eg: Chinese battery giants like CATL dominate global markets due to this vertical setup.
What are the steps taken by the Indian government?
- Expansion of FAME Scheme: The Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) scheme initially launched in 2015 with ₹895 crore outlay, expanded to ₹10,000 crore in 2019. Supports EV adoption through subsidies and incentives for manufacturers and buyers.
- Encouraging Localisation and Investment: Caps on imported EVs to encourage domestic production (maximum 8,000 completely built units annually per manufacturer under SPMEPCI). Push for localisation of components and assembly to build a robust domestic EV ecosystem.
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Way forward:
- Promote Strategic Partnerships for Technology Transfer: Encourage and mandate joint ventures between foreign EV firms and Indian manufacturers to ensure effective technology sharing and skill development.
- Build a Comprehensive Domestic Battery Ecosystem: Invest in creating end-to-end battery manufacturing capabilities, including raw material sourcing, processing, and cell production, to reduce import reliance and lower costs.
Mains PYQ:
[UPSC 2023} How do electric vehicles contribute to reducing carbon emissions and what are the key benefits they offer compared to traditional combustion engine vehicles?
Linkage: India’s journey to decarbonize and transform mobility, which includes the adoption of EVs, is currently hampered because policies “fall short of addressing a pressing issue… technology transfer”. This question directly addresses the core subject of electric vehicles (EVs) and their benefits, particularly in reducing carbon emissions.
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Why in the News?
India’s rooftop solar (RTS) capacity has gone beyond 17 GW, showing good progress in using clean energy in cities. But in crowded urban areas, there isn’t enough space for more rooftop solar panels.
What is Building-Integrated Photovoltaics (BIPV)?
BIPV refers to the integration of photovoltaic materials directly into the building envelope (e.g., façades, roofs, windows). It serves both as a building material and a solar power generator. Eg: Façades, curtain walls, glass windows, skylights, tiles, railings, balconies, canopies, atriums, and shading devices.
How does it differ from traditional rooftop solar systems?
|
Traditional Rooftop Solar (RTS) |
Building-Integrated Photovoltaics (BIPV) |
| Installation |
Added onto rooftops |
Embedded into building structure |
| Space Use |
Limited to rooftop area |
Uses entire building envelope (walls, windows etc.) |
| Aesthetic |
Usually visible, can affect aesthetics |
Customisable, aesthetically integrated |
| Function |
Only generates electricity |
Generates electricity + serves as a building material |
| Retrofitting |
Often retrofitted |
Typically integrated during design/build phase |
Why is BIPV particularly important for densely populated urban areas in India?
- Limited Rooftop Space in High-Rises: In densely populated cities, tall buildings with small rooftops cannot accommodate large rooftop solar (RTS) systems. Eg: A 16-storey building with a 4,000 sq. ft rooftop can install only a 40 kWp RTS system, but its south-facing façade can support 150 kWp BIPV panels.
- Efficient Use of Building Surfaces: BIPV allows power generation from vertical and horizontal surfaces like façades, windows, and balconies, thus using more surface area. Eg: Façade areas of buildings are often 3–4 times larger than rooftop areas, offering greater solar potential.
- Supports Sustainable Urban Growth: With India’s urban population projected to reach 850 million by 2051, BIPV enables renewable energy adoption in future infrastructure. Eg: Integration of BIPV in new public infrastructure (e.g., metro stations, airports) can reduce carbon footprint.
- Energy Access for Non-Rooftop Households: Residents in multi-storey apartments without rooftop access can still benefit from solar energy via BIPV on balconies, railings, or windows. Eg: In Germany, 15 lakh households use balcony solar panels, reducing electricity bills by up to 30%.
- Aesthetic and Space-Neutral Design: BIPVs blend into building designs without occupying extra space or affecting aesthetics, which is ideal for space-constrained urban settings. Eg: The Renewable Energy Museum in Kolkata has a solar-powered dome with over 2,000 integrated panels, combining function with form.
What challenges are limiting the adoption of BIPVs in India?
- High Initial Costs: BIPV systems are more expensive than traditional rooftop solar due to integration with building materials and use of advanced technology.
- Policy and Regulatory Gaps: Lack of clear policies, mandates, and incentives specific to BIPV hinders its integration into mainstream construction practices. Eg: Unlike Europe’s Energy Performance of Buildings Directive, India’s National Building Code does not yet mandate or promote BIPV use.
- Low Awareness and Technical Capacity: Architects, builders, and homeowners are often unaware of BIPV’s benefits or how to incorporate it effectively in design.
- Dependence on Imports and Limited Domestic Manufacturing: India relies heavily on imported BIPV components, increasing costs and reducing supply reliability. Eg: Specialised BIPV glass panels or semi-transparent modules are often imported from China or Europe due to lack of local alternatives.
- Absence of Standardisation and Performance Guidelines: There are no clear standards, benchmarks, or guidelines for BIPV performance, quality, and installation, causing hesitation among developers. Eg: Without defined safety and efficiency norms, urban local bodies may delay approvals or avoid BIPV in building plans.
What measures can India take to scale up the uptake of BIPVs effectively? (Way forward)
- Introduce Targeted Policy Incentives and Subsidies: India should extend solar subsidy schemes to specifically support BIPV adoption, especially in space-constrained urban areas. Eg: Under the PM Surya Ghar Muft Bijli Yojana (2024), BIPV was included with subsidies up to ₹78,000 for a 3-kW residential system. Similar support is needed for commercial and industrial sectors.
- Embed BIPV in Building and Energy Codes: Integrating BIPV requirements into the National Building Code, Energy Conservation Building Code, and Eco Niwas Samhita can make its use more widespread and standardized. Eg: Europe’s Energy Performance of Buildings Directive mandates solar use in new constructions and promotes BIPV with clear regulations—India can adopt a similar model.
- Promote Domestic Manufacturing and Demonstration Projects: Boosting indigenous production through PLI schemes, along with pilot projects in public infrastructure (e.g., schools, airports), can improve visibility and reduce costs. Eg: The CtrlS Datacenters in Navi Mumbai and Kolkata’s Renewable Energy Museum show how BIPV can be scaled in real-world infrastructure.
Mains PYQ:
[UPSC 2020] India has immense potential of solar energy though there are regional variations in its development. Elaborate.
Linkage: Building-Integrated Photovoltaics (BIPV) is a key solution for boosting solar adoption, especially in densely populated urban areas where traditional rooftop solar (RTS) is constrained by limited shadow-free space. BIPV transforms entire buildings into power generators by integrating solar elements directly into architectural elements, using available surfaces more efficiently and contributing significantly to India’s solar capacity goals.
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Why in the News?
Donald Trump’s push to return as U.S. President and his deal-based approach to security have led to doubts being raised about America’s strong support for global alliances like NATO and Indo-Pacific ties. As a result, a key chance is being presented to countries like India and Australia to take on a bigger role in regional security.
What opportunity does Trump’s return present for India-Australia defence ties?
- Strategic Autonomy Amid U.S. Uncertainty: Trump’s transactional approach and doubts over U.S. security guarantees create a power vacuum, pushing India and Australia to enhance self-reliant regional security frameworks. Eg: Trump’s past remarks questioning NATO and alliances signal that countries like India and Australia must prepare to collaborate independently in the Indo-Pacific.
- Convergence on Regional Threat Perception: Both nations share concerns about China’s assertiveness and have a common interest in upholding a rules-based Indo-Pacific order. Eg: Their cooperation in military exercises like Malabar and AUSINDEX reflects growing trust and joint readiness to ensure maritime security.
- Enhanced Role for Middle Powers: With the U.S. potentially pulling back, middle powers like India and Australia can take on more active roles in shaping the regional security architecture. Eg: The establishment of the Comprehensive Strategic Partnership (CSP) in 2020 and air-to-air refuelling arrangements show how both are stepping up bilateral defence engagement.
How have India and Australia enhanced their defence partnership?
- Strategic Frameworks and Dialogues: India and Australia have institutionalised their defence ties through frameworks like the Comprehensive Strategic Partnership (CSP) 2020 and the 2+2 Ministerial Dialogue (launched in 2021), enabling high-level strategic coordination. Eg: These platforms have strengthened regular engagement on defence, security, and regional stability.
- Operational Cooperation and Logistics Support: Practical collaboration has grown through agreements like the Mutual Logistics Support Agreement (MLSA), enabling joint exercises, logistics sharing, and humanitarian missions. Eg: In November 2024, an Air-to-Air Refuelling Agreement allowed the Royal Australian Air Force to extend the range of Indian fighter aircraft.
