The Union government has removed central excise duty on petrol blended with higher quantities of ethanol (22%, 25%, 27%, and 30%) to popularize biofuels. This exemption aims to prevent a dual levy, as petrol already bears excise duty and ethanol bears GST. While this is a preliminary step for introducing higher blends, the government clarified it does not indicate an immediate rollout, which will follow extensive testing and consultation. Industry associations have welcomed the move, seeing it as a strong signal of policy stability and commitment to attracting investments in the ethanol blending value chain.
- The Union government exempted higher ethanol-blend petrol (E22, E25, E27, E30) from central excise duty.
- This measure aims to popularize biofuels and prevent a dual levy on the blended product.
- The exemption is a preliminary step towards eventually introducing higher blends, pending further testing and consultation.
The implementation framework for India's four labour codes (Code on Wages 2019, Industrial Relations Code 2020, Social Security Code 2020, Occupational Safety, Health and Working Conditions Code 2020) is complete, but critics argue the rules fail to address key concerns, leaving workers vulnerable. Gaps include vague definitions of "floor wage," lack of minimum tenure for Fixed-Term Employment, and inadequate safeguards for gig workers. The rules also do not clarify employment relationships in the gig economy or mandatory gratuity insurance, and set a high 30% membership threshold for union recognition, weakening workers' bargaining power.
- India's four new labour codes have been operationalized, but the accompanying rules are criticized for failing to protect workers adequately.
- Critical gaps exist in defining "floor wage" and establishing minimum tenure or renewal limits for Fixed-Term Employment.
- Gig and platform workers remain vulnerable as the rules do not clarify their employment relationship or ensure mandatory gratuity insurance.
China's State Council issued guidelines to promote basic public services for residents regardless of their hukou status, aiming to include migrants in urban services like education, housing, and social insurance. This builds on reforms since 2014, which gradually equalized benefits for migrants in smaller cities. The goal is to increase permanent urban residents to nearly 70% by 2029, driven by demographic concerns and the economic imperative to boost domestic consumption and create a unified market. However, structural constraints persist, as local governments, responsible for service delivery, face budget issues, and differing social insurance standards still disadvantage migrant workers. The reforms aim for inclusion without fully abolishing the hukou system.
- China's State Council issued guidelines to extend basic public services to residents regardless of their hukou (residence registration) status.
- The reforms aim to include migrants in urban services like education, public rental housing, and social/medical insurance.
- The initiative is driven by demographic concerns and the economic need to boost consumption and create a unified national market.
India called for urgent action on the shrinking climate finance pool and the widening adaptation finance gap at the UN climate negotiations in Bonn, Germany. India emphasized that the Paris Agreement's provision obliging developed countries to provide funds to developing nations must be given dedicated agenda space. India aligned with positions of the G77 and China, LMDC, and BASIC bloc. The Bonn meeting, a mid-year session preparing for COP31 in Antalya, Turkiye, focuses on shifting to an implementation phase, with key items including the Global Goal on Adaptation and the Just Transition Work Programme. India also pressed for dialogue on unilateral trade measures like the EU's Carbon Border Adjustment Mechanism (CBAM).
- India advocated for addressing the shrinking climate finance and widening adaptation finance gap at the Bonn climate talks.
- It stressed the importance of the Paris Agreement's provision for developed countries to fund developing nations.
- India aligned with the Group of 77 and China, Like-Minded Developing Countries (LMDC), and BASIC bloc.
The article highlights China's increasing diplomatic engagement, evidenced by recent visits from top leaders of UNSC permanent members. It emphasizes China's independent foreign policy of peace, advocating for multilateralism, non-aggression, and dispute resolution through dialogue. President Xi Jinping's discussions with U.S. President Trump focused on "constructive strategic stability" and the Taiwan question, while talks with Russian President Putin reinforced their strategic partnership. The article also underscores economic and trade cooperation as a priority, with China aiming to be a key contributor to global economic growth and an advocate for a fairer, more just, and equitable global economic governance.
- China has become a central hub of global diplomacy, hosting leaders from all other UNSC permanent members recently.
- Its foreign policy emphasizes peace, multilateralism, non-aggression, and dialogue for dispute resolution.
- Discussions with the U.S. focused on "constructive strategic stability" and the sensitive Taiwan question.
