General Studies Paper-3

Context

The Indian government has notified the World Trade Organization (WTO) of its proposal to levy retaliatory tariffs amounting to nearly $724 million on the U.S..

About

• The move follows the United States’ decision to extend safeguard tariffs—amounting to a 25% ad valorem increase—on imports of passenger vehicles, light trucks, and certain automobile components from India.
• The proposed suspension of concessions by India or other obligations would take the form of an increase in tariffs on selected products originating in the US.

Background of U.S. Tariffs

• Originally imposed in 2018 under President Trump, these tariffs targeted steel (25%) and aluminium (10%) on national security grounds.
• In 2025, during Trump’s second term, the U.S. eliminated country- and product-specific exemptions, affecting India directly.
• The U.S. declined to hold consultations, claiming the tariffs were national security measures, not safeguards.

WTO Safeguards Agreement

• Article 12.3 of the WTO Safeguards Agreement requires a country planning safeguard measures to consult affected members in advance, providing them an opportunity to discuss the proposed action and seek clarification.
• Article 12.5 of the WTO Agreement on Safeguards allows a member country to notify its intention to suspend trade concessions if another member imposes safeguard measures without proper consultation.

India’s Position

• India maintains that the measures taken by the United States are not consistent with the General Agreement on Tariffs and Trade 1994 (GATT 1994) and Agreement on Safeguards (AoS).
• Further, it said that since the U.S. did not hold mandatory consultations under Article 12.3 of the AoS, India had the right to retaliate.
• India reserves the right to suspend concessions or other obligations that are substantially equivalent to the adverse effects of the measure to India’s trade.
• WTO Monitoring: India will inform the WTO’s Council for Trade in Goods and Committee on Safeguards of its actions.

Implications

• Bilateral Trade: The estimated trade affected by the US action is valued at $2.9 billion, with India seeking to reciprocally recover $723.75 million annually through its proposed tariff measures.
• Trade Deal: The timing of India’s notification is significant, it comes amid heightened expectations of a breakthrough in the ongoing India-US Bilateral Trade Agreement (BTA) negotiations.
• The move could be seen as an attempt by India to build negotiating leverage, especially as it pushes for the removal of US safeguard duties as part of the final deal contours.
• WTO Rules and Reform: The disagreement over whether national security tariffs constitute safeguard measures adds to broader debates on WTO’s relevance and enforcement capacity.

Conclusion

• The proposal assumes significance as both countries are negotiating a bilateral trade agreement (BTA).
• Trade analysts say that India’s WTO notification is a legal and strategic step, signaling its readiness to retaliate against the US safeguard duties on automobiles and parts.

General Studies Paper-2

Context: The World Health Organization (WHO) has launched the “3 by 35” Initiative, calling on countries globally to increase taxes on tobacco, alcohol, and sugary drinks.

The initiative urges a minimum 50% real price increase on the three targeted products by 2035, achieved through higher excise or health taxes.

About

• The world faces an urgent challenge of non-communicable diseases (NCDs) such as heart disease, cancer, and diabetes now account for over 75% of global deaths.
• Simultaneously, shrinking development aid and rising public debt have strained health systems, especially in low- and middle-income countries.
• Studies suggest a one-time 50% price hike could prevent up to 50 million premature deaths over the next 50 years and raise USD 1 trillion in public revenue over the next decade.
• From 2012 to 2022, nearly 140 countries raised tobacco taxes, with real prices rising over 50% on average, demonstrating that large-scale change is possible.

What is a Health Tax?

• A health tax is a levy imposed on products that have a negative impact on public health—primarily tobacco, alcohol, and sugary drinks. The dual purpose is to:
• Reduce consumption of these harmful products.
• Generate revenue for public health, education, and social protection programs.

Objectives and Expected Impacts

• Reduce NCD Burden: Lower consumption of unhealthy products to prevent millions of premature deaths.
  • In Columbia, cigarette tax hike led to a 34% drop in consumption.
• Mobilize Revenue: Generate an additional US$ 1 trillion globally over the next decade.
• Strengthen Health Systems: Fund universal health coverage, prevention, and health infrastructure.
  • SDG 3: Ensure healthy lives and promote well-being for all ages, with targets to reduce NCD mortality by one-third by 2030.

Challenges and Considerations

• Industry Opposition: Strong lobbying by tobacco and beverage industries; policy delays and dilution.
• Regressive Tax Concerns: Risk of disproportionate impact on low-income groups unless paired with subsidies.
• Revenue Volatility: Declining consumption may affect long-term revenue stability.
• Tax Exemptions: Long-term industry agreements can restrict tax increases and weaken public health.