- Joint Military Exercises and Multilateral Engagement:The two countries regularly conduct tri-services and multilateral military exercises to build interoperability and trust. Eg: Exercises like AUSINDEX (Navy), AUSTRAHIND (Army), and participation in Malabar and Pitch Blackreflect deepening defence cooperation.
Why should India upgrade its Defence Adviser role in Canberra?
- Reflect Strategic Importance of the Partnership: Upgrading the DA role to a one-star rank signals that India values its growing defence relationship with Australia.
- Eg: Australia views India as a “top-tier security partner”; a higher-ranked DA would align with this perception and facilitate deeper military coordination.
- Ensure Balanced Tri-Service Representation: Currently held by a Navy officer, the DA position lacks dedicated Army and Air Force support, limiting joint-service engagement. Eg: Adding Army and Air Force assistants would enhance collaboration across all services, especially for tri-service exercises like AUSTRAHIND and AUSINDEX.
- Strengthen Pacific Island Outreach: The same DA currently manages India’s engagement with Pacific Island nations, which need focused strategic attention. Eg: Appointing dedicated personnel for Pacific outreach would align with India’s broader Indo-Pacific vision and regional diplomacy.
Which defence cooperation areas need urgent focus?
- Cross-Service Military Integration: Move beyond Navy-centric cooperation to promote joint operations across the Army, Navy, and Air Force. Eg: Plan a large-scale joint military exercise involving all three services to test real-world interoperability and enhance preparedness.
- Maintenance, Repair, and Overhaul (MRO) & Joint Manufacturing: Expand cooperation in naval MRO facilities and co-production of patrol boats for island nations. Eg: India’s MRO contracts with the U.S. and U.K. navies can be replicated with Australia to support regional maritime forces in the Indian and Pacific Oceans.
- Ground-Level Operational Exchanges and War-Gaming: Encourage working-level military exchanges, war-gaming, and fellowships to build trust and generate fresh strategic ideas. Eg: Regular staff college fellowships and classified tabletop exercises can deepen understanding and foster tactical collaboration.
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How can MSMEs boost India-Australia defence collaboration?
- Promote Joint Innovation in Defence Tech: MSMEs and startups in both countries are at the forefront of dual-use and cutting-edge technologies. Collaborating can lead to co-development of defence innovations. Eg: Indian and Australian MSMEs can jointly develop components for drones, surveillance systems, or cyber-security tools.
- Align Indigenous Defence Programs: Both nations are running indigenisation drives in defence manufacturing. Aligning these efforts can reduce dependency on third-party suppliers. Eg: India and Australia can create a joint MSME supply chain for ship components or lightweight materials for aircraft.
- Create Bilateral Platforms for MSME Engagement: Establish frameworks similar to the U.S.-India INDUS X model to connect MSMEs, investors, and defence officials from both countries. Eg: A dedicated India-Australia Defence MSME Forum can organise hackathons, product expos, and joint funding opportunities.
Way forward:
- Deepen Tri-Service and Industrial Collaboration: Expand joint military exercises across all services and foster MSME-led co-development in defence tech, MRO, and manufacturing to build resilient, self-reliant capabilities.
- Strengthen Strategic Architecture and Representation: Upgrade India’s Defence Adviser role in Canberra and establish dedicated bilateral MSME engagement platforms to reflect the growing strategic importance and operational depth of the partnership.
Mains PYQ:
[UPSC 2021] The newly tri-nation partnership AUKUS is aimed at countering China’s ambitions in the Indo-Pacific region. Is it going to supersede the existing partnerships in the region? Discuss the strength and impact of AUKUS in the present scenario.
Linkage: Australia is undergoing a substantial overhaul of its armed forces and acquiring new technologies under AUKUS, which includes the U.S. and the U.K. This strategic shift for Australia, alongside concerns about “American security guarantees appear increasingly conditional,” creates a context where Australia’s defense ties with India, as a fellow middle power, are deepening. AUKUS, while involving the US, signifies a new alignment in the Indo-Pacific that impacts the broader strategic environment in which India and Australia forge their independent and collaborative defense relationship.
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Why in the News?
In 2025, the Southwest Monsoon, which plays a vital role in India’s farming economy, brought heavy and destructive rains. Instead of simply starting the farming season, it has caused widespread damage across the northeastern states.
Why is the northeastern region particularly vulnerable to monsoon-related disasters?
- Geographical Terrain and River Systems: The Northeast has a complex topography of steep hills and fast-flowing rivers like the Brahmaputra and Barak. These rivers often overflow during monsoon, causing floods and erosion. Eg: In Assam, over 10 major rivers flowed above danger level in June 2025, affecting over 3 lakh people across 19 districts.
- High and Prolonged Rainfall: The region receives one of the highest average monsoon rainfalls in India, making even a “below normal” monsoondestructive. Eg: Despite IMD predicting lower-than-normal rainfall, Assam, Tripura, and Sikkim faced flash floods and landslidesin May–June 2025.
- Dual Monsoon Exposure and Fragile Ecology: The region experiences both the southwest monsoon (June–September) and a retreating monsoon (October–December), increasing disaster exposure. The fragile ecology, including deforestation and slope instability, worsens risks. Eg: In North Sikkim, landslides in early June 2025 marooned 1,500 tourists and blocked arterial roads due to incessant rain.
What is the Dual Monsoon Pattern?
Dual Monsoon Pattern refers to the occurrence of two distinct monsoon phases in a year that affect a region, particularly the Northeastern States of India. These are:
- Southwest Monsoon (June to September):
This is the primary monsoon season for most of India. The Bay of Bengal branch of the southwest monsoon brings heavy rainfall to the Northeastern States like Assam, Meghalaya, and Arunachal Pradesh.
- Retreating/Post-Monsoon (October to December):
This secondary phase brings additional rainfall, especially to Nagaland, Manipur, Mizoram, and Tripura (NMMT region). This is often accompanied by cyclonic storms originating from the Bay of Bengal.
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How does the dual monsoon pattern affect the disaster preparedness of northeastern States?
- Extended Vulnerability Period: The presence of both the southwest monsoon (June–September) and the retreating/post-monsoon (October–December) leads to a prolonged rainy season, increasing the duration for which states must stay alert and prepared. Eg: In 2023, flash floods affected parts of Meghalaya in both July and November, stretching disaster response capacities.
- Recurring Strain on Resources: The back-to-back monsoon cycles put continuous pressure on relief infrastructure, emergency services, and budgetary resources, often without adequate recovery time between events. Eg: In Assam, flood shelters and boats used during June floods had to be reactivated again during October rains, delaying repairs and replenishment.
- Challenges in Long-term Planning: The dual monsoon system makes it harder to plan and execute infrastructure repair, agricultural recovery, and resettlement efforts, as damage may recur within months. Eg: In Arunachal Pradesh, roads repaired after July landslides were again washed away during October rains in 2022, disrupting connectivity repeatedly.
Why has infrastructure development lagged in the northeastern States compared to the rest of India?
- Challenging Geographical Terrain: The region is dominated by mountainous landscapes, dense forests, and seismic zones, which make construction of roads, bridges, and railways technically difficult and cost-intensive. Eg: In Sikkim, frequent landslides and narrow mountain roads delay road-widening and highway projects.
- Security and Strategic Concerns: The presence of international borders with countries like China, Myanmar, and Bangladesh and historical instances of insurgency have led to delays in project execution due to security concerns and administrative restrictions. Eg: The construction of the India-Myanmar-Thailand Trilateral Highway through Manipur has faced repeated delays due to local unrest and law-and-order issues.
- Low Political and Economic Prioritisation: Compared to other regions, the Northeast has received less investment in infrastructure due to lower population density, limited industrial base, and less political influence at the national level. Eg: States like Nagaland and Mizoram have limited railway connectivity even today, unlike the rapid expansion seen in western and southern India.
What are the steps taken by the Indian government?
- Strengthened Disaster Response and Early Warnings: The government has deployed NDRF units across the Northeast and enhanced IMD’s region-specific alerts for floods and landslides in states like Assam, Sikkim, and Arunachal Pradesh.
- Infrastructure Development in Vulnerable Areas: Schemes like NESIDS support critical infrastructure such as flood protection embankments and all-weather roads in remote regions of Manipur and Mizoram.
- Integration into National Disaster Management Frameworks: NDMA conducts capacity building, mock drills, and implements region-specific guidelines for urban flooding and landslide risk in cities like Gangtok and Guwahati.
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What long-term measures are needed to ensure sustainable disaster management in the Northeast? (Way forward)
- Region-Specific Infrastructure Planning and Investment: Develop climate-resilient infrastructure suited to the region’s fragile ecology, such as landslide-resistant roads, flood-resistant housing, and robust early warning systems. Eg: The installation of a real-time flood monitoring system in the Brahmaputra basin has improved early evacuation in parts of Assam.
