27 October 2025

• PM Modi addressed the 22nd ASEAN–India Summit (Kuala Lumpur, 2025) virtually.
• India announced 2026 as “ASEAN–India Year of Maritime Cooperation.”
• Summit focused on finalising the ASEAN–India Trade in Goods Agreement (AITIGA) review and adopting the Plan of Action 2026–2030.
• India reaffirmed partnership in maritime security, digital inclusion, food security, and supply chain resilience.

Key Points

• Strategic Focus: Strengthen maritime, trade, education, and technology cooperation.
• Trade Pact: Review of AITIGA (2010) to boost economic potential.
• Plan 2026–2030: Cooperation in green energy, cybersecurity, health, and innovation.
• Global South: India, ASEAN as partners for inclusive development.
• HADR Cooperation: India’s active role in disaster relief in Southeast Asia.
• High-Level Engagements: Visits by leaders of Indonesia, Singapore, and the Philippines underline ASEAN’s strategic importance.

Static Linkages

• ASEAN founded (1967) – Bangkok Declaration; HQ – Jakarta, Indonesia.
• India–ASEAN ties: Dialogue Partner (1992), Summit Level (2002), CSP (2022).
• Policies: Look East (1992) → Act East (2014); aligns with SAGAR and IPOI.
• Trade: ASEAN – India’s 4th largest trading partner (~$131 bn in 2023–24).

Critical Analysis

• Pros
  • Strengthens India’s Indo-Pacific role and economic diversification.
  • Boosts maritime security and blue economy initiatives.
  • Reinforces India’s Global South leadership.
• Challenges
  • Trade imbalance; implementation delays in AITIGA, connectivity projects.
  • South China Sea tensions may restrict maritime cooperation.
  • Need for better digital and logistics integration.

Way Forward

• Fast-track AITIGA review.
• Accelerate IMT Highway and Kaladan projects.
• Deepen blue economy and marine research.
• Institutionalise regional HADR cooperation.   Expand Digital Public Infrastructure (DPI) to ASEAN.

COUNTOURS OF CONSTITUTIONAL MORALITY

• Renewed judicial focus on “Constitutional Morality” in India through key judgments (Sabarimala, Puttaswamy, Manoj Narula, NCT of Delhi).
• The debate stems from the broader relationship between law and morality — whether law should enforce moral values or merely reflect them.
• Origin traced to George Grote (1846) and popularized in India by Dr. B.R. Ambedkar in the Constituent Assembly debates.

Key Points

• Meaning: Acting in accordance with the values of the Constitution — justice, equality, liberty, fraternity, and rule of law.
• Ambedkar’s View: Democracy in India must rest on constitutional morality, not political convenience.
• Judicial Use:
  • Manoj Narula (2014): Norms of constitutional conduct.
  • Sabarimala (2018): Public morality ≠ constitutional morality.
  • Puttaswamy (2017): Protects individual dignity and privacy.
  • NCT of Delhi (2018): Promotes cooperative federalism.
• Current Relevance: Debates on faith vs rights, gender equality, criminalization of politics, and Centre-State relations.

Static Linkages

• Dharma in ancient texts integrated law and morality.
• A.V. Dicey: Differentiated constitutional law and constitutional conventions.
• Preamble, DPSPs, and Fundamental Duties embed moral principles.
• Rule of Law: Foundation of constitutional morality.

Critical Analysis

• Pros:
  • Ensures rule of law and ethical governance  Protects minority rights
  • Strengthens democracy beyond majoritarianism
• Cons:
  • Risk of judicial overreach  No clear legal definition
  • Possible conflict with public morality

Way Forward

• Promote constitutional values via education and civil services training
• Strengthen ethical standards in public office  Ensure judicial restraint and balance
• Encourage public discourse on constitutional ethics.

INDIA-NEPAL ECONOMIC TIES RESET

• On October 1, 2025, RBI Governor Sanjay Malhotra announced three major steps towards internationalising the Indian rupee (INR), with direct implications for India–Nepal economic ties.
• These measures aim to promote cross-border rupee trade, reduce dollar dependency, and strengthen regional financial integration, especially with Nepal, Bhutan, and Sri Lanka.
• The move aligns with India’s broader objective of making INR a global trade settlement currency and promoting financial diplomacy in South Asia.

Key Points

1. Cross-border INR lending:

• RBI allows Authorised Dealer (AD) banks to lend INR to non-residents from Nepal, Bhutan, and Sri Lanka for trade and investment purposes.
• Expansion of Special Rupee Vostro Accounts (SRVAs):
  • Foreign banks can now use SRVAs with Indian banks to invest in corporate bonds and commercial papers, besides central government securities.
• 3.Transparent Reference Rate Mechanism:
  • A reference rate for major partner currencies will be established to facilitate INR-based pricing and transactions.
• Peg Stability:
  • The INR–NPR peg (₹1 = ₹1.6 NPR) has ensured exchange rate stability for Nepal, supporting trade predictability.
• Trade Data:
  • India accounts for 65% of Nepal’s international trade and 67% of its exports.
  • Indian FDI in Nepal: $670 million (33% of total FDI stock).

Static Linkages

• Balance of Payments (BoP) – Components: Current & Capital Account.
• Foreign Exchange Management Act (FEMA), 1999 – Governs cross-border transactions and AD bank operations. Vostro/Nostro Accounts Concept – Mechanism for international settlements.
• Rupee Trade Mechanism (2022) – Introduced to promote INR settlement of exports/imports.
• Monetary Policy Objectives – Stability, liquidity, growth promotion.
• SAARC & BIMSTEC economic cooperation frameworks – Regional economic integration efforts.

