India's ambition to install 500 GW of non-fossil fuel capacity by 2030 relies heavily on Production Linked Incentive (PLI) schemes. While downstream module assembly is progressing, critical upstream segments like polysilicon and wafer manufacturing remain bottlenecks, reaching only 14% and 10% of targets respectively. Similarly, battery cell manufacturing progress is sluggish, with only 2.8% of the targeted 50 GWh capacity commissioned by late 2025. The article argues that capital subsidies alone are insufficient; India needs deep technical expertise, workforce training, and a relook at PLI provisions to prioritize know-how over company net worth.
- PLI schemes for solar and batteries face significant implementation challenges in high-technology upstream segments.
- Stringent domestic value addition requirements (60% within five years) are difficult for manufacturers to meet.
- The lack of technical expertise and difficulties in obtaining visas for foreign experts hinder factory construction.
India's four new Labour Codes aim to promote the formalisation of employment and improve the ease of doing business. However, data from the Periodic Labour Force Survey (PLFS) 2023-24 highlights significant challenges for the youth (aged 15-29). Youth unemployment stands at 10.2%, and a large portion of young workers are in informal or self-employed roles without written contracts or social security. The new codes introduce the 'gig worker' category and mandate social security, but gaps in coverage and the lack of a statutory national floor wage remain concerns for labor advocates.
- The four Labour Codes consolidate 29 central laws to simplify compliance and expand social protection.
- Youth labor force participation is 46.5%, significantly lower than the 76.4% for those aged 30-59.
- Over 90% of young workers are informally employed, with 66.1% of regular salaried youth lacking written contracts.
Former RBI Governor C. Rangarajan argues that the recent decline in the Indian rupee's value is driven more by geopolitical factors and U.S. trade policies than domestic economic fundamentals. Despite a strong growth rate of 7.4% and low inflation, the rupee has depreciated due to capital outflows sparked by U.S. tariff threats. Rangarajan suggests that while the RBI can intervene to reduce volatility, a long-term solution lies in diplomatic engagement with the U.S. to resolve trade disputes. He warns that devaluation is not a remedy when inflation disparities are low.
- The rupee's depreciation is attributed to capital outflows following U.S. threats of reciprocal tariffs.
- India's current account deficit remains modest at 0.76% of GDP, indicating strong internal economic health.
- The RBI's role is to reduce exchange rate volatility rather than pegging the rupee to a specific value.
India and the European Union (EU) have concluded a historic Free Trade Agreement (FTA) after nearly 20 years of talks. The deal aims to double exports to India and eliminate tariffs on 99.5% of Indian exports to the 27-nation bloc. Key sectors benefiting include textiles, leather, gems, and jewelry. In return, India has granted tariff concessions on 97.5% of imports from the EU, making European wines and luxury cars significantly cheaper. The agreement also includes a Security and Defence Partnership and a memorandum on mobility for Indian professionals and students, marking a major shift in bilateral relations.
- The FTA eliminates duties on 99.5% of Indian exports and 97.5% of EU imports into India.
- Key Indian labor-intensive sectors like textiles, leather, and footwear will gain zero-duty access to the EU market.
- The deal includes a Security and Defence Partnership to enhance cooperation in maritime security and cyber-security.
A U.S. military incursion in Venezuela has led to a collapse in oil exports, severely impacting Cuba, which relies on Venezuela for a significant portion of its energy needs. Under the 'oil-for-doctors' scheme, Venezuela supplied subsidized crude in exchange for Cuban medical services. With Venezuelan imports dropping drastically, Cuba is facing acute fuel shortages, prolonged power cuts, and food supply disruptions. While Cuba has attempted to diversify its sources with imports from Mexico and Russia, it remains in a deep economic crisis with a trade deficit reaching $13.9 billion in 2023.
- Oil accounts for 83% of Cuba's total power generation, making it highly vulnerable to supply shocks.