Way Forward

• The “3 by 35” Initiative signals a paradigm shift—placing health taxes at the center of both public health and sustainable development strategies. For countries, the path forward involves:
• Designing robust, broad-based health taxes.
• Avoiding industry-driven tax exemptions.
• Using revenues to fund health, education, and social protection, especially for vulnerable groups.
• Building cross-sectoral alliances and engaging civil society for sustained impact.

General Studies Paper-3

Context

• On July 5, 2025, India marks both the fourth anniversary of its Ministry of Cooperation and the International Day of Cooperatives, during a year globally recognized as the United Nations International Year of Cooperatives.
• This convergence underscores the renewed relevance and strategic importance of the cooperative model in India’s development agenda, particularly within the Atmanirbhar Bharat (Self-Reliant India) vision.

Contemporary Relevance

• The cooperative movement in India is the largest in the world, with over 8.4 lakh registered cooperatives and a membership base of nearly 29 crore citizens, reflecting deep roots in the country’s socio-economic fabric.
• The 2025 International Day of Cooperatives, themed “Cooperatives: Driving Inclusive and Sustainable Solutions for a Better World,” highlights the sector’s role in delivering people-centered, evidence-based solutions to challenges like economic concentration, inequality, and climate change.
• The creation of the Ministry of Cooperation in July 2021 signaled a decisive policy shift, aiming to strengthen cooperatives at the grassroots, streamline regulatory processes, and transform them into engines of inclusive growth.

Philosophical Foundation

• Indian cooperatives are rooted in Gandhian and Lohiaite ideals of self-help, local democracy, and swaraj, emphasizing community spirit, mutual accountability, and equitable resource ownership.
• They serve as structural counterweights to both top-down government schemes and private corporations, promoting democratic ownership, grassroots participation, and local resource mobilization.

Structural Presence & Sectoral Spread

• Cooperatives are diversified across sectors: about 20% are in banking/credit, while the rest span dairy, sugar, agro-processing, housing, warehousing, and more.
• Key players like Amul, IFFCO, KRIBHCO, and NAFED exemplify successful cooperative business models, especially in dairy and fertilizers, compressing supply chains and ensuring better prices for producers.
• Cooperatives account for 35% of India’s sugar production, 30% of fertilizer distribution, and 15% of short-term agricultural credit, and contribute to significant employment, especially in rural and semi-urban areas.

How Cooperatives Can Boost MSME Potential?

• Resource Pooling & Shared Infrastructure: Cooperatives enable MSMEs—especially those run by artisans, farmers, and small producers—to pool resources such as tools, technology, and workspace. This reduces individual costs, increases efficiency, and allows members to benefit from economies of scale.
• Access to Finance: By operating collectively, MSMEs within cooperatives can access credit, savings, and insurance more easily.
• Market Linkages & Branding: Cooperatives help MSMEs reach wider markets through collective branding, quality certification, and e-commerce integration. For example, the Amul cooperative has enabled thousands of small dairy producers to market products nationally under a unified brand, achieving both scale and recognition.
• Skill Development & Innovation: Cooperatives foster a supportive environment for skill training, knowledge sharing, and innovation.
  • The PM Vishwakarma Yojana, launched in 2023, is designed to empower traditional artisans through skill upgradation, financial access, and market integration, with cooperatives providing the ecosystem for collective access to tools, credit, branding, and digital platforms.
• Collective Bargaining & Advocacy: Cooperatives represent the interests of MSMEs in policy forums and negotiations, ensuring their voices are heard and their needs addressed in government schemes and regulations.
• Inclusive & Sustainable Growth: The cooperative model promotes self-reliance, job creation, and grassroots participation, which are essential for inclusive and sustainable economic development.
• Risk Mitigation: By sharing risks and rewards, cooperatives provide a safety net for MSMEs, making them more resilient to market fluctuations and economic shocks.

Challenges Facing Cooperatives and MSMEs in India

• Poor Infrastructure: Many cooperatives, especially at the grassroots, lack adequate physical and digital infrastructure, limiting their operational efficiency and market outreach.
• Government Interference and Outdated Laws: Excessive regulation and political interference undermine autonomy, transparency, and democratic functioning of cooperatives.
• Mismanagement and Nepotism: Weak governance, mismanagement, and nepotistic recruitment practices have eroded trust and hampered professional growth within cooperatives.
• Socio-economic Disparities and Exclusion: Structural inequalities persist, with marginalized communities often excluded from meaningful participation and leadership roles within cooperatives.
• Digital & Financial Exclusion: Many rural cooperatives and MSMEs lack digital literacy, e-payment capability, or access to online markets. For example: Lack of awareness and handholding prevents Udyam registration or linking with digital portals like GeM (Government eMarketplace).
• Low Awareness of Government Schemes: Even flagship schemes like PMEGP, PM Vishwakarma, SFURTI, and MUDRA see under-utilisation due to poor IEC (Information, Education, Communication) outreach at grassroots.