Union Rural Development Minister Shivraj Singh Chouhan announced an interim allocation of ₹95,962 crore for the new rural employment scheme, Viksit Bharat-Guarantee for Rozgar and Ajeevika Mission Gramin (VB-GRAM G). This allocation aims for a "seamless transition" from MGNREGS and ensures no State faces fund reduction. The combined outlay for the scheme will be ₹1.25 lakh crore, with States contributing an additional 40%. The new program emphasizes wider presence in economically weaker States, proposing the use of the 16th Finance Commission's horizontal devolution formula for Central allocations. 26 States have completed procedural requirements, while four are still pending.
- An interim allocation of ₹95,962 crore has been announced for the new rural employment scheme, VB-GRAM G.
- The scheme aims to ensure a seamless transition from MGNREGS without reducing funds for any State.
- States are expected to contribute an additional 40% of the allocated sum, bringing the combined outlay to ₹1.25 lakh crore.
Mazagon Dock Limited (MDL), a leading shipbuilding company, is now considering investing over ₹29,000 crore in a mega shipbuilding cluster in Andhra Pradesh, after its plans for a greenfield shipyard in Thoothukudi, Tamil Nadu, faced setbacks. MDL had committed ₹15,000-18,000 crore for the Thoothukudi project, but the Tamil Nadu government allegedly onboarded a foreign company, HD Hyundai, without competitive bidding, raising questions about transparency and adherence to the Shipbuilding Development Scheme Guidelines. This move by Tamil Nadu is seen as undermining efforts to promote indigenisation under the Maritime Amrit Kaal Vision 2047, prompting MDL to explore alternative investment opportunities.
- Mazagon Dock Limited (MDL) is exploring a ₹29,000 crore investment in a shipbuilding cluster in Andhra Pradesh after issues in Tamil Nadu.
- MDL's initial plan for a ₹15,000-18,000 crore greenfield shipyard in Thoothukudi, Tamil Nadu, was reportedly sidelined.
- The Tamil Nadu government allegedly signed an 'Exclusive Business Cooperation Agreement' with foreign company HD Hyundai for the Thoothukudi shipyard without competitive bidding.
Amid global pressure on LPG supplies due to the West Asia conflict, the Centre has reduced the number of subsidised refills available under the Pradhan Mantri Ujjwala Yojana (PMUY) from nine to four cylinders per year. Under the scheme, beneficiaries receive a ₹300 subsidy per cylinder. Despite the reduction, Petroleum Ministry officials argue that PMUY consumers still receive a significant 'indirect subsidy,' as the effective price of ₹642 per cylinder is a 60% discount compared to international LPG prices (estimated at ₹1,600). The PMUY scheme has provided around 10.55 crore LPG connections as of May 26 this year.
- The government has reduced the number of subsidised LPG refills for PMUY beneficiaries from nine to four cylinders annually.
- This decision comes amidst global LPG supply pressures exacerbated by the West Asia conflict.
- Under the Pradhan Mantri Ujjwala Yojana (PMUY), beneficiaries receive a direct subsidy of ₹300 per cylinder.
The India-Oman Comprehensive Economic Partnership Agreement (CEPA), effective June 1, 2026, aims to deepen trade, investment, and economic cooperation. It offers significant opportunities for Indian exporters, with Oman providing duty-free access on 98.08% of its tariff lines, covering 99.38% of India's exports by value. The CEPA streamlines trade procedures, recognizes Indian certifications, and focuses on services and professional mobility. Strategically, Oman's location at the crossroads of the Gulf, Indian Ocean, and East Africa positions it as a gateway for Indian businesses to the wider GCC region and East African economies, strengthening India's global manufacturing and services ambitions.
- The India-Oman CEPA, effective June 1, 2026, aims to significantly boost bilateral trade, investment, and economic cooperation.
- Oman grants duty-free access to 98.08% of its tariff lines, covering 99.38% of India's exports by value, providing a competitive edge for Indian manufacturers.
- The agreement includes trade facilitation measures like mutual recognition of certifications (e.g., India's Export Inspection Council, NPOP, Halal) and streamlined customs.
India's provisional GDP growth for 2025-26 is pegged at 7.7%, demonstrating resilience in manufacturing and services sectors. Private Final Consumption Expenditure and Gross Fixed Capital Formation grew faster, indicating positive trends in household consumption and investment. However, the economic outlook faces significant challenges. The agriculture sector's growth slowed to 3% in 2025-26, and the India Meteorological Department predicts a deficient monsoon at 90% of the Long Period Average. Global headwinds, including geopolitical conflicts, energy supply disruptions, and fertilizer constraints, are expected to strain the economy, with the RBI forecasting a growth dip to 6.6% for 2026-27, emphasizing the need for policy agility.