- The 'oil-for-doctors' program was a cornerstone of the Havana-Caracas relationship since the Hugo Chavez era.
- Cuba's trade deficit has worsened significantly, reaching its worst figure in 2023 at $13.9 billion.
A recent RBI report highlights an uneven demographic transition across Indian states. Southern states like Kerala and Tamil Nadu are projected to become 'ageing states' by 2036, with elderly populations exceeding 20%. Conversely, northern states like Bihar and UP will see rising working-age populations beyond 2031. This shift creates fiscal pressures, as ageing states face higher pension costs and lower tax devolution due to population-based formulas. The article advocates for a new industrial policy focused on the 'care economy' and a massive expansion of public geriatric care to ensure 'graceful ageing' for all.
- Kerala and Tamil Nadu's elderly populations are expected to exceed 22% and 20% respectively by 2036.
- The Finance Commission's population weightage formula disadvantages states that have successfully controlled population growth.
- Ageing in India disproportionately affects women, who often live longer but with fewer financial assets and no formal pensions.
India and the European Union have announced the conclusion of negotiations for a Free Trade Agreement (FTA) during the 77th Republic Day celebrations. The talks, which began in 2007, faced numerous hurdles over two decades, including market access for sensitive agricultural items and environmental regulations. The deal, approved by both sides, now undergoes 'legal scrubbing' before ratification by the European Parliament and the 27 EU member states. This agreement is expected to significantly boost bilateral trade, which already exceeds $136 billion, and upgrade the strategic partnership to include enhanced defense and maritime security cooperation.
- Negotiations for the India-EU FTA first launched in 2007 and were relaunched in 2022 after a long freeze.
- The agreement covers trade in goods, services, and investment, while setting aside sectors where common ground could not be reached.
- The EU acts as a single customs bloc, making this one of the world's largest bilateral trade deals.
As India prepares for Budget 2026-27, there is a critical need to address constraints on women’s time and productivity. Women contribute only 18% to India’s GDP, largely due to the burden of unpaid domestic work. The article suggests reimagining schemes like PMAY and Jal Jeevan Mission with a 'gender-savings' focus. Key recommendations include expanding the 'Care Infrastructure Convenience Window', increasing allocations for women-led MSMEs, and upskilling women for the AI-driven future. The goal is to move beyond just spending on women to ensuring outcomes in income, agency, and opportunity through targeted gender budgeting.
- Women's unpaid labor remains a major barrier to their participation in the formal workforce.
- Gender budgeting should focus on time-saving infrastructure like piped water and clean cooking energy.
- The 'Care Infrastructure Convenience Window' is proposed to mandate reporting on time-use metrics.
Relations between India and the UAE have reached a new level of strategic depth, highlighted by frequent high-level visits and the Comprehensive Economic Partnership Agreement (CEPA). Bilateral trade has seen a 37% rise, with a target of $200 billion by 2032. UAE investments are significant in India's infrastructure, including the Dholera Investment Region and GIFT City. Cooperation has expanded into advanced sectors like nuclear energy (small modular reactors), food security (Bharat Mart), and connectivity (India-Middle East-Europe Economic Corridor). The partnership is built on mutual trust, shared interests, and a commitment to regional stability.
- The CEPA has significantly boosted bilateral trade, with UAE exports to India rising by 28%.
- UAE's Abu Dhabi Investment Authority (ADIA) has committed $1 billion to India's National Investment and Infrastructure Fund.
- Strategic cooperation includes nuclear energy, semiconductors, and the development of the Dholera Investment Region.
The Reserve Bank of India (RBI) is encouraging the Indian government to use its 2026 BRICS chairmanship to promote Central Bank Digital Currencies (CBDCs) for cross-border payments. CBDCs are digital forms of legal tender issued by central banks, utilizing blockchain for transparent and immutable transactions. This move aims to reduce reliance on the U.S. dollar-based SWIFT system, which has excluded countries like Russia and Iran. While offering benefits like reduced money laundering and programmable transactions, the proposal faces risks, including potential U.S. retaliatory tariffs and complex regulatory hurdles between member nations.