Way Forward

• Reform Cooperative Governance and Autonomy: Ensure time-bound, transparent elections in all registered cooperatives. Digitise cooperative records under e-Sahakarita Mission Mode Project for transparency.
• Cluster-Based Development Model: Promote activity-specific cooperatives at the block/district level under the Cluster Development Programme (CDP).
  • Integrate PM Vishwakarma beneficiaries into cooperative clusters like:
  • Tailor clusters in Tirupur
  • Pottery in Khurja
  • Handloom in Varanasi
• Credit Access Through Tailored Financial Instruments: Strengthen NABARD refinance schemes for PACS and agri-coops.
  • Design Cooperative Credit Guarantee Fund (CCGF) for MSME-linked cooperatives.

Conclusion: Cooperatives in the Vision of Viksit Bharat@2047

• As India aspires to become a developed nation by 2047, cooperatives are positioned as key drivers of democratic, decentralized, and inclusive growth.
• Rather than being viewed as legacy institutions, cooperatives are now recognized as vital for sustainable, community-led development, capable of integrating traditional knowledge, modern business practices, and social equity into the heart of India’s economic transformation.

General Studies Paper-3

Context

• Manufacturing has long been the backbone of economic growth, employment generation, and technological advancement for emerging economies.
• In this context, India’s ‘Make in India’ (2014) and China’s ‘Made in China 2025’ (MIC2025) (2015) represent ambitious policy frameworks aimed at repositioning their respective countries in the global manufacturing value chain.
• A comparative assessment of these initiatives provides valuable lessons for India as it seeks to catalyse its own industrial revolution.

Objectives and Strategic Vision

• Made in China 2025 (MIC2025):
  • Aim: Upgrade China’s manufacturing capabilities, reduce foreign dependence, and move up the global value chain.
  • Focus: Ten strategic sectors, including advanced IT, robotics, aerospace, green energy, and high-tech transport.
  • Approach: State-led, target-driven, and heavily funded with clear timelines and measurable goals.
• Make in India:
  • Aim: Increase manufacturing’s share in GDP, boost employment, and attract FDI.
  • Focus: 25 sectors including electronics, defence, automotive, textiles, and biotechnology.
  • Approach: Facilitative, aiming to improve the business environment, incentivise investment, and enhance ease of doing business.

Achievements

• China (MIC2025):
  • Green Technologies: Dominates global lithium-ion battery and solar module production (>75% share), and leads in electric vehicles.
  • High-Speed Rail: World’s largest network (~40,000 km).
  • Robotics & AI: Closed the gap with global leaders, with firms like DJI and Huawei as global innovators.
  • Integrated Supply Chains: Self-sufficiency in electronics, renewables, and mobility sectors.
  • Domestic Value Addition: Enhanced local content in high-tech manufacturing.
• India (Make in India)
  • Mobile Manufacturing: Now second-largest globally; Apple produces 15% of iPhones in India.
  • FDI Growth: Inflows rose from $45.14 bn (2014-15) to $84.83 bn (2021-22).
  • PLI Schemes: ₹1.97 lakh crore committed across 14 sectors, incentivising domestic production.
  • Ease of Doing Business: Improved World Bank ranking from 142 (2014) to 63 (2019).
  • Infrastructure: Development of industrial corridors and logistics parks.

Challenges and Shortcomings

• China:
  • Global Criticism: Accused of unfair subsidies, non-tariff barriers, forced technology transfers, and monopolistic ambitions.
  • Trade Tensions: MIC2025 became a flashpoint in US-China trade disputes.
• India:
  • Stagnant Manufacturing Share: Manufacturing’s GDP share remains around 17.7% (2023), far from the 25% target.
  • Employment Concerns: Manufacturing’s share in employment declined from 11.6% (2013-14) to 10.6% (2022-23).
  • Export Weakness: Exports as a share of GDP fell from 25.2% (2013-14) to 22.7% (2023-24); exports remain concentrated in non-labour-intensive goods.
  • R&D Deficit: R&D spending is below 0.7% of GDP, much lower than China.
  • Skill Gaps: Only 4.7% of the workforce is formally skilled (vs. China’s 24%).

