Skip to content TRADE DEFICIT WIDENS 93% IN SEPTEMBER
KEY HIGHLIGHTS
- India’s trade deficit surged 93% in September 2025 to $16.6 billion due to faster import growth.
- For April–September 2025, the overall deficit fell 2.3%, showing improved trade balance.
- Goods exports rose, while services exports declined, affecting total export growth.
Key Points
- September 2025:
- Exports: $67.2B (+0.8%)
- Imports: $83.8B (+11.3%)
- Trade Deficit: $16.6B (vs $8.6B last year)
- H1 FY2025 (Apr–Sep):
- Exports: $413.3B (+4.45%)
- Imports: $472.8B (+3.55%)
- Deficit down 2.3%.
- Goods exports: +6.7% ($36.4B) despite 50% U.S. tariffs.
- Services exports: −5.5% ($30.8B).
- Exports to U.S. up 13.4% in H1 but falling monthly.
Static Linkages
- Trade Deficit: Difference between imports and exports under the Current Account of BoP.
- Exchange Rate Effect: Persistent deficit → rupee depreciation.
- Tariffs & Protectionism: Affect competitiveness and market access.
- Comparative Advantage: India’s goods vs. services strength.
- Trade Policy: Guided by WTO norms and bilateral FTAs.
Critical Analysis
- Positives:
- Merchandise exports resilient.
- Deficit improved in H1.
- Strong supply chain adaptability.
- Negatives:
- Services exports weakening.
- Rising import bill could hurt rupee.
- Tariff exposure to U.S. remains a risk.
Way Forward
- Diversify export markets.
- Boost digital and service exports
- Strengthen manufacturing under PLI and Make in India.
- Simplify trade procedures (NTFAP).
- Maintain forex reserves for currency stability.
NAVIGATING GLOBAL ECONOMIC SHIFT
KEY HIGHLIGHTS
- The global economic order is shifting amid the US–China power rivalry.
- Rise of state-led capitalism and populist- autocrats reshaping markets and state control.
- Trade wars, digital colonialism, and de- dollarisation are redefining global alignments.
- India and the Global South face a crucial moment to shape a fair, multipolar world order.
Key Points
- State–Capital Nexus: Shift from free-market capitalism to crony state capitalism serving oligopolies.
- US Strategy: Supply chain reshoring, tariffs on 70+ nations, sanctions on 30+, and control of trade routes and resources.
- Digital Dominance: Big Tech monopolies and digital currencies eroding economic sovereignty.
- Aid Withdrawal: G7 aid cuts ($44 bn) deepen poverty and instability in developing nations.
- Global South Response: Push for currency diversification, bilateral trade, gold reserves, and localised production.
- India’s Role: Opportunity to reform global financial institutions, lead BRICS, and promote fair trade.
Static Linkages
- Economic nationalism and mercantilism theories.
- Washington vs. Beijing Consensus on development models.
- Role of IMF–World Bank in shaping the post-war order.
- Concept of sovereign wealth funds and non-alignment policy.
- Digital sovereignty and data localisation.
Critical Analysis
- Pros
- Multipolar order reducing Western dominance.
- Strengthened South–South cooperation.
- Technological sovereignty and policy autonomy.
- Cons
- Rise of plutocracy, debt distress, digital exploitation.
- Weakening of democracies and regulatory systems.
- Fragmented global financial order. Ethical/Constitutional Angle:
- Challenges principles of economic justice (Article 39) and privacy rights.
Way Forward
- Reform IMF–World Bank voting rights for equitable representation