- CBDCs are digital versions of national currencies (e.g., India's e-rupee) held in wallets separate from bank accounts.
- The proposal aims to facilitate faster, cheaper, and more transparent cross-border settlements within the BRICS+ grouping.
- Blockchain technology ensures that transactions are permanent and can be programmed for specific uses (e.g., expiry dates).
'Pax Silica' is a U.S.-led chip supply chain alliance aimed at building a 'closed-loop' AI ecosystem, reducing dependence on Chinese manufacturing. Signed by nine countries, including Australia, Japan, and South Korea, the initiative seeks to map a new geography of computing power. It integrates Australia's mines, Singapore's logistics, and Japan's precision machinery with American technology. India faces a 'paradox' as it seeks to join this U.S.-led security architecture to secure its supply chain while simultaneously managing its economic ties and potential investments from China.
- Pax Silica aims to isolate AI development from Chinese influence by creating a self-contained supply chain.
- The initiative is a successor to the Indo-Pacific Economic Framework (IPEF) but with a sharper focus on semiconductors.
- India is expected to join Pax Silica as early as February to bolster its industrial growth and security ties.
U.S. President Donald Trump has renewed interest in Greenland, citing its rich natural resources and strategic location. Greenland is home to vast reserves of oil, natural gas, and 25 of the 34 'critical raw materials' identified by the EU, including graphite and titanium. Strategically, it is vital for U.S. national security, hosting the Golden Dome missile defense plan. While Trump initially proposed a purchase, recent discussions at Davos suggest a 'framework of a future deal' involving potential long-term leases or security arrangements, similar to U.K. bases in Cyprus, rather than an outright sale.
- Greenland is strategically located for Arctic security and hosts critical U.S. missile defense infrastructure.
- The territory contains significant deposits of critical minerals essential for green energy and military technology.
- Denmark has consistently maintained that Greenland is 'not for sale,' leading to diplomatic friction.
Prime Minister Narendra Modi, addressing the 18th Rozgar Mela, handed over 61,000 appointment letters for various government jobs. He emphasized that India's entry into multiple mobility and trade agreements is creating new employment opportunities for the youth. The PM noted a significant increase in manufacturing, particularly in electronics, where exports have crossed ₹4 lakh crore. He also highlighted the growth of the 'creator economy' and the startup ecosystem, which now has over two lakh registered startups. Furthermore, he pointed out the rising participation of women in the workforce, supported by schemes like Mudra and Start-up India.
- Trade and mobility agreements with several countries are being positioned as key drivers for domestic employment.
- India's electronics manufacturing sector has grown six-fold since 2014, reaching a value of over ₹11 lakh crore.
- The startup ecosystem has expanded to include over 2 lakh registered startups, employing over 21 lakh people.
The government's ambitious Advanced Chemistry Cell Production Linked Incentive (ACC-PLI) scheme, launched in 2021 to catalyze domestic battery manufacturing, is facing significant delays. As of October 2025, only 1.4 GWh of battery cells have been commissioned against a planned capacity of 50 GWh. Challenges include delays in visa approvals for Chinese technical specialists, lack of critical technologies, and high entry barriers for traditional manufacturers. India currently lacks a mature cell manufacturing ecosystem, leaving the industry heavily dependent on imports from China for critical mineral refining and component production.
- The ACC-PLI scheme aims to reduce India's dependence on battery imports and accelerate EV adoption.
- Only 1.4 GWh of capacity has been commissioned out of the 50 GWh target.
- The scheme requires 25% local manufacturing within two years and 60% within five years.