Key Lessons for India

• Strategic, Long-Term Vision: China’s MIC2025 was anchored in a clear, well-funded, and time-bound strategy targeting high-value sectors. India must similarly articulate a National Industrial Strategy with sector-specific roadmaps, measurable targets, and strong coordination between central and state governments.
• Robust R&D and Innovation Ecosystem: China’s rise was powered by heavy investments in R&D and fostering public-private research partnerships. India’s R&D spending remains low (<0.7% of GDP). To catch up, India should incentivize private sector R&D, establish research parks, and promote technology transfer.
• Integrated Manufacturing Clusters and Supply Chains: China’s integrated supply chains reduced import dependence and improved domestic value addition. India must accelerate the development of plug-and-play industrial parks, strengthen MSME linkages, and ensure backward integration to boost local manufacturing.
• Focus on Skilling and Workforce Readiness: China’s skill development programs created a future-ready workforce. India, with only 4.7% formally skilled workers, needs large-scale, industry-linked vocational training, especially in electronics, renewables, and advanced manufacturing.
• Policy Stability and State Support: Consistent, long-term policy support and incentives were crucial for China. India should maintain policy stability, reduce compliance burdens, and ensure ease and cost-effectiveness of doing business.
• Support for MSMEs and Startups: MSMEs are the backbone of India’s industrial output and exports. Enhanced credit access, expanded MSME classification, and targeted support for startups can drive innovation and job creation.
• Quality, Technology, and Clean Manufacturing: China’s focus on quality and technology made its products globally competitive. India should prioritize clean tech manufacturing (solar PV, EV batteries, wind turbines), quality standards, and digital platforms for export facilitation.

General Studies Paper-2

Context: India’s development cooperation with the Global South has been showing a rising trend for the last several years.

India’s development cooperation with the Global South

• India has emerged as a key advocate for the Global South, leveraging its democratic credentials and economic growth.
• Historically, it played a leading role in The 1955 Bandung Conference, advocating decolonization and equality.
  • The formation of the Non-Aligned Movement (NAM) in 1961.
  • Establishing the G-77 in 1964 to promote South-South cooperation.
• India continues this legacy through initiatives like Proposing African Union’s inclusion in G20, which was accepted at the 2023 Delhi Summit.
• India’s development cooperation with the Global South has grown significantly, with funding nearly doubling from $3 billion in 2010-11 to $7 billion in 2023-24.
  • Key engagement methods include capacity building, technology transfer, market access, grants, and concessional finance, particularly through Lines of Credit (LoCs) under the IDEAS scheme.

Challenges

• The Global South faces challenges like food insecurity, poor health infrastructure, debt, conflict, and lack of fair representation in global policymaking.
• With rising global debt concerns and liquidity crises, India is re-evaluating the role of LoCs due to increased risks and costs.
• Traditional development assistance providers (ODA) are facing budget cuts and a shrinking aid environment, with a steep decline in global aid expected from $214 billion in 2023 to around $97 billion.
• This reduction threatens progress towards Sustainable Development Goals (SDGs), which require over $4 trillion annually by 2024, amid costlier and less predictable borrowing.

Alternatives

• Triangular Cooperation (TrC)—a partnership model involving a Global North donor, a Global South pivotal country, and a third partner country—offers a promising alternative.
• Countries like Japan, Germany, Indonesia, and Brazil have successfully implemented TrC projects, promoting shared learning and tailored solutions.
• India and Germany have initiated TrC projects in Africa and Latin America, supported further by collaborations with the US, UK, EU, and France during India’s G-20 presidency.
• These partnerships demonstrate how combining technical, financial, and human resources in TrC can effectively re-phase global development finance to achieve impactful, cost-effective results in the Global South.

Suggestions and Way Ahead

• India’s approach is rooted in its vision of inclusive development—“Sabka Saath, Sabka Vikas” and “Vasudhaiva Kutumbakam” (One Earth, One Family, One Future)—emphasizing partnership, empowerment, and shared growth for a sustainable future.
• India can help shape a more inclusive and resilient global order amid rising global inequalities and weakening development finance

General Studies Paper-3

Context

The European Commission has proposed a legally binding goal to reduce net Green House Gas emissions by 90% by 2040, compared to 1990 levels.

EU’s Recent Plans to Curb Greenhouse Gas Emissions

• The 2040 milestone is built to ensure trajectory to the 2050 climate-neutral goal, offering policy clarity to citizens, industrial investment, and global diplomacy.
• Carbon Offsets from Outside Europe: From 2036 onwards, countries can meet up to 3% of their reduction target through carbon credits generated from climate projects outside the EU.
• Technological Neutrality: The EU is open to all types of clean or low-carbon technologies to reduce pollution, like Renewable energy, Nuclear energy, Carbon capture and storage (CCS), and Carbon removal.
• Complementary Policies:
• Fit for 55 package targets a 55% cut by 2030, expanding European Union Emissions Trading System (EU ETS) and rolling out the Carbon Border Adjustment Mechanism (CBAM).
• Heavy industries may get exemptions via free permits to protect competitiveness.

India’s Commitments Emission Reductions

• India has launched the LiFE mission (Lifestyle for Environment) and updated its NDCs (Nationally Determined Contributions) under the Paris Agreement.
• Under its updated NDC 2022, India pledges:
  • 45% reduction in emissions intensity (amount of CO₂ per unit of GDP) by 2030, compared to 2005 levels.
  • 50% of installed electricity capacity will come from non-fossil fuel sources by 2030.
  • Creating a carbon sink of 2.5 to 3 billion tonnes of CO₂ equivalent (GtCO₂e) by increasing forests and tree cover.