- Integrated Inter-State and Central Coordination Mechanism: Establish a permanent regional disaster coordination body with participation from all Northeast states and the Centre to plan, share resources, and respond collectively to disasters. Eg: A joint task force involving Assam, Arunachal Pradesh, and Meghalaya could improve flood response across shared river systems like the Barak and Brahmaputra.
Mains PYQ:
[UPSC 2024] Flooding in urban areas is an emerging climate-induced disaster. Discuss the causes of this disaster. Mention the features of two such major floods in the last two decades in India. Describe the policies and frameworks in India that aim at tackling such floods.
Linkage: The Bay of Bengal branch of the monsoon reaches the northeastern States first. These areas usually get a lot of rain during the monsoon, even in years when rainfall is lower than normal. Because of this, the region is naturally more prone to problems like flooding, which often comes with such heavy rain.
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Why in the News?
The RBI Bulletin (May 2025) reports that India received a record-breaking $81 billion in gross FDI inflows in FY 2024-25, but retained only $353 million in net FDI, revealing a dramatic divergence in the investment narrative.
What do gross and net FDI trends indicate about India’s investment climate?
- Gross FDI inflows are high: India received a record $81 billion in gross FDI in 2024-25, indicating strong headline interest from foreign investors. Eg: Media and government reported this as a sign of a robust investment climate.
- Net FDI is drastically low: Net FDI dropped to only $353 million, showing that much of the incoming investment is offset by capital outflows, weakening the real impact on the economy. Eg: Rising outward FDI and disinvestment reduced net foreign capital retained in India.
- Declining FDI-to-GDP ratio: The gross inflow-to-GDP ratio fell from 3.1% (2020-21) to 2.1% (2024-25), and net FDI-to-GDP fell from 1.6% to near zero, reflecting a slowing domestic investment environment despite high gross inflows. Eg: This signals tepid corporate investment and cautious investor sentiment in India.
What is Private Equity (PE) and Venture Capital (VC)?
- Private Equity (PE) refers to investment funds that buy existing companies or large stakes in businesses, often to improve their performance and later sell them for profit. PE typically invests in more mature companies.
- Venture Capital (VC) is a type of financing that supports early-stage startups and small businesses with high growth potential. VC investors take higher risks in exchange for potentially high returns.
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Why is the rise in Private Equity (PE)/Venture Capital (VC) driven FDI a concern for long-term investment?
- PE/VC-driven FDI focuses on brownfield investments: These funds mainly acquire existing firms rather than creating new production capacity, limiting contributions to capital formation and technology acquisition. Eg: Investments by Blackstone in Care Hospitals and ChrysCapital in Lenskart.
- Short investment horizon: PE/VC funds typically have a 3-5 year exit strategy, often selling holdings during stock market booms, which leads to disinvestment rather than sustained growth. Eg: The spike in disinvestment in FY25 was partly due to PE/VC funds liquidating their positions.
- Limited impact on long-term industrial growth: Since these funds focus on services like fintech and retail rather than manufacturing or infrastructure, they contribute less to enhancing India’s productive capacity. Eg: The declining share of FDI in greenfield projects shows limited greenfield capital formation.
How does outward FDI suggest India is used for tax arbitrage?
- High correlation between inward and outward FDI: India shows a strong link between the money flowing in and out, suggesting that funds often enter and exit quickly rather than being invested long-term. Eg: Similar volumes of FDI both coming into and going out of India.
- Use of tax havens as intermediaries: A significant portion of both inward and outward FDI involves countries like Singapore and Mauritius, known for tax concessions and treaty benefits. Eg: Many Indian companies route investments through these jurisdictions to reduce tax liabilities.
- ‘Treaty shopping’ for tax benefits: Global investors move capital through India to exploit variations in tax laws, a practice called tax arbitrage, which may not contribute to domestic economic growth. Eg: Research shows India ranked 6th among emerging markets for such correlated FDI flows, indicating use as a conduit for tax optimization.
What are the effects of declining FDI-to-GDP and GFCF ratios?
- Reduced contribution to economic growth: Declining FDI-to-GDP and FDI-to-GFCF (Gross Fixed Capital Formation) ratios indicate that foreign investments are becoming a smaller part of India’s overall economy and capital investment, potentially slowing down industrial expansion and technology adoption. Eg: Gross FDI inflows peaked at 7.5% of GFCF in FY21 but have declined sharply since then.
- Weakening investor confidence: The downward trend signals tepid domestic corporate investment and reduced foreign investor interest, which can affect job creation and long-term economic stability. Eg: Net FDI relative to GDP has declined from 1.6% in 2020-21 to nearly zero in 2024-25, showing declining investor enthusiasm.
Why should India reform its foreign capital regulations?
- To curb tax arbitrage and ‘hot money’ flows: Current regulations allow large volumes of inward and outward FDIthrough tax havens, enabling tax optimization rather than genuine investment, which undermines domestic economic goals. Eg: High FDI flows involving Singapore and Mauritius reflect such practices.
- To promote long-term, productive investments: Reform is needed to encourage FDI that contributes to capital formation, technology acquisition, and industrial growth rather than short-term PE/VC-driven disinvestment. Eg: The rising share of alternative investment funds in FDI has led to increased disinvestment, affecting sustainable growth.
Way forward:
- Strengthen Regulatory Frameworks: Implement stricter rules to curb tax arbitrage and limit quick inflows and outflows via tax havens, ensuring FDI supports genuine, long-term economic growth.
- Promote Greenfield and Productive Investments: Encourage FDI in new capacity building, manufacturing, and technology sectors over short-term PE/VC deals to boost capital formation, industrial growth, and sustainable development.
Mains PYQ:
[UPSC 2013] Though India allowed Foreign Direct Investment (FDI) in what is called multi-brand retail through the joint venture route in September 2012, the FDI, even after a year, has not picked up. Discuss the reasons.
Linkage: The net FDI-to-GDP ratio has steadily fallen from 1.6% in 2020-21 to zero in 2024-25. This ongoing decline is worrying, even though policymakers continue to make optimistic claims.
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Why in the News?
India’s economic data for 2024–25 shows a mixed picture: the economy grew strongly by 7.4% in the last quarter, which was better than expected, but the overall yearly growth dropped to 6.5% — the lowest in four years since the pandemic.
What led to the higher-than-expected GDP growth in Q4 2024-25?
- Robust Growth in Construction and Agriculture Sectors: The construction sector returned to double-digit growth, and agriculture performed strongly, both of which are key employment generators. Eg: Infrastructure expansion and favourable harvests boosted rural incomes and demand.
- Strong Performance of Services Sector: The services sector maintained steady and strong growth, contributing significantly to the GDP rise. Eg: IT, finance, and hospitality services saw sustained recovery post-pandemic.
- Statistical Boost from Higher Net Taxes: A 12.7% increase in net tax collections inflated the GDP figure, even though underlying economic activity was slower. Eg: Higher indirect tax revenues during the quarter pushed headline growth from ~6.8% to 7.4%.
Why is 6.5% annual GDP growth seen as inadequate despite being the highest globally?
- Below the Required Rate for ‘Viksit Bharat 2047’ Vision: To achieve the developed nation goal by 2047, India needs sustained annual growth of around 8% or more. Eg: The Economic Survey states that consistent 8% growth is essential to meet infrastructure, employment, and welfare needs by 2047.
- Mismatch with India’s Domestic Demands and Aspirations: India’s population growth and development needs demand faster economic expansion, regardless of how the rest of the world is performing. Eg: Even though India outpaces global peers, a 6.5% rate may not create enough jobs or uplift per capita incomes sufficiently.
- Limited Acceleration Potential Under Stable Growth Phase: While 6.5% reflects stability, it also signals a plateau, with low inflation but no signs of rapid acceleration in the near future. Eg: Chief Economic Adviser V. Anantha Nageswaran indicated India may not see major growth spurts soon, making it harder to catch up with long-term development targets.
How do net taxes affect the true picture of GDP growth?
- Artificial Boost to Headline GDP: A significant rise in net taxes (taxes minus subsidies) can inflate GDP figures without a corresponding increase in real economic activity. Eg: In Q4 2024–25, GDP growth was 7.4%, but without the 12.7% surge in net taxes, real growth would have been around 6.8%.
- Distorts Sector-Wise Contribution Assessment: High net tax contributions may overshadow sluggish performance in core sectors like manufacturing or consumption, giving a misleading impression of overall health. Eg: Despite weak private consumption, GDP looked robust due to the statistical impact of increased tax revenue.