- India's provisional GDP growth for 2025-26 is estimated at 7.7%, showing resilience in manufacturing and services.
- Private Final Consumption Expenditure and Gross Fixed Capital Formation have shown faster growth, indicating positive trends in consumption and investment.
- The agriculture sector's growth has slowed significantly, raising concerns, especially with a predicted deficient monsoon.
The Supreme Court recently delivered two significant rulings impacting India's real-money online gaming industry. It upheld the constitutional validity of State laws prohibiting real-money gaming platforms, asserting that betting and gambling are 'res extra commercium' and fall under State legislative competence (Entry 34, List II). The Court also affirmed the Centre's retrospective 28% GST levy on online gaming companies, clarifying that GST applies to the full value of stakes, irrespective of whether games are skill-based or chance-based. The rulings emphasize that once money is staked on an uncertain outcome, the distinction between skill and chance becomes irrelevant for GST purposes. These judgments have severe implications for the industry, with many companies facing insolvency and potential shifts in operations.
- The Supreme Court upheld State laws prohibiting real-money online gaming, classifying betting and gambling as 'res extra commercium'.
- The Court affirmed that State governments have legislative competence to regulate such activities under Entry 34 of List II.
- The Centre's retrospective 28% GST levy on online gaming was upheld, applicable to the full value of stakes.
Prime Minister Narendra Modi recently invoked 'national interest' regarding the closure of the Sterlite Copper plant in Thoothukudi, Tamil Nadu, suggesting a conspiracy behind its shutdown. The plant, closed for eight years after police firing on protesters in 2018 and environmental violations, had a capacity of 4 lakh tonnes of refined copper annually, meeting 40% of India's demand and contributing to exports. Its closure turned India into a net importer of copper, costing $3.5 billion in foreign exchange. Vedanta, the company, proposed a 'green copper' project with cleaner technology, but its application was rejected by the TNPCB. The Madras High Court has directed the State government to form an expert committee to study the new proposal, amidst ongoing legal and environmental debates.
- PM Modi highlighted the closure of the Sterlite Copper plant in Thoothukudi as a matter of national interest, implying a conspiracy.
- The plant's closure transformed India from a copper exporter to a net importer, impacting the economy.
- Vedanta proposed a 'green copper' project with advanced, cleaner technology, but its application was rejected by the TNPCB.
SpaceX is preparing for a massive $75 billion IPO on Nasdaq (SPCX) at a $1.75-2 trillion valuation, primarily to fund its Orbital Data Centre (ODC) and AI unit expansion. The company faces scrutiny over its 'Frankenco' structure, where Starlink profits are used to offset xAI's heavy losses. Starlink also faces headwinds from new European regulations limiting its bandwidth and increased noise in radio bands. Analysts express skepticism about the valuation, citing the use of IPO proceeds for debt repayment and the controversial merger with cash-burning xAI as 'related-party transactions'. Concerns also exist regarding the feasibility of the proposed ODC and Terafab facility, particularly regarding thermal management and radiation hardening in space.
- SpaceX is planning a massive IPO to raise $75 billion, targeting a $1.75-2 trillion valuation, primarily to fund its Orbital Data Centre and AI expansion.
- The company's financial structure, where Starlink's profits are used to cover xAI's substantial losses, is under investor scrutiny.
- Starlink faces regulatory challenges in Europe and technical issues with increasing radio noise.
The Government of India (GoI) has promulgated an ordinance waiving the 12.5% long-term capital gains (LTCG) tax on foreign institutional investments (FII) in government bonds. This exemption will be effective from April 1, 2026. The decision aims to rationalize the tax treatment for FPIs in Government Securities, recognizing the importance of a competitive tax regime for attracting global capital. This move comes after FIIs sold a significant amount of Indian securities. Experts believe this will make Indian government securities more tax-efficient for overseas investors, though some argue it doesn't fully address concerns of long-only equity investors regarding capital gains structure, currency risk, and valuation premium.
- The Indian government has waived the 12.5% long-term capital gains (LTCG) tax on foreign institutional investments (FII) in government bonds.
- This tax exemption is set to take effect from April 1, 2026, aiming to create a more competitive tax regime for attracting global capital.
- The measure is expected to make Indian government securities more attractive and tax-efficient for overseas investors.