What is the Progress under GHG Emission Reduction?

• Progress of European Union: Achieved a 37% reduction in emissions since 1990. In 2023 alone, emissions fell by 8.3%, even though the economy continued to grow.
  • The EU is now using a mix of clean energy sources like renewables (solar, wind), nuclear power, and carbon capture technology to meet its goals.
  • The EU has strong policies and tools like CBAM, ETS and Horizon Europe.
  • India’s 4th Biennial Update Report (BUR-4), highlighted a 7.93% reduction in GHG emissions in 2020 compared to 2019.
• Emission intensity (per unit GDP) saw a 36% reduction from 2005 to 2020.
• As of October 2024, India’s installed electricity capacity from non-fossil fuel sources reached 46.5%, totaling approximately 203GW.
• Solar power alone accounted for roughly 92 GW of this capacity.
• India ranked 10th in the Climate Change Performance Index 2025, scoring high in GHG emissions and energy use but weaker in climate policy and renewable deployment.

Challenges in GHG Emission Reduction

• The EU faces challenges in reducing GHG emissions due to industrial resistance seeking relaxed rules, reliance on foreign carbon credits that may shift the burden to poorer nations, and slow progress in the transport sector, where road emissions remain high.
• India’s Heavy Dependence on Coal: Coal still fuels ~75% of Indian emissions. Also, the steel industry is growing fast and still depends heavily on coal, which adds to the pollution problem.
• Climate Targets Need to Be Stronger: India has set climate goals ( NDCs), but experts say they are not strong enough to limit global warming to 1.5°C.
• Policy Gaps Remain: India is setting up a carbon market (where companies can trade the right to emit carbon), but it is still optional and not fully working yet.

What are the Suggestions?

• The EU should tighten offset rules by allowing only high-integrity credits, speed up transport decarbonisation by advancing vehicle mandates, and boost funding—using CBAM revenues—to support vulnerable regions and sectors.
• India can raise its NDC ambition with deeper emission cuts across key sectors, promote a green industrial shift (e.g., hydrogen, electric arc furnaces), make carbon trading mandatory by 2026 with strict oversight, and improve energy efficiency through stronger standards and expanded solar and EV adoption.

Concluding remarks

• The EU’s 2040 climate target represents a critical midpoint between ambition and feasibility in the journey toward net zero.
• While the inclusion of carbon offsets provides tactical flexibility, it also raises important ethical and governance questions.
• For India and the Global South, it reinforces the need to advocate for just and equitable climate action in global platforms while preparing domestic policies for a green future.

General Studies Paper-3

Context: The Telangana Gig and Platform Workers’ Union (TGPWU)urged the State government to ensure minimum wages, legal recognition, and comprehensive welfare schemes, for gig and platform workers.

Who are gig workers?

• The World Economic Forum defines the gig economy as short-term, task-based work facilitated by digital platforms connecting workers with customers.
• In India, gig workers are considered “self-employed,” with increasing female participation.
• Gig work includes web-based tasks like content writing and software development, and location-based services like driving and food delivery through platforms such as Ola and Zomato.
• Gig workers are paid per task, enjoying flexible work outside the traditional 9-to-5 model.

Related Steps

• The 2025 Union Budget introduced steps to formally recognise gig and platform workers and extended social protection schemes to them.
• The Code on Social Security, 2020, legally defined gig and platform workers as those engaged in non-traditional employer-employee arrangements.
• Recent initiatives like e-Shram registration, digital ID cards, and health coverage under Ayushman Bharat show the government’s recognition of gig workers.

Challenges

• The revised Periodic Labour Force Survey (PLFS) 2025 has not made significant changes to accurately reflect the diverse nature of gig and platform work.
• Despite projections estimating the gig workforce to reach 23.5 million by 2029-30, India’s main labour survey still categorizes gig workers under broad groups like ‘self-employed’ or ‘casual labour,’ leading to their statistical invisibility.
• This lack of clear classification hampers effective policy-making and equitable access to social security schemes established under the Code, such as the Social Security Fund and National Social Security Board, which depend on accurate data for inclusive welfare planning.

Conclusion and Way Forward

• The 2025 PLFS revision improved sample size and rural coverage; it still does not clearly define or capture gig work.
• To ensure inclusive policymaking, India can revise PLFS classifications or add specific modules for gig workers.
• Governments and platforms must collaborate to define clear legal protections and offer tailored social security like health and pension plans.
• Platforms should ensure transparency, fair pay, and good working conditions.

General Studies Paper-3

Context: The Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) marks 50 years since it entered into force.