Is stable growth enough for India’s transition?
- Stability Reduces Risk but Limits Acceleration: While stable growth ensures low inflation and reduced economic volatility, it may not generate the momentum needed to transform India into a developed economy. Eg: As per the Chief Economic Adviser, India has entered a phase of low inflation and stable growth, but such stability might cap faster economic acceleration.
- Inadequate for Meeting Rising Aspirations: India’s growing population and developmental needs require higher employment, infrastructure, and productivity, which stable but slow growth may not adequately support. Eg: A 6.5% GDP growth may not create enough jobs or income levels to match the goals of schemes like ‘Viksit Bharat 2047’.
- Missed Opportunity in a Global Slowdown: In a “growth-scarce” global environment, India has the chance to become a key economic engine. Relying on stable growth without pushing for higher gains may lead to missed strategic opportunities. Eg: Despite outperforming other major economies, India’s slow capital investment pace until late FY25 indicates underutilization of its potential.
Way forward:
- Accelerate Structural Reforms and Investments: India must boost productivity by investing in infrastructure, manufacturing, skilling, and digitalisation, while simplifying regulations to attract both domestic and foreign investment. Eg: Fast-tracking initiatives like Gati Shakti and PLI schemes can unlock higher economic momentum.
- Enhance Domestic Demand and Job Creation: Policies should focus on reviving rural consumption, supporting MSMEs, and expanding labour-intensive sectors to ensure inclusive growth. Eg: Increasing public expenditure on health, education, and affordable housing can stimulate demand and generate employment.
Mains PYQ:
[UPSC 2024] Examine the pattern and trend of public expenditure on social services in the post-reforms period in India. To what extent this has been in consonance with achieving the objective of inclusive growth?
Linkage: Inclusive growth is a core objective for a “transitioning economy” like India aiming for goals such as ‘Viksit Bharat’, and challenges in achieving it represent “growing pains”.
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Why in the News?
A groundbreaking study by Microsoft and WSP Global, published in Nature, shows major progress in making data centres more environmentally friendly.
What are Data centres?
Data centres are specialized facilities used to store, process, and manage data for organizations. They house large numbers of computer servers, network equipment, storage systems, and cooling systems, and form the backbone of the digital infrastructure that powers the internet, cloud computing, and various IT services. |
What are the environmental benefits of using cold plates and immersion cooling in data centres?
- Lower Greenhouse Gas Emissions: These methods reduce emissions by 15–21% compared to traditional air cooling. Eg: Microsoft’s study showed that using immersion cooling in their data centres significantly reduced carbon emissions during peak operations.
- Reduced Energy Consumption: They use 15–20% less energy, as liquid coolants transfer heat more efficiently than air. Eg: Alibaba’s deployment of cold plate cooling led to lower power usage effectiveness (PUE), cutting energy bills and environmental impact.
- Significant Water Conservation: Water usage drops by 31–52%, helping conserve freshwater resources Eg: In water-stressed regions like Arizona, using cold plate cooling helps tech firms operate data centres without heavy reliance on water-based air conditioning systems.
How does life cycle assessment aid in evaluating cooling technologies?
- Measures Full Environmental Impact (Cradle to Grave): LCA evaluates emissions, energy use, and water consumption across a product’s entire lifecycle — from manufacturing to disposal. Eg: The Microsoft-WSP study assessed cold plates and immersion cooling from production to end-of-life, revealing their overall environmental benefits.
- Identifies Trade-offs Between Technologies: LCA highlights sustainability trade-offs, helping compare the true impact of different cooling methods. Eg: It showed that while immersion cooling reduces emissions, the type of coolant used may raise separate ecological concerns.
- Supports Informed Decision-Making for Climate Goals: LCA provides data-driven insights for industry and policymakers to adopt greener technologies that align with emissions targets. Eg: The ICT sector can use LCA results to choose cooling systems that help cut emissions by 42% by 2030, as per global climate goals.
Why is renewable energy essential for sustainable data centre cooling?
- Drastically Reduces Carbon Emissions: Using renewable energy like solar or wind can cut emissions by 85–90%, regardless of the cooling technology used. Eg: A data centre powered by wind energy in Sweden showed near-zero emissions even with traditional air cooling.
- Enhances the Impact of Green Cooling Technologies: When combined with cold plates or immersion cooling, renewables amplify environmental benefits by further lowering energy and water use. Eg: The Microsoft-WSP study found that with 100% renewables, water savings could increase up to 50%.
- Ensures True Sustainability Across the System: Cooling innovations alone aren’t enough if the electricity source is polluting; renewables make the entire system eco-friendly. Eg: A server cooled efficiently but powered by coal-based electricity still carries a high carbon footprint.
In what ways are liquid-cooling methods superior to air cooling?
- Higher Cooling Efficiency and Performance: Liquid-cooling systems like cold plates and immersion cooling transfer heat more efficiently than air, reducing the risk of overheating and improving hardware performance. Eg: In Microsoft’s data centres, cold plate cooling reduced component temperatures significantly compared to air-cooled setups, boosting system reliability.
- Lower Energy and Water Consumption: Liquid methods use 15–20% less energy and up to 52% less water, making them more sustainable and cost-effective in the long run. Eg: Alibaba’s immersion-cooled servers showed reduced electricity bills and water usage in high-demand operations.
To what extent can cooling innovations help meet ICT emission targets by 2030?
- Significant Reduction in Greenhouse Gas Emissions: Advanced cooling technologies like cold plates and immersion cooling can reduce ICT data centre emissions by 15–21%, directly contributing to the 42% emission cut target set for 2030 (from 2015 levels). Eg: Microsoft’s deployment of cold plate systems showed measurable emissions drops in large-scale data operations.
- Supports Scalable, Energy-Efficient Data Centre Growth: As demand for cloud services increases, liquid cooling enables high-performance computing without a corresponding rise in energy and carbon footprint, helping the sector scale sustainably. Eg: Alibaba’s use of immersion cooling enabled expansion of AI and cloud infrastructure while keeping energy use in check.
Way forward:
- Promote Policy Incentives for Green Cooling Technologies: Governments should provide tax breaks, capital subsidies, and faster approvals for data centres that adopt liquid-cooling systems and renewable energy integration. Eg: Extending schemes like India’s PLI (Production-Linked Incentive) to green tech in data centres can fast-track low-emission infrastructure adoption.
- Mandate Life Cycle Assessments and Emission Reporting: Introduce mandatory Life Cycle Assessments (LCA) and carbon disclosure norms for large-scale data centres to encourage transparent, science-based decisions. Eg: Requiring firms to report environmental impact from cooling systems can guide smarter industry shifts aligned with ICT sector’s 2030 emission targets.
Mains PYQ:
[UPSC 2022] How will India achieve the target of 50% of its installed capacity from renewable energy by 2030? Justify your answer. How will the shift of subsidies from fossil fuels to renewables help achieve the above objective? Explain.
Linkage: Switching to renewable energy is a more effective way for the tech industry to run energy-hungry data centers in a cleaner, more sustainable way. This helps them meet climate goals and support national environmental targets.
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Why in the News?
India’s industrial output grew by only 2.7% in April 2025, the slowest pace in 8 months, showing a clear slowdown at the start of the new financial year (FY26).
What are the key reasons behind the slowdown in India’s factory output and IIP growth in April 2026?
- Weak Performance of Core Sectors: The eight core industries, which have a 40% weight in the IIP, grew by just 0.5% in April 2026, the lowest in eight months. Eg: Refinery products, steel, and cement showed subdued output, dragging overall industrial growth.
- Contraction in Mining Activity: Mining output shrank by 0.2%, marking its first contraction since August 2024, adversely affecting raw material availability for other industries. Eg: Reduced coal and mineral extraction hit electricity generation and steel production.
- Slowdown in Manufacturing and Electricity Generation: Manufacturing grew only by 3.4% (down from 4.2%) and power generation by 1.1% (down from 10.2%). Eg: Weak electricity demand and reduced industrial usage reflected sluggish overall economic activity.
- Trade and Tariff-Related Uncertainties: Global trade volatility, tariffs, and supply chain disruptions have reduced demand for export-oriented goods. Eg: Decline in orders from U.S. and EU markets affected electronics and textile manufacturing.
- Persistently Low Rural Demand: Consumer non-durables contracted for the third consecutive month, indicating weak rural consumption despite low inflation. Eg: Low sales of food and hygiene products in rural markets signal demand compression in the FMCG sector.
Why is the contraction in consumer non-durables output a concern for rural consumption trends?