Critical Analysis

• Advantages / Opportunities:
  • Strengthens INR internationalisation, aligning with Atmanirbhar Bharat vision.
  • Helps Nepalese businesses access cheaper institutional credit via Indian banks.
  • Reduces dollar dependency and mitigates forex volatility.
  • Boosts India–Nepal trade, FDI, and supply chain integration.
  • Enhances financial trust and interoperability between RBI and Nepal Rastra Bank.
• Challenges / Concerns:
  • Risk of credit default or non-repayment across jurisdictions.
  • Need for policy harmonisation between RBI and NRB (Nepal Rastra Bank).
  • Potential perception of Indian dominance in Nepal’s financial system.
  • Compliance complexities with FEMA, KYC, and anti- money laundering norms.
  • INR liquidity management across borders must remain prudent and transparent.

Way Forward

• Establish a bilateral Rupee Trade Settlement Mechanism (like India–Russia model).
• Develop joint financial protocols and credit rating frameworks between RBI & NRB.
• Encourage regional financial institutions under BIMSTEC/South Asian frameworks.
• Promote INR-denominated instruments (bonds, trade credit) for regional investors.
• Leverage this to boost cross-border digital payment systems (UPI–NIPL initiatives).

FOREIGN BANKS EYE INDIA’S GROWTH

• Emirates NBD Bank (ENBD), UAE’s largest lender, will acquire 60% stake in RBL Bank via $3 billion (₹26,850 crore) primary infusion — one of the largest FDI deals in India’s banking sector.
• Recent foreign investments in Indian banks:
  • SMBC (Japan) – $1.6 billion for 20% in YES Bank.
  • Abu Dhabi’s IHC – $1 billion controlling stake in Sammaan Capital.
  • Blackstone-backed Asia II Topco XIII – ₹6,196 crore in Federal Bank.
• Reflects strong global confidence in India’s economic growth and banking reforms.

Key Points

• Regulatory openness: RBI now more receptive to strategic foreign capital.
• Improved financial health:  
  • NPAs at record lows.
  • ROA (PSBs): -0.5% (FY19) → 1% (FY25); Private banks: 0.2% → 1.2%.
  • CET Ratio: PSBs – 13%; Private – 16%.
• Banks positioned for sustained double-digit credit growth.
• Foreign banks’ interest: India seen as a large, under-penetrated, high-growth market.
• ENBD–RBL deal to boost trade finance, wealth management, and corporate governance.

Static Linkages

• FDI Policy:
  • Private banks – FDI up to 74% (automatic up to 49%, govt approval beyond).
  • Public sector banks – FDI up to 20% (govt route).
• Basel III Norms: Focus on capital adequacy (CET1) and risk management.
• IBC, 2016: Strengthened asset quality and reduced NPAs.
• Narasimham Committee Reports: Recommended liberalisation and bank consolidation.
• Economic Survey 2023–24: Emphasises banking sector resilience and rising credit demand

Critical Analysis

• Pros
  • Strengthens banks’ capital base and credit capacity.
  • Brings global technology and governance standards.
  • Enhances foreign investor confidence in India’s stability.
  • Supports India’s Viksit Bharat 2047 vision.
• Cons
  • Possible foreign control in key financial institutions.
  • Cultural and operational integration issues.  Risk of short-term speculative inflows.
  • Need for regulatory vigilance to avoid systemic risks.

Way Forward

• Maintain prudential caps on foreign ownership.
• Encourage long-term strategic capital, not short-term inflows.
• Strengthen RBI supervision of cross-border mergers.
• Deepen domestic bond markets for capital diversification.
• Promote bank consolidation and governance reforms.

• The Trump administration imposed sanctions on Russian oil giants Rosneft and Lukoil, escalating US-Russia economic tensions.
• The sanctions freeze all US assets of these companies and prohibit American firms from engaging in transactions with them.
• The move affects India, China, and other countries reliant on Russian crude, potentially inviting secondary sanctions.
• India is a major importer of Russian crude, especially through Rosneft-linked Nayara Energy’s Gujarat refinery (~4,00,000 bpd).

Key Points

• Production: Rosneft 3.7 million bpd, Lukoil 1.6 million bpd.
• Impact on India:
  • Threat to supply security and refining operations.
  • Discounted Russian crude at risk; may need alternative sources.
• Global Oil Market:
  • Contributes to market fragmentation.  
  • Push for multipolar energy trade, challenging US dollar dominance.
• Diplomatic Angle:
  • India-US BTA talks ongoing; energy cooperation may reduce Russian dependence.
• Alternative Payments: Rupee-Rouble, Yuan-Rouble transactions being explored.

Static Linkages

• Energy Security: Importance of diversified crude supply for national energy security.
• Global Geopolitics: Historical context of sanctions as a foreign policy tool (e.g., Iran, Iraq).
• Economic Diplomacy: Bilateral and multilateral trade agreements, e.g., India-US BTA.
• Currency Systems: Role of reserve currencies in international trade; alternative payment mechanisms.

Critical Analysis

• Pros: Leverages Russia, pushes India to diversify energy.
• Cons: Secondary sanctions risk, supply disruption, higher domestic fuel costs.
• Stakeholders:
  • India: affordable energy vs strategic ties with Russia.
  • Russia: bypass Western financial dominance.
  • US: weaken Russia economically.

Way Forward

• Diversify crude sources; expand strategic reserves.
• Increase renewable energy capacity.
• Use local currency payments to reduce dollar dependency.
• Strengthen India-US energy cooperation.