About

• Genesis: CITES (the Convention on International Trade in Endangered Species of Wild Fauna and Flora) is a pioneering global agreement originally conceived in 1963 at a meeting of the International Union for Conservation of Nature (IUCN).
• Aim and Scope: CITES is a voluntary international agreement between governments, aiming to ensure that international trade in specimens of wild animals and plants does not threaten their survival.
  • It operates through a licensing system that regulates all import, export, and re-export of listed species and their parts or derivatives.
• Administration and Structure: The CITES Secretariat is administered by the United Nations Environment Programme (UNEP) in Geneva, Switzerland.
  • As of 2024, there are 185 Parties (countries or regional organizations) to CITES; India ratified the Convention in 1976.
  • While CITES is legally binding on its Parties, it does not replace national laws. Instead, each Party must implement CITES through its own domestic legislation.

Significance

• CITES was the first global agreement to address wildlife trade at an international level, providing a framework for cooperation to prevent over-exploitation and extinction due to trade.
• It remains a cornerstone of international efforts to protect biodiversity, with its effectiveness relying on the commitment and enforcement by its member Parties.

Key Initiatives

• Monitoring the Illegal Killing of Elephants (MIKE) Programme: Adopted at the 10th CoP Harare (1997), this site-based system monitors trends in the illegal killing of elephants across Africa and Asia.
• International Consortium on Combating Wildlife Crime (ICCWC): Launched in 2010, ICCWC is a partnership between CITES and other organizations to support national law enforcement agencies in combating wildlife and forest crime.
• Strategic Vision 2021–2030: This framework guides CITES’ efforts to ensure wildlife trade supports global biodiversity goals, sustainable development, and the Kunming-Montreal Global Biodiversity Framework.
• CITES Tree Species Programme: Launched in 2024, focuses on improving the management and sustainable use of tree species listed under CITES.

General Studies Paper-3

Context

India has completed eight years since the implementation of the Goods and Services Tax (GST) on July 1, 2017, a significant reform aimed at creating a “One Nation, One Tax” regime.

Key Aspects of GST

• Destination-Based Indirect Tax: GST is a destination-based tax, meaning the tax revenue accrues to the State where the goods or services are consumed, not where they are produced.
  • This is a key shift from the earlier origin-based taxation system.
• Dual GST Model: India has adopted a dual GST model, meaning both the Centre and States/Union Territories (UTs) levy taxes on the supply of goods and services.
  • Central GST (CGST): Collected by the Union government,
  • State GST (SGST)/UTGST: Collected by the States/UTs,
  • Integrated GST (IGST): Levied by the Centre on inter-state transactions and imports, and later apportioned between Centre and consuming State.
• Input Tax Credit (ITC): GST enables seamless flow of input tax credit across the supply chain. Businesses can claim credit for taxes paid on inputs used to supply taxable goods/services, thereby avoiding cascading of taxes.
• Zero-Rated Exports: Exports under GST are treated as zero-rated supplies. Exporters can claim refunds of input taxes paid, promoting competitiveness of Indian goods and services in global markets.
  • The current GST structure consists of four main rate slabs: 5 percent, 12 percent, 18 percent and 28 percent.
• There are three special rates: 3 percent on gold, silver, diamond and jewellery, 1.5 percent on cut and polished diamonds and 0.25 percent on rough diamonds.
  • A GST Compensation Cess is also levied on select goods such as tobacco products, aerated drinks and motor vehicles at varying rates. It is used to compensate states for any revenue loss resulting from the transition to the GST system.

Achievements of GST in 8 Years

• Unified Taxation Structure: GST subsumed 17 Central and State taxes and 23 cesses, reducing fragmentation and simplifying the tax regime.
• Increased Revenue Realisation: In 2024–25, GST recorded its highest-ever gross collection of ₹22.08 lakh crore, reflecting a year-on-year growth of 9.4 percent.
• The average monthly collection stood at ₹1.84 lakh crore.
• The number of active taxpayers has also seen a sharp rise. As of 30 April 2025, there are over 1.51 crore active GST registrations.

Shortcomings of GST

• Exclusion of Key Sectors: Important items such as petroleum (crude oil, diesel, petrol, natural gas, ATF) and alcohol for human consumption remain outside GST — defeating the goal of a truly unified tax system.
• Complex Rate Structure: India has multiple tax slabs — 0%, 5%, 12%, 18%, and 28% — along with special rates (0.25%, 1%, 3%) and Compensation Cess on luxury/sin goods. This increases classification disputes and litigation.
• Frequent Changes in Law and Compliance: Businesses, especially MSMEs, face difficulties due to frequent changes in return filing formats, late fee penalties, and evolving interpretation of rules.
• Inverted Duty Structure: Sectors like textiles and footwear face an inverted duty structure, where tax on inputs is higher than output, leading to working capital blockages.
• Input Tax Credit Restrictions: ITC is often denied due to procedural lapses or supplier non-compliance, causing unjustified burden on recipients.
• Delays in Dispute Resolution: The GST Appellate Tribunal (GSTAT) was not operational for years, leading to pendency of thousands of appeals and burdening High Courts.