- Indicates Weak Rural Demand: Consumer non-durables, such as food and hygiene products, form a major part of rural consumption. A contraction suggests low purchasing power and reduced rural spending. Eg: Declining sales of items like cooking oil, soap, and packaged food in rural areas reflect demand stagnation.
- Signals Broader Economic Distress in Agriculture-Dependent Households: Despite low inflation, rural incomes haven’t risen due to falling crop prices and below-MSP realizations. This affects demand for basic goods. Eg: Farmers selling wheat and pulses below MSP in mandis earn less, reducing their ability to buy essential goods.
- Affects Industrial and FMCG Sector Recovery: Sustained low rural consumption weakens demand for consumer non-durables, impacting production and profits in the FMCG and small-scale industries. Eg: Companies like Hindustan Unilever or Dabur see lower rural sales, leading to reduced factory output and job cuts.
How can implementing MSPs more systematically help boost rural incomes and demand?
- Ensures Price Stability and Income Security for Farmers: A guaranteed MSP reduces the risk of distress sales and provides a stable income floor for farmers, encouraging spending. Eg: If paddy is procured at the MSP instead of below-market rates, farmers are assured of fair returns, enabling them to spend on consumption and inputs.
- Enhances Rural Purchasing Power and Consumption Demand: Higher farm incomes lead to greater spending on goods and services, especially consumer non-durables, which form a bulk of rural consumption. Eg: A farmer earning better returns on wheat is more likely to purchase goods like clothing, packaged food, and household items.
- Stimulates Local Economies and Industrial Output: With higher rural demand, local businesses and FMCG industries see increased sales, encouraging higher production and employment. Eg: Higher MSP-based procurement leads to better incomes in Punjab, increasing demand for tractors, fertilizers, and daily-use goods, boosting factory output.
Who should drive capital expenditure to revive demand?
- Private Sector as the Primary Driver: The private sector must lead CapEx to create productive assets, jobs, and income, especially in manufacturing and infrastructure. Eg: Large firms investing in semiconductor plants or logistics hubs generate employment and boost demand for allied sectors.
- Government as a Catalyst through Public Investment: The government should maintain strong capital spending on infrastructure, rural development, and connectivity to crowd in private investment. Eg: Projects like Bharatmala or PM Gati Shakti improve transport networks, encouraging private factories and warehousing units to set up nearby.
- Public-Private Partnerships (PPPs) to Leverage Resources and Efficiency: PPPs can combine government support with private expertise and funding, especially in sectors like renewable energy, urban transport, and health. Eg: Hybrid Annuity Model (HAM) in road construction allows private players to build highways with shared investment risk, boosting economic activity.
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Way forward:
- Boost Rural Demand through Targeted MSP Implementation and Welfare Schemes: Ensure systematic MSP procurement and expand rural employment and income support to revive consumption of consumer non-durables and support FMCG growth.
- Accelerate CapEx through Private Investment and Strategic Public Spending: Encourage private sector-led capital expenditure in manufacturing and infrastructure, complemented by government investments in connectivity and logistics to stimulate industrial output and job creation.
Mains PYQ:
[UPSC 2016] The nature of economic growth in India in recent times is often described as a jobless growth. Do you agree with this view? Give arguments in favour of your answer.
Linkage: The concept of “jobless growth” is highly relevant in a scenario where economic expansion, or lack thereof, is debated in relation to employment generation. A slowdown in industrial output could exacerbate concerns about job creation.
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Why in the News?
A huge 600-million-year-old group of stromatolites was found in Chambaghat, Himachal Pradesh, sparking new interest in India’s ancient rocks and the early history of life on Earth.
What are Stromatolites?
Stromatolites are layered, reef-like structures formed by ancient blue-green algae called cyanobacteria. These tiny microbes trapped and bound sediments in shallow seas, creating mineral mounds over millions of years. They are some of the oldest evidence of life on Earth. |
How do they contribute to understanding Earth’s early history?
- Earliest Evidence of Life: Stromatolites, built by cyanobacteria over 3.5 billion years ago, are among the oldest records of life on Earth. Eg: Stromatolites in Australia date back to 3.6 billion years, showing microbial activity long before complex life existed.
- Oxygen Production and Atmospheric Change: Cyanobacteria in stromatolites performed photosynthesis, releasing oxygen and leading to the Great Oxidation Event(~2.4 billion years ago). Eg: This oxygenation made the atmosphere suitable for the evolution of multicellular organisms.
- Tectonic and Environmental Insights: Their presence in now-mountainous regions like Chambaghat in Himachal Pradesh, originally shallow seas, reveals tectonic shifts and lost oceans. Eg: The Chambaghat stromatolites formed in the Tethys Sea, later uplifted to the Himalayas by the collision of the Indian and Eurasian plates.
Where was the recent significant stromatolite outcrop discovered?
A large outcrop was discovered in Chambaghat, Solan district, Himachal Pradesh. It is located in the pine-clad ridges at around 5,000–6,000 feet above sea level. It belongs to the Krol Group, sedimentary rocks formed in the ancient Tethys Sea.
Why is it unique?
- Large and Well-Preserved Outcrop: The Chambaghat site features an extensive hill covered with stromatolites, not just a few isolated samples. Eg: Unlike other Indian sites where stromatolites are scattered or small, Chambaghat has a whole hill full of these structures, making it exceptional in scale and preservation.
- Relatively Young Stromatolites in a High-Altitude Location: These stromatolites date back about 600 million years and are found at an altitude of 5,000–6,000 feet above sea level. Eg: Their presence so high in the Himalayas tells a story of tectonic uplift, where ancient shallow marine depositswere pushed up from the Tethys Sea due to India’s collision with Eurasia.
- Accessible and Visible Geological Heritage: The site is easily accessible and visible to researchers, locals, and tourists, making it a prime candidate for preservationand education. Eg: Many stromatolite sites in India are obscure or hard to reach, but Chambaghat offers a natural exhibit that could help raise public awareness about Earth’s early history.
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Why is there scientific disagreement about the importance of the Chambaghat stromatolites?
- Not True Fossils but Biosedimentary Structures: Some scientists argue that stromatolites are organo-sedimentary structures, formed by trapped sediments and calcium carbonate, rather than preserved fossils of organisms. Eg: fossils are inaccurate because the original organisms are not preserved, only the structures formed by cyanobacteria.
- Common and Widespread Geological Features: Stromatolites are found all over India and globally, so some experts feel the Chambaghat stromatolites are not a rare or unique discovery. Eg: The oldest stromatolites in India, like those in Dharwad, Karnataka (2,500 million years old), and worldwide (3.6 billion years old in Australia) are much older and more significant.
- Not the Oldest or Most Unique Evidence of Life: While Chambaghat stromatolites are impressive, they are relatively young compared to other sites and not the earliest proof of life. Eg: Dr Arun Deep Ahluwalia notes that stromatolites in the Krol Belt are the youngest stromatolites, making them less important for studying the very earliest life forms.
What is the significance of preserving stromatolite sites like Chambaghat?
- Educational and Scientific Value: Preserving stromatolite sites helps in studying Earth’s early life and geological history, providing valuable insights into how oxygenation of the atmosphere led to complex life. Eg: Chambaghat’s stromatolites can be used as an exhibit for students and researchers to understand the origin of life and ancient marine environments.
- Cultural and Geoheritage Importance: Protecting these sites promotes public awareness and tourism, fostering a sense of pride and responsibility towards India’s unique geological heritage. Eg: Creating a Geoheritage Park at Chambaghat can engage locals, tourists, and schools, preserving the site while boosting local economy and education.
Way forward:
- Formal Protection and Geoheritage Park Development: Declare Chambaghat stromatolite site a protected geological monument and develop it into a Geoheritage Park to ensure conservation, promote scientific research, and boost geo-tourism.
- Public Awareness and Educational Outreach: Launch educational programs and community engagement initiatives involving schools, researchers, and local stakeholders to increase awareness about the site’s scientific and cultural significance.
Mains PYQ:
[UPSC 2021] What is Cryptocurrency? How does it affect global society? Has it been affecting Indian society also?
Linkage: The growing importance of cryptocurrency, its disruptive potential in global finance, and its implications for India, specifically mentioning India’s significant number of crypto users. This PYQ demonstrates the UPSC’s interest in the fundamental understanding and societal effects of this technology.
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Why in the News?
The container ship MSC Elsa 3 sank off the coast of Kochi on May 24, triggering a major environmental and maritime safety crisis that could turn into one of India’s worst maritime pollution disasters.
What led to the sinking of MSC Elsa 3?
- Operational Failure at Sea: On May 24, MSC Elsa 3 began tilting off the coast of Kochi due to an unspecified operational problem. Despite attempts by the crew, the ship could not be stabilised.