India and the European Union are deepening their relationship as they prepare for the 16th India-EU Summit. A key focus is the Free Trade Agreement (FTA), which could unlock opportunities in textiles, chemicals, and digital services. However, challenges remain, such as the EU's Carbon Border Adjustment Mechanism (CBAM), which India views as a non-tariff barrier. The partnership is also expanding into defense and security, with calls for a Security and Defense Partnership. This alignment is driven by a shared belief in strategic autonomy and a multipolar world order.
- The India-EU FTA is in final stages, aiming to boost trade in various sectors.
- The Carbon Border Adjustment Mechanism (CBAM) imposes 20-35% carbon charges on certain Indian exports.
- A proposed Security and Defense Partnership would put India on par with Japan and South Korea for the EU.
Prime Minister Narendra Modi inaugurated several developmental projects in Kerala, including flagging off three new Amrit Bharat Express trains and a passenger train. He emphasized that a developed Kerala is essential for a developed India. The PM also unveiled the PM SVANidhi Card, highlighting the transformation of street vendors' lives through the scheme. Additionally, he noted that under the Pradhan Mantri Awas Yojana, over 4 crore houses have been provided to the poor nationwide, with nearly 1.25 lakh urban poor families in Kerala receiving permanent homes.
- Three new Amrit Bharat Express trains were flagged off to strengthen Kerala's rail connectivity.
- The PM SVANidhi Scheme has transformed the lives of street vendors by providing access to credit.
- Over 4 crore houses have been provided to the poor under the Pradhan Mantri Awas Yojana.
Data from the Reserve Bank of India (RBI) shows that India’s net Foreign Direct Investment (FDI) remained negative for the fourth consecutive month in November 2025. This trend is driven by high levels of repatriation and disinvestment by foreign companies, which exceeded total inflows by $446 million. Additionally, net Foreign Portfolio Investments (FPI) have also been negative in the 2025-26 financial year due to uncertainty over India-U.S. trade deals and a weakening rupee. Despite this, gross inflows remained steady at $6.4 billion, with the financial services and manufacturing sectors receiving the highest shares.
- Net FDI is the balance between total inflows and outflows (repatriation/disinvestment).
- Outflows in November 2025 exceeded inflows by $446 million.
- Repatriation and disinvestment reached a five-month high of $5.3 billion in November 2025.
India's recent white paper, 'Democratising Access to AI Infrastructure,' argues that AI's future will be determined by who controls the underlying infrastructure—compute power, datasets, and model ecosystems. Currently, these resources are concentrated among a few global corporations. To ensure competitiveness and sovereignty, India must develop its own physical (data centres, GPUs) and digital (datasets, protocols) infrastructure. The paper emphasizes a 'Digital Public Infrastructure' (DPI) approach, using public-private partnerships (PPPs) to provide shared, standards-based access to AI resources for startups and public institutions.
- AI infrastructure is becoming a foundational economic asset, similar to roads or electricity, enabling modern innovation.
- India hosts nearly 20% of global data but only 3% of global data centre capacity, creating a significant strategic asymmetry.
- A sovereign AI infrastructure is necessary to prevent dependence on external entities and to protect domestic innovation.
The Reserve Bank of India (RBI) has recommended connecting the Central Bank Digital Currencies (CBDCs) of BRICS nations to the 2026 summit agenda. This initiative aims to streamline cross-border payments, which are currently plagued by high costs and transparency issues. CBDCs offer a sovereign-guaranteed, blockchain-based alternative to private cryptocurrencies. While this could bypass the SWIFT network and facilitate trade with sanctioned nations like Russia and Iran, it may also invite geopolitical friction, particularly with the U.S. regarding the global dominance of the dollar and potential retaliatory tariffs.
- CBDCs provide a transparent and immutable record of transactions, helping to curb money laundering and black money.
- India's UPI infrastructure is highly successful domestically, making CBDCs more relevant for international rather than domestic use.
- Linking CBDCs could allow for direct payments that do not rely on the dollar-denominated SWIFT system.