Reforms Needed in GST (GST 2.0)

• Inclusion of Petroleum Products and Electricity: Current exclusions cause tax cascading and reduce input credit availability for sectors like logistics and manufacturing.
  • Inclusion would expand the tax base, make pricing transparent, and remove distortion across sectors.
• Simplify Compliance for MSMEs: Introduce quarterly returns with simplified formats for small taxpayers.
  • Provide automatic ITC reconciliation tools to avoid mismatches.
• Broaden the Tax Base: Review and rationalise exemptions, especially those with limited benefit or causing distortions.
  • Include gig economy and digital services more comprehensively.
• Improve Input Tax Credit (ITC) Mechanism: Denial of ITC for procedural lapses (e.g., supplier not uploading invoice) has led to unfair burdens.
  • Allow provisional credit and improve supplier-buyer reconciliation tools.
• Rationalisation of GST Slabs: Reduce slab multiplicity to improve compliance and reduce litigation.
• Reform in GST Council Functioning: Promote greater transparency, stakeholder consultations, and time-bound decisions.
  • Consider weighted voting in cases of deadlock to uphold cooperative federalism.

Concluding remarks

• Eight years since its rollout, GST has transformed India’s indirect tax landscape, but it remains a work in progress.
• As India moves toward becoming a $5 trillion economy, GST 2.0 reforms are not just desirable—they are essential for sustaining growth, ensuring revenue stability, and promoting cooperative federalism.

General Studies Paper-2

Context

External Affairs Minister S Jaishankar’s second visit to Europe within a month reflects a deepening India-Europe engagement.

India-EU Relations

• Political cooperation: India-EU relations date to the early 1960s, and a cooperation agreement signed in 1994 took the bilateral relationship beyond trade and economic cooperation.
  • The first India-EU Summit, in 2000, marked a landmark in the evolution of the relationship.
  • At the 5th India-EU Summit at The Hague in 2004, the relationship was upgraded to a ‘Strategic Partnership’.
• Economic cooperation: India’s bilateral trade in goods with the EU was USD 137.41 billion in 2023-24, making it the largest trading partner of India for goods.
  • EU is India’s largest trading partner for goods, 17% of India’s exports go to the EU and 9% of EU exports come to India.
• India-EU Free Trade Agreement (FTA) Negotiations:
  • Negotiation Resumption: Talks resumed in June 2022 after an 8-year hiatus (stalled in 2013 due to market access disagreements).
  • Objective: To finalize a comprehensive trade agreement covering goods, services, investments, and geographical indications.
• Negotiation Structure: The agreement will be concluded in two phases, following India’s phased approach used in previous FTAs (e.g., with Australia).
  • This is partly due to the volatile global trade environment, including US tariff actions.
  • Prime Minister Narendra Modi and the European Commission President agreed to seal the deal by the end of this year.
• Other areas of cooperation:
  • The India-EU Water Partnership (IEWP), established in 2016, aims to enhance technological, scientific, and policy frameworks in water management.
  • In 2020, there was an agreement for research and development cooperation in the peaceful uses of nuclear energy between the European Atomic Energy Community and the Government of India.
  • India and the EU established the Trade and Technology Council (TTC) in 2023. The TTC is a forum for the two parties to collaborate on trade, technology, and security. The TTC’s goals.
• India’s Two Levels of Engagement
  • EU as a bloc: Regular summits, strategic dialogues on trade, tech, security, foreign policy.
  • Bilateral with major EU members: Deepening ties with France, Germany, Nordic and Eastern European countries.

Issues/Factors Shaping India-Europe Relations

• Geopolitical Shifts and Strategic Autonomy: Return of war in Europe (Russia–Ukraine) and the global erosion of multilateralism.
  • Europe seeking greater strategic autonomy from the US (especially post-Trump era).
  • India aims to maintain a multipolar world order while diversifying its partnerships beyond the US, Russia, and China.
• Trade and Economic Cooperation: EU is one of India’s largest trade and investment partners.
  • India and EU are keen on concluding India–EU Free Trade Agreement (FTA) and Investment Agreement.
  • IMEC (India–Middle East–Europe Corridor) provides opportunities for the strategic connectivity and trade.
• Technology and Digital Sovereignty: Both have the shared interest in promoting digital technologies as public goods.
  • India can benefit from Europe’s strengths in deep tech, semiconductors, digital manufacturing.
• Defence and Strategic Cooperation: Europe is a key arms supplier to India.
  • India seeks joint development, co-production, and technology transfer.
  • Europe is rearming due to the Ukraine war; India is pursuing Atmanirbharta (self-reliance).
• Mobility and People-to-People Ties: Need for a high-ambition mobility agreement to promote student and academic exchanges, research partnerships.
  • Skilled migration and tech workforce integration.
• Indo-Pacific and Maritime Strategy: Europe increasingly views the Indo-Pacific as a strategic priority.
  • India is working with France, Germany, and others to promote free and open Indo-Pacific.
• Shared goal: Prevent coercion by any hegemonic power (implied reference to China).