- Aging Vessel and Abandonment by Crew: Although structurally considered safe, the ship was nearly 30 years old. The crew abandoned it after unsuccessful efforts to right it, leading to its eventual sinking.
- Unfavourable Sea Conditions: Monsoon-related rough weather worsened the situation, with containers dislodging and floating, further destabilising the vessel before it sank to a depth of 50 metres.
Why are the sunken containers considered hazardous?
- Reactive Chemicals: Some containers hold substances that react dangerously with water, posing immediate chemical and fire hazards. Eg: 12 containers had calcium carbide, which reacts with seawater to produce acetylene gas, a highly flammable and explosive compound.
- Toxic Leakage: Leaked substances from damaged containers can pollute seawater and pose health hazards to marine life and humans. Eg: A container with rubber solution leaked and reacted with seawater, leading to the appearance of plastic pellets along the Kerala coast.
- Long-Term Environmental Impact: Chemicals from sunken containers can gradually seep out, causing persistent marine pollution and ecological damage. Eg: If not retrieved, chemicals from these containers may enter the food chain, harming marine biodiversity and impacting fisheries.
Who handles oil spill response in India?
The Indian Coast Guard is the nodal agency under the National Oil Spill Disaster Contingency Plan (NOS-DCP). |
How does this incident test India’s maritime disaster readiness?
- Inter-agency Coordination: Effective disaster response requires smooth coordination between multiple agencies such as the Coast Guard, pollution control boards, and port authorities. Eg: In the 2017 Chennai oil spill, response was delayed due to confusion and poor coordination, leading to severe coastal damage.
- Emergency Response Infrastructure: The ability to quickly deploy salvage teams, pollution control equipment, and monitoring systems is essential. Eg: After MSC Elsa 3 sank, authorities had time to prepare, making it a critical test of India’s readiness to act swiftlybefore oil or chemicals leak.
- Policy Implementation and Preparedness: Real-time implementation of national plans and compliance with international protocols demonstrate operational strength. Eg: The National Oil Spill Disaster Contingency Plan (NOS-DCP) designates the Coast Guard as the nodal agency, and this incident checks how well the plan is executed.
What are the steps taken by the Indian Government?
- Activation of Nodal Agencies: The Indian Coast Guard has been designated as the nodal agency under the National Oil Spill Disaster Contingency Plan (NOS-DCP) to coordinate the response. Eg: In the MSC Elsa 3 case, the Coast Guard is actively engaged in monitoring oil leakage and coordinating salvage efforts.
- Deployment of Salvage Operations: Salvage teams are being engaged following international insurance protocols to prevent further environmental damage. Eg: Authorities have mobilised professional salvers to safely retrieve containers and prevent hazardous leaks from the sunken ship.
- Monitoring and Cleanup Measures: Environmental agencies have been tasked with identifying and addressing the pollution caused, including plastic pellets and chemical residues. Eg: The Kerala government is coordinating with central pollution control authorities to manage the shoreline impactand protect marine life.
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Way forward:
- Strengthen Maritime Hazard Protocols and Container Screening: India must enforce stricter pre-shipment screening of cargo for hazardous materials and mandate real-time tracking of containers carrying reactive or toxic substances.
- Enhance Rapid Response Infrastructure and Inter-agency Coordination: Develop a unified maritime disaster response framework with clearly defined roles for all agencies — Coast Guard, pollution boards, port authorities, and state governments.
Mains PYQ:
[UPSC 2022] Discuss in detail the photochemical smog emphasizing its formation, effects and mitigation. Explain the 1999 Gothenburg Protocol.
Linkage: The MSC Elsa 3 incident directly involves environmental pollution, specifically marine pollution from hazardous cargo and fuel oil, necessitating mitigation efforts. This question reflects the UPSC’s interest in environmental pollution issues.
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Why in the News?
The MoU signed between Pakistan’s newly created Crypto Council and World Liberty Financial Inc. (WLFI)—a company linked to the Trump family—signals a dramatic pivot by Pakistan toward digital assets, despite its economic fragility.
What are the key objectives of the Pakistan-WLFI crypto collaboration?
- Promote Financial Inclusion: Use blockchain technology to increase access to financial services across Pakistan. Eg: The Pakistan Crypto Council aims to leverage blockchain for wider economic participation despite the country’s economic challenges.
- Monetise National Assets: Utilize crypto to unlock value from untapped resources like rare earth minerals. Eg: Plans include using blockchain to help Pakistan capitalise on rare earth deposits for economic growth.
- Establish Pakistan as a Crypto Hub: Position Pakistan as a regional leader in cryptocurrency trade and stablecoin usage for remittances. Eg: The MoU with WLFI includes introducing stablecoins to facilitate trade and remittances, boosting Pakistan’s role in the regional crypto market.
Why is the Trump administration supporting cryptocurrencies in its second term?
- Reposition US as a Global Leader in Digital Assets: Trump aims to make the US a frontrunner in blockchain innovation and cryptocurrency adoption. Eg: Issued executive orders promoting a national blockchain strategy and reducing regulatory hurdles.
- Maintain US Dollar Dominance: By supporting dollar-backed stablecoins and banning central bank digital currencies (CBDCs), Trump seeks to preserve the US dollar’s global supremacy. Eg: The creation of the Strategic Bitcoin Reserve to hold government-seized crypto assets as national reserves, similar to gold.
- Encourage Crypto Industry Growth and Innovation: Trump reversed previous skepticism to foster a pro-crypto environment, appointing industry-friendly figures to key roles. Eg: Inclusion of pro-crypto leaders like Elon Musk and David Sacks and pausing enforcement actions against major exchanges like Coinbase.
How might Pakistan’s crypto ambitions affect India’s economic and security interests?
- Risk of Cross-Border Money Laundering and Terror Funding: Pakistan’s use of decentralized cryptocurrencies may facilitate untraceable financial flows that could fund terrorism and illicit activities affecting India’s security. Eg: Concerns over digital currencies being misused to fund terror networks across borders.
- Strategic Economic Competition in the Crypto Space: Pakistan’s push to become a regional crypto hub could challenge India’s position in the growing digital asset market and impact economic influence in South Asia. Eg: Pakistan’s plans to monetise national assets and promote crypto adoption with support from WLFI.
- Leverage of Diaspora and Technology for Geopolitical Influence: Pakistan is engaging its diaspora and tech entrepreneurs to strengthen ties with the US and advance its crypto ambitions, potentially shifting regional power dynamics. Eg: Appointment of a British Pakistani entrepreneur to lead crypto regulation and influence policy, signaling increased geo-economic influence via digital currencies.
When did the Indian Supreme Court raise concerns about the lack of a crypto regulatory framework?
During the hearing of Shailesh Bhatt’s bail petition in early 2025: The Supreme Court highlighted the absence of a clear regulatory framework governing cryptocurrencies in India. The Court remarked on the paradox of taxing crypto assets without proper regulation. |
Way forward:
- Develop a Comprehensive Crypto Regulatory Framework: India should establish clear, balanced regulations to promote innovation, protect investors, and curb illicit activities in the crypto space.
- Enhance Cross-Border Collaboration and Monitoring: Strengthen international cooperation to monitor and prevent misuse of cryptocurrencies for money laundering and terrorism financing, while fostering responsible crypto adoption.
Mains PYQ:
[UPSC 2021] What is Cryptocurrency? How does it affect global society? Has it been affecting Indian society also?
Linkage: The growing importance of cryptocurrency, its disruptive potential in global finance, and its implications for India, specifically mentioning India’s significant number of crypto users. This PYQ demonstrates the UPSC’s interest in the fundamental understanding and societal effects of this technology.
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Why in the News?
For the first time in India’s parliamentary history, the Deputy Speaker’s position stayed empty for the whole Lok Sabha term from 2019 to 2024, and now there is a chance it won’t be filled in the 18th Lok Sabha either.
Why is the Deputy Speaker’s vacancy a constitutional concern?
- Violation of Constitutional Provisions: Articles 93 and 94 require the Deputy Speaker to be elected “as soon as may be” and to hold office until resignation, removal, or disqualification. The prolonged vacancy violates this mandate, creating a constitutional vacuum. Eg: In the 17th Lok Sabha (2019-24), no Deputy Speaker was appointed despite the constitutional requirement.
- Undermines Parliamentary Democracy and Power Sharing: The Deputy Speaker’s post is traditionally given to an Opposition member to maintain checks and balances. Leaving it vacant concentrates power in the ruling party, weakening democratic resilience and the principle of shared authority. Eg: The refusal of the ruling party to offer the Deputy Speaker position to the Opposition breaks this longstanding convention.