The Supreme Court has drawn a clear distinction between 'irrational freebies' used by political parties to lure voters and legitimate 'welfare schemes' aimed at marginalized sections. The Court observed that while state largesse to individuals can be problematic, investing in health and education is a constitutional obligation under the Directive Principles of State Policy (DPSP). The Bench expressed concern over the lack of dedicated revenue surplus for developmental purposes and rising national debt. It is considering whether such freebies constitute a 'corrupt practice' under the Representation of the People Act.
- The Court emphasized that launching welfare schemes is an obligation under the Directive Principles of State Policy.
- There is a legal debate on whether freebies should be classified as 'expenditure defrayable by the Union or State' under Article 282.
- The Court is shifting away from its 2013 judgment in the S. Subramaniam Balaji case regarding election manifesto promises.
The 'Pax Silica' initiative, launched in December 2025, aims to reduce dependence on China for critical minerals, semiconductors, and AI technologies. Led by the US, the initiative seeks to build trusted digital infrastructure and secure supply chains for Rare Earth Elements (REEs). Major participants include Australia, the Netherlands, and Singapore. For India, joining Pax Silica offers an opportunity to integrate into global high-tech ecosystems and secure its semiconductor future, though it must navigate stringent licensing regulations and ensure its strategic autonomy is not compromised by the US-led framework.
- Pax Silica is a response to China's dominance in the supply of REEs and its use of export controls as a geopolitical tool.
- The initiative focuses on 'trusted' manufacturing and logistics for frontier technologies like semiconductors and AI.
- India is a strong candidate due to its digital infrastructure and large pool of STEM talent.
India's Ministry of Finance is considering scrapping curbs on Chinese Foreign Direct Investment (FDI) introduced in 2020 following border tensions. The Economic Survey suggests that FDI from China could help India boost exports and integrate into global supply chains, similar to the East Asian model. Currently, Chinese FDI accounts for less than 1% of India's total FDI inflows. While India has successfully replaced China in some sectors like smartphone manufacturing, experts argue that complete 'de-risking' without including Chinese companies in the manufacturing mix is difficult given China's dominance in global markets.
- Press Note 3 (2020) mandated government approval for FDI from countries sharing a land border with India, primarily targeting China.
- The Economic Survey 2023-24 suggests that attracting Chinese FDI is essential for India to become a global manufacturing hub.
- China's share of the US smartphone import market dropped from 60% in 2016 to 22% in 2024, with India and Vietnam gaining ground.
The rapid shift toward electric vehicles (EVs) is creating an unprecedented demand for copper, a metal indispensable for batteries, motors, and charging infrastructure. EVs require four to five times more copper than internal combustion engine vehicles. As EV adoption accelerates, a structural supply deficit is emerging, potentially reaching 4.5 million tonnes by 2028. This 'copper crunch' is exacerbated by declining ore grades and long development cycles for new mines. Geopolitically, China dominates the EV supply chain, including battery cell production, posing a challenge to global energy transition goals and resource security.
- Copper demand is entering a phase of exponential growth that policymakers and markets have underestimated.
- A 'jaw-opening deficit' is forming as supply from major producers like Chile and Peru fails to keep pace with demand.
- China controls over 70% of global battery cell production and has secured long-term copper supply contracts.
The recent visit of UAE President Sheikh Mohamed bin Zayed Al Nahyan to India has resulted in significant economic and security commitments. Both nations aim to double bilateral trade to $200 billion and have announced intentions to conclude a 'Strategic Defence Partnership,' the first of its kind for India in the region. The UAE is already India's third-largest trading partner and a key investor. However, India must navigate the complex regional 'cold war' between the UAE and Saudi Arabia, as well as tensions involving Iran and Israel that threaten connectivity projects like IMEC.
- India and the UAE are negotiating a framework for a first-of-its-kind Strategic Defence Partnership.
- The UAE is India's 3rd largest trading partner and 2nd largest export destination.
- Regional connectivity projects like IMEC and INSTC are threatened by ongoing Middle East tensions.