Europe’s Internal Challenges

• Political Fragmentation and Rise of Nationalism: Increasing polarisation within EU member states.
  • Rise of right-wing populism and Euroscepticism (e.g., in Hungary, Italy, Poland).
  • Despite Brexit, these forces challenge EU unity and the idea of European integration.
• Economic Strains: Inflationary pressures, energy crises post-Ukraine war, and post-pandemic recovery.
  • Supply chain vulnerabilities and deindustrialisation risks due to reliance on external sources.
  • Pressure to achieve digital and green transitions while maintaining economic competitiveness.
• Immigration and Identity Crisis: Europe is facing uncontrolled immigration from Africa, West Asia, and Eastern Europe.
  • This is causing strain on public services and rise of xenophobia and anti-immigrant politics.
  • There is a cultural anxieties over national identity vs European values.
• Institutional and Policy Faultlines: Divergences among member states on issues like defence spending, fiscal policy, migration burden-sharing.
  • Frictions in EU governance, especially between Western and Eastern Europe.
• Defence Dependence and Strategic Autonomy: Long-standing dependence on US and NATO for defence.
  • The need for a unified European security policy grows amid US unpredictability and regional threats.

India’s Role in Addressing Europe’s Internal Challenges

• Strategic and Defence Partnership: India’s defence procurement and co-development with France and other European nations supports Europe’s defence industry.
  • Shared interest in strategic autonomy and multipolarity aligns with Europe’s need to reduce US dependency.
• Economic and Trade Cooperation: India is a fast-growing market for EU exports and a source of affordable, skilled labour.
  • Concluding the India–EU Free Trade and Investment Agreements can help diversify Europe’s economic partnerships.
  • India is central to the success of IMEC (India–Middle East–Europe Corridor), helping secure long-term trade and energy routes.
• Migration and Mobility: Europe’s ageing population needs skilled workers; India’s young workforce can help address this through bilateral mobility partnerships, academic exchanges, especially in STEM.
• Digital and Technological Cooperation: India offers trusted partnerships in digital public infrastructure, AI governance, and cybersecurity.
  • Both share a vision of tech as a public good.
  • Indian IT and innovation sectors can enhance Europe’s digital competitiveness.
• Green Energy and Sustainability: India’s leadership in solar energy, biofuels, and green hydrogen aligns with Europe’s green goals.
  • Partnerships in climate finance, clean energy tech, and sustainable agriculture help the EU meet green targets.
• Multilateralism and Rule-Based Order: India supports multilateral reforms (e.g., UN, WTO) aligned with EU values.
• In a fragmented world, both India and Europe can co-lead coalitions based on norms, not coercion.

Challenges in the India – EU Relations

• India’s Stand on Ukraine War: Europe expects India to be more critical of Russia; India maintains strategic neutrality.
• EU’s Stand on Pakistan and Terrorism: India expects the EU to hold Pakistan accountable for state-sponsored terrorism — especially given Europe’s own experience with Islamist terrorism.
• Slow Progress on Trade Agreements: The India–EU Free Trade Agreement (FTA) negotiations, started in 2007, have faced multiple deadlocks.
• Carbon Border Adjustment Mechanism (CBAM) imposed by the EU creates additional trade barriers for India.
• Human Rights and Normative Pressure: EU often adopts a prescriptive stance on India’s internal matters (e.g., Kashmir, CAA, farm laws).
• India views this as interference in domestic affairs, causing diplomatic friction.
• Regulatory and Standards Barriers: EU’s strict regulations on data privacy, digital taxation, environmental standards, and labour laws are hurdles for Indian exporters and tech firms.
• Media stereotypes and limited public awareness in Europe with respect to India hinder people-to-people ties.

Way Ahead

• Fast-Track Trade and Investment Agreements: Conclude the long-pending India–EU Free Trade Agreement and Investment Protection Agreement.
• Deepen Strategic and Defence Cooperation: Move beyond buyer-seller relationship to joint development and co-production of defence technologies.
• Expand Mobility and Education Partnerships: Finalise a comprehensive mobility agreement for skilled professionals, students, and researchers.
• Build Resilient Supply Chains: Diversify away from China by promoting trusted, transparent supply chains.
• Leverage initiatives like IMEC (India-Middle East-Europe Corridor) for logistics, energy, and trade.
• Enhance People-to-People and Cultural Ties: Promote tourism, media engagement, and cultural exchanges to break stereotypes and deepen mutual understanding.