- Risk of Constitutional Crisis and Legislative Disruption: The Deputy Speaker ensures the continuity of parliamentary proceedings if the Speaker resigns or is incapacitated. Without a Deputy Speaker, a constitutional crisis could arise, disrupting governance and legislative business. Eg: If the Speaker’s chair becomes vacant, the Deputy Speaker normally assumes duties; without one, the functioning of Parliament could be paralyzed.
What is the significance of Deputy speaker in Parliament?
- Ensures Continuity of Parliamentary Proceedings: The Deputy Speaker presides over the Lok Sabha when the Speaker is absent, ensuring that legislative businesscontinues smoothly without interruption. Eg: When the Speaker is unavailable due to illness or travel, the Deputy Speaker takes charge of the session.
- Acts as a Neutral and Impartial Arbiter: The Deputy Speaker plays a crucial role in maintaining fairness during debates and sensitive discussions, acting independently of the ruling party’s influence. Eg: The Deputy Speaker oversees debates on private member bills and ensures that all voices, including the Opposition, are heard.
- Maintains Democratic Balance and Power Sharing: By convention, the Deputy Speaker is usually from the Opposition, which helps uphold the spirit of power-sharing and checks and balances essential to parliamentary democracy. Eg: Offering the Deputy Speaker post to an Opposition member fosters cooperation and harmony between the ruling party and Opposition.
What are the key duties of the Deputy Speaker?
- Presides over Lok Sabha sessions in the Speaker’s absence: The Deputy Speaker conducts and manages the proceedings of the House with the same powers as the Speaker during such times. Eg: When the Speaker is unavailable, the Deputy Speaker presides over debates and voting sessions.
- Oversees important parliamentary committees: The Deputy Speaker chairs key committees like the Private Member’s Bill Committee and the House Budget Committee, facilitating legislative scrutiny. Eg: The Deputy Speaker leads discussions on private members’ bills ensuring smooth consideration and debate.
- Maintains impartiality and ensures fair conduct: The Deputy Speaker acts as a neutral arbitrator, ensuring orderly debates and protecting the rights of all members, including the Opposition. Eg: During sensitive or contentious discussions, the Deputy Speaker ensures that rules are followed and all sides get a fair hearing.
When should the Deputy Speaker be elected as per Article 93?
- Article 93 states that the Deputy Speaker must be elected “as soon as may be” after the House of Lok Sabha is constituted.
- The phrase implies a sense of urgency and necessity, not discretionary or indefinite delay. This means the election should happen immediately or without unreasonable delay following the formation of the new Lok Sabha.
- The Deputy Speaker continues in office until resignation, removal, or disqualification as per Article 94, ensuring continuity.
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Way forward:
- Timely Election of Deputy Speaker to Uphold Constitutional Mandate: The government and all parliamentary parties should prioritize the election of the Deputy Speaker “as soon as may be” as mandated by Articles 93 and 94 to avoid constitutional vacuum, ensure smooth functioning of the Lok Sabha, and maintain democratic resilience.
- Respecting the Convention of Power Sharing with the Opposition: To strengthen parliamentary democracy, the ruling party should adhere to the established convention of offering the Deputy Speaker post to an Opposition member. This would foster bipartisan cooperation, reinforce checks and balances, and promote harmonious functioning of the House.
Mains PYQ:
[UPSC 2024] Discuss the role of Presiding Officers of state legislatures in maintaining order and impartiality in conducting legislative work and in facilitating best democratic practices.
Linkage: The role of presiding officers in legislative bodies (at the state level, analogous to the Deputy Speaker in Lok Sabha). This article emphasizes that the Deputy Speaker oversees debates and serves as a neutral arbiter.
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Why in the News?
Recently, the CEO of NITI Aayog announced that India has moved ahead of Japan to become the world’s fourth-largest economy.
What is the key difference between nominal GDP and PPP-based GDP?
- Nominal GDP: Measured using current market exchange rates in US dollars. Eg: If India’s GDP is ₹270 lakh crore and $1 = ₹75, then nominal GDP = ₹270 lakh crore ÷ 75 = $3.6 trillion.
- PPP-Based GDP: Adjusted for differences in the cost of living and price levels between countries. Eg: If goods and services are cheaper in India, PPP adjusts the GDP upward to reflect greater actual consumption — India’s GDP could be $12 trillion in PPP terms, even though nominal GDP is lower.
When did India become the third-largest economy by PPP estimates?
In 2009, India overtook Japan in PPP-based GDP. This milestone occurred during the tenure of the Manmohan Singh-led UPA government. India has retained the 3rd position ever since, behind only China and the United States. The PPP-based ranking reflects India’s large population and lower cost of living, which boosts its effective domestic consumption. |
How do exchange rates affect nominal GDP rankings?
- Conversion Dependency: Nominal GDP is calculated in US dollars, so a country’s GDP in local currency must be converted using the exchange rate. Eg: If India’s GDP is ₹300 lakh crore and $1 = ₹75, its dollar GDP would be $4 trillion; but if $1 = ₹85, the same GDP becomes $3.5 trillion.
- Exchange Rate Fluctuations Can Distort Rankings: A country’s global GDP rank can change without any real economic growth or decline, simply due to currency appreciation or depreciation. Eg: If the Japanese yen strengthens against the dollar, Japan’s nominal GDP in dollars rises—even if its actual output hasn’t changed.
- Unfair Comparison Across Countries: Countries with volatile or weakening currencies may appear smaller in nominal terms than they are in real domestic terms. Eg: India’s GDP may seem lower than the UK’s in nominal terms due to a weaker rupee, even if India produces more goods and services overall.
Why is per capita GDP more reflective of individual prosperity?
- Accounts for Population Size: Per capita GDP divides total GDP by the population, showing the average income per person, unlike aggregate GDP which may hide disparities. Eg: India’s GDP is higher than the UK’s in total, but because India has over 20 times the population, its per capita GDP is much lower.
- Better Indicator of Living Standards: It reflects the average economic well-being and purchasing power of citizens, making it more relevant for assessing prosperity. Eg: A country with $50,000 per capita GDP (like the UK) offers far better public services, infrastructure, and living conditions than one with $2,800 (like India), even if total GDPs are comparable.
- Highlights Income Distribution and Development Needs: Low per capita GDP suggests widespread poverty or unequal wealth distribution, even if overall GDP is growing. Eg: Despite being the world’s 5th largest economy, India’s low per capita GDP shows most individuals have limited incomes and access to economic benefits.
What does India’s per capita GDP reveal compared to the UK’s?
| Aspect |
India |
UK |
Example |
| Per Capita GDP (2025) |
10,020 PPP dollars |
58,140 PPP dollars |
UK’s per capita income is ~6 times higher than India’s. |
| Living Standards & Services |
Lower access to quality services |
Higher standard of living, social welfare |
Indians have limited access to healthcare, education, and housing |
| Economic Inequality & Prosperity |
Aggregate GDP is growing, but benefits are not evenly distributed |
Prosperity is more widely shared |
Despite India’s growth, individual prosperity remains low on average. |
Way forward:
- Invest in Human Capital and Social Infrastructure: India must enhance spending on education, healthcare, and skill development to improve productivity and raise per capita incomes. Improved human capital directly boosts innovation, employability, and long-term economic growth.
- Focus on Inclusive and Equitable Growth: Policies should ensure that economic gains are widely distributed, especially through rural development, MSME support, and targeted welfare schemes. This will reduce income disparities and lift more people into the formal, productive economy, improving per capita prosperity.
Mains PYQ:
[UPSC 2022] Is inclusive growth possible under market economy? State the significance of financial inclusion in achieving economic growth in India.
Linkage: India’s high aggregate economic rank alongside low per capita income, raises questions about how India’s economic growth model is translating into shared prosperity, a central theme of inclusive growth. This question explicitly asks about the possibility and mechanisms (like financial inclusion) of achieving “inclusive growth” within a market economy.
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Why in the News?
Under President Trump, the U.S. withdrew from key global commitments like WHO and the Paris Agreement. Meanwhile, China is expanding influence by offering financial aid and increasing global investments.
Why has the U.S. withdrawn from key international bodies like the WHO and the Paris Agreement?
- Perceived Bias and Mismanagement: The U.S. accused the World Health Organization (WHO) of being biased towards China and mismanaging the COVID-19 pandemic response. Eg: President Trump alleged that the WHO failed to hold China accountable during the early stages of the outbreak.
- Disproportionate Financial Burden: The U.S. claimed it was contributing significantly more than other countries, creating an unfair financial burden. Eg: The U.S. contributed around 20% of the WHO’s assessed funding, while China contributed much less until recently.