The Reserve Bank of India (RBI) announced several measures to attract foreign capital, particularly for government securities. Under the Fully Accessible Route (FAR), the RBI expanded the universe of 'specified securities' to include new issuances of 15, 30, and 40-year tenor G-secs. Additionally, limits on short-term investments, concentration, and individual securities for FPI investment under the General Route have been removed. These steps aim to make Indian government securities more tax-efficient and attractive for overseas investors. The RBI also decided to increase investment limits for Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) in equity instruments traded on the stock market without SEBI registration, further liberalizing foreign investment.
- RBI has expanded the scope of government securities under the Fully Accessible Route (FAR) to attract more foreign capital.
- Restrictions on Foreign Portfolio Investment (FPI) in government securities, such as limits on short-term investments and concentration, have been removed under the General Route.
- These measures are intended to enhance the attractiveness and tax efficiency of Indian government securities for overseas investors.
The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) unanimously decided to keep the policy repo rate unchanged at 5.25% under the liquidity adjustment facility (LAF). Consequently, the standing deposit facility (SDF) rate remains at 5% and the marginal standing facility (MSF) rate and bank rate at 5.50%. The MPC also maintained its neutral stance. RBI Governor Sanjay Malhotra noted the global environment's deterioration, extended supply chain disruptions, and elevated energy prices, leading to a moderation in growth and an increase in inflation projections. The real GDP growth forecast for FY27 was lowered to 6.6% from the earlier 6.9%, while CPI inflation for FY27 is projected at 5.1%, 50 basis points higher than before. The MPC highlighted risks from the West Asia conflict, sub-normal monsoon forecast, and El Niño.
- The RBI's Monetary Policy Committee (MPC) unanimously decided to keep the key policy repo rate unchanged at 5.25%.
- The MPC maintained a neutral stance, indicating a wait-and-watch approach amidst global uncertainties.
- The real GDP growth forecast for FY27 has been lowered to 6.6% from an earlier projection of 6.9% due to global headwinds.
Russian President Vladimir Putin stated that Western pressure on Prime Minister Narendra Modi to reduce India's engagement with Russia would harm global stability and bilateral relations. He emphasized that India is a reliable strategic partner whose growth is a result of hard work. Putin dismissed concerns that India's ties with the U.S. would negatively affect its strategic relationship with Russia, asserting that India prioritizes its national interests and develops relations with various countries naturally. He also mentioned that Moscow would not interfere in the 'delicate' India-China bilateral relations, acknowledging their efforts to resolve border issues. Putin highlighted Russia's balanced approach in Asia, ensuring its synergy with New Delhi does not come at Beijing's expense, and vice versa. He also offered Russia's fifth-generation stealth aircraft Su-57 for joint development with India.
- Russian President Putin views Western pressure on India to scale back ties with Russia as detrimental to global stability and bilateral relations.
- Putin affirmed India as a reliable strategic partner, emphasizing its right to pursue national interests and develop relations with any country without affecting its ties with Russia.
- Russia maintains a balanced foreign policy in Asia, ensuring its strong ties with India and China are independent and do not compromise each other.
India intends to eliminate capital gains tax on foreign portfolio investments in government securities to attract more foreign capital. This strategic move aims to bolster the rupee, which has depreciated over 5% this year due to high oil prices and foreign equity outflows. Currently, foreign investors face a 12.5% long-term capital gains tax on bonds held over 12 months, and a 20% withholding tax on interest earned in government bonds may also be removed. While not a definitive solution, this tax easing is expected to positively influence foreign inflows into the Indian bond market in the medium term.
- India plans to remove capital gains tax for foreign investors in government securities.
- The measure aims to attract foreign capital and support the Indian rupee.
- Foreign investors currently pay 12.5% long-term capital gains tax on bonds.
India faces a significant SDG financing gap, particularly in energy transition, infrastructure, and health, which are intrinsically linked to climate challenges. The article argues that investments in climate solutions, such as clean energy, yield multiple returns—carbon reduction, improved health, and enhanced productivity—which are often overlooked by current investment frameworks. This incomplete valuation leads to under-mobilization of capital. A new framework is proposed to measure and value both financial and social returns, ensuring capital is directed towards solutions that maximize overall impact. Technical assistance is highlighted as crucial for developing commercially viable project pipelines.
- India's SDG financing gap is closely tied to climate challenges, especially in energy transition.
- Climate investments offer multiple co-benefits, including health and economic productivity, beyond emissions reduction.
- Current investment frameworks often fail to capture the full spectrum of these diverse returns.