- Rejection of Global Climate Commitments: The Trump administration viewed international climate agreements like the Paris Agreement as detrimental to American economic interests. Eg: The U.S. withdrew from the Paris Agreement and announced it would cease all financial commitments under the UNFCCC.
What steps has China taken to increase its global influence in response to the U.S.’s retreat?
- Increased Financial Contributions to Global Institutions: China has significantly raised its funding to international bodies like the WHO to fill the vacuum left by the U.S. Eg: After the U.S. announced its withdrawal from the WHO, China pledged an additional $500 million over five years and increased its assessed contribution from 6.5% (2015–16) to 15% (2024–25).
- Expansion of Bilateral Lending and Debt Diplomacy: China has extended massive loans to developing countries, becoming a dominant bilateral creditor globally. Eg: China’s share in global bilateral sovereign debt rose from around 1% in 2003 to 26% in 2023, making it the largest lender worldwide.
- Strategic Soft Power and Infrastructure Investments: China has expanded its Belt and Road Initiative and other overseas investments to enhance influence and dependency. Eg: China’s investments across Asia, Africa, and Latin America have increased, with more than 60% of respondents in a 2024 Pew survey acknowledging China’s economic influence in their countries.
How has China’s financial contribution to the WHO changed after the pandemic?
- Increased Assessed Contributions: China’s assessed contribution to the WHO rose from 6.5% in 2015–16 to 15% in 2024–25. This increase reflects China’s growing economic stature and its commitment to global health initiatives.
- Significant Financial Pledges: In response to the U.S. withdrawal from the WHO, China pledged an additional $500 million over five years to support the organization’s activities. This move positions China as a leading state donor and underscores its intent to enhance its influence in global health governance.
Where does China stand in terms of global bilateral debt holdings compared to the U.S.?
- China as the Leading Bilateral Creditor: As of 2023, China holds approximately 26% of the external bilateral debt of developing countries, making it the largest bilateral creditor globally. Eg: China is the primary bilateral creditor for 53 countries and ranks among the top five creditors in three-quarters of all developing nations.
- Decline in U.S. Bilateral Lending: The U.S.’s share in global bilateral debts has significantly decreased over the decades. Eg: In 1973, the U.S. held 36% of global bilateral debt, but by 2023, this share had dropped to just 4%.
- China’s Influence on Debt Repayments: China’s substantial lending has led to a significant portion of debt repayments from developing countries being directed to it. Eg: In 2025, developing countries are projected to allocate over 30% of their bilateral debt service payments to China, surpassing payments to multilateral lenders and private creditors.
What is the status of India in soft power?
- Strong Cultural Influence Globally: India’s rich culture, including yoga, Bollywood, and its large diaspora, enhances its global soft power. Eg: The International Day of Yoga is celebrated worldwide, promoting Indian culture and wellness.
- Growing Economic and Diplomatic Presence: India is increasing its influence through diplomacy, international aid, and participation in global forums. Eg: India’s development projects and humanitarian aid in Africa and neighboring countries strengthen its soft power.
- Challenges Affecting Soft Power Projection: Internal challenges like social issues and governance impact India’s image abroad. Eg: India’s ranking slipped to 29th in the 2024 Global Soft Power Index, indicating room for improvement.
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Way forward:
- Strengthen Multilateral Engagements and Global Leadership: India should actively enhance its financial and diplomatic contributions to key international bodies like WHO and climate forums to build credibility and influence, positioning itself as a responsible global leader.
- Leverage Cultural Diplomacy While Addressing Domestic Challenges: Amplify India’s soft power by promoting cultural exports and diaspora ties, while simultaneously improving governance and addressing social issues to boost its global image and rankings.
Mains PYQ:
[UPSC 2024] The USA is facing an existential threat in the form of a China, that is much more challenging than the erstwhile Soviet Union.’ Explain
Linkage: The depiction of China advancing its position while the U.S. is perceived as pulling back, creating a dynamic of increased competition and challenge between the two powers. This question presents the U.S. perspective on China as a major challenge.
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Why in the News?
Despite rising power deficits amid urbanisation and climate pressures, India’s UJALA scheme showcases energy efficiency’s impact—saving $10B and 9,500 MW—highlighting efficiency over mere capacity expansion.
What challenges does India face in meeting its peak power demand?
- Rising Peak Demand due to Urbanisation and Climate Change: Rapid urbanisation and increasing use of cooling appliances during hotter summers have significantly increased electricity demand. Eg: In 2023–24, India’s peak power demand reached 250 GW, making it the third-largest power consumer globally.
- Slow Expansion of Power Generation Capacity: Building new power plants, especially coal-based, is capital- and time-intensive, which cannot keep pace with rising demand. Eg: Despite efforts, power deficit widened from 0.69% in FY20 to about 5% in FY24, reflecting supply constraints.
- Integration Challenges with Renewable Energy: While renewables are growing, their intermittent nature and grid integration issues limit their effectiveness in meeting peak demand. Eg: Solar and wind power face supply variability, making it difficult to meet peak-hour requirements consistently.
What is UJALA Scheme?
The UJALA scheme (Unnat Jyoti by Affordable LEDs for All) is a flagship energy efficiency program launched by the Government of India in 2015. It aims to promote energy-saving lighting solutions by distributing LED bulbs, tube lights, and energy-efficient fans at affordable prices
How has the UJALA scheme contributed to energy efficiency and savings?
- Massive Reduction in Power Consumption: The scheme distributed over 37 crore LED bulbs and enabled the sale of 407 crore more, replacing energy-inefficient lighting. Eg: LED bulbs consume half the power of CFLs and 1/9th the power of incandescent bulbs, leading to major power savings in households.
- Reduction in Peak Demand and Generation Needs: By improving lighting efficiency nationwide, UJALA helped reduce peak power demand by over 1,500 MW. Eg: It avoided the need to build 9,500 MW of new power capacity—equivalent to 19 new 500 MW coal-fired plants.
- Lower Costs and Emissions: UJALA reduced the cost of LED bulbs from ₹500 to ₹70, making them accessible and cutting emissions. Eg: The scheme has helped India save over $10 billion and significantly reduced CO₂ emissions.
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Why is enhancing energy efficiency crucial for India’s energy future?
- Bridges the Gap Between Demand and Supply: India faces a widening peak power deficit (from 0.69% in FY20 to ~5% in FY24) despite increased generation. Eg: Energy efficiency helps reduce demand quickly—schemes like UJALA lowered peak demand by 1,500 MW, easing pressure on the grid.
- Delays the Need for New (Often Fossil-Based) Power Plants: Building new fossil-fuel-based power plants is time-consuming and costly. Eg: Efficiency measures like LED lighting under UJALA avoided building 19 new coal plants (9,500 MW)—cutting cost, time, and pollution.
- Supports Climate Goals and Reduces Emissions: India’s energy mix still depends 70% on coal, worsening climate and pollution. Eg: Energy efficiency improvements between 2000–2018 helped avoid 300 Mt of CO₂ emissions, according to the International Energy Agency.
Where can further energy efficiency mandates be applied in India?
- Buildings and Construction Sector: Residential and commercial buildings consume significant energy, especially for cooling and lighting. Eg: Mandating energy-efficient designs and green building codes (like ECBC) in urban housing projects can reduce long-term electricity use.
- Home Appliances: Many households still use inefficient devices that consume more electricity. Eg: Expanding BEE’s star-rating program to cover more appliances like fans, refrigerators, and ACs can push consumers toward efficient options.
- Micro, Small and Medium Enterprises (MSMEs): MSMEs often use outdated machinery that wastes energy. Eg: Energy audits and subsidized upgrades in sectors like textiles or ceramics can reduce energy costs and improve competitiveness.
Way forward:
- Invest in Grid Flexibility and Energy Storage: Promote battery storage, pumped hydro, and smart grid systems to manage peak loads and integrate renewable energy reliably.
- Strengthen Energy Efficiency Mandates: Enforce stricter efficiency norms for buildings, appliances, and MSMEs, backed by incentives, audits, and awareness campaigns.
Mains PYQ:
[UPSC 2016] “Give an account of the current status and the targets to be achieved pertaining to renewable energy sources in the country. Discuss in brief the importance of National Programme on Light Emitting diodes (LEDs).”
Linkage: Despite growth in electricity generation, including recent additions of renewable energy, India has faced peak power demand deficits. While adding new power production capacity takes time, especially for fossil fuels, focusing on energy efficiency is presented as the quickest and least expensive way to address rising power demand and climate change. This question is highly relevant as it specifically asks about renewable energy targets and the importance of the National Programme on LEDs.
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