India requires ₹162.5 trillion ($2.5 trillion) by 2030 for its Nationally Determined Contributions and $10.1 trillion by 2070 for net-zero emissions, highlighting a vast climate finance gap. Decarbonizing key sectors alone demands $467 billion by 2030. The article stresses the need for a robust financing strategy, including a climate-finance taxonomy to standardize investments and differentiated capital requirements by the RBI to incentivize green lending. Establishing State Climate Finance Facilities and scaling sovereign green bonds are crucial steps to mobilize capital and achieve India's ambitious climate targets.
- India faces a massive climate finance requirement to meet its 2030 NDCs and 2070 net-zero targets.
- A significant financing gap exists, particularly for decarbonizing critical industrial sectors.
- A comprehensive climate-finance taxonomy is essential to standardize green investments and build investor confidence.
India's EV sector is rapidly growing, but this momentum exposes a new strategic vulnerability: heavy reliance on imported lithium-ion batteries, particularly from China. The article argues that future EV growth must prioritize supply chain resilience, strategic autonomy, and long-term sustainability. Current domestic cell manufacturing is insufficient, leading to significant battery imports that are susceptible to global geopolitical and economic disruptions. To mitigate risks, India needs to diversify suppliers, chemistries (e.g., sodium-ion batteries), and geographies. Product modifications for efficiency, developing software-defined battery platforms, and building an "EV supply chain alliance" with trusted partners are crucial to sustain demand without external bottlenecks.
- India's rapidly growing EV market is becoming strategically vulnerable due to high dependence on imported lithium-ion batteries, especially from China.
- Future EV growth must focus on supply chain resilience, strategic autonomy, and long-term sustainability, beyond just electrification speed.
- Domestic cell manufacturing capacity is currently inadequate, making India susceptible to global supply chain disruptions and price volatility.
A NITI Aayog Frontier Tech Hub report, "Future of India's Semiconductor Industry," states that India faces steep challenges in developing world-class semiconductor manufacturing, despite it being a national priority. The report emphasizes the need for local manufacturing due to geopolitical pressures and supply chain disruptions. India currently lacks a single fabrication unit, with the first expected by 2028. The report advocates for "selective depth" and "capital efficiency" over replicating the full global spectrum, focusing on packaging and high-volume domestic segments. It also stresses building sovereign design capabilities, R&D excellence, and securing trusted international partners like the U.S., Japan, EU, and South Korea.
- India faces significant challenges in developing world-class semiconductor manufacturing capabilities, despite its strategic importance.
- The NITI Aayog report emphasizes local manufacturing to mitigate geopolitical risks and supply chain disruptions.
- India currently has no operational fabrication units, with the first expected by 2028.
India's record milk production, reaching 239 million tonnes in 2023-24, faces significant challenges from extreme heat linked to climate change. Dairy farmers report premature births and reduced milk output, with production falling by nearly 30% during heatwaves. Heat stress reduces cows' feed intake, diverts energy from milk production and reproduction, and increases costs for farmers to keep animals cool. While larger organized dairy operators can adapt with cooling systems, small farmers with limited capital struggle. The dairy sector, contributing 5% to India's GDP and supporting 80 million farmers, is vulnerable, highlighting the need for resilient strategies against climate impacts.
- India achieved record milk production of 239 million tonnes in 2023-24, but extreme heat poses a significant threat.
- Heat stress in cattle leads to reduced feed intake, lower milk production (up to 30% drop), and reproductive issues like premature births.
- Small dairy farmers, who constitute the majority of India's milk producers, struggle to afford cooling systems and management strategies.
The Centre plans to phase out the Wholesale Price Index (WPI) over the next five years, replacing it with a more detailed Producer Price Index (PPI) starting June 15. The Department for Promotion of Industry and Internal Trade (DPIIT) will release a revised WPI series with a new base year 2022-23, alongside the new PPI series. The PPI will include three indices: Output PPI, Trial Input PPI, and Services PPI, offering a more realistic assessment of inflationary trends by covering output, input, and services prices. This transition aligns with global best practices and IMF recommendations, providing better insights into price movements and inflation transmission.
- The Indian government will phase out the Wholesale Price Index (WPI) over five years, replacing it with the Producer Price Index (PPI).
- The DPIIT will release a new WPI series with base year 2022-23 and the new PPI series from June 15.
- The PPI will comprise three indices: Output PPI, Trial Input PPI, and Services PPI, providing a comprehensive view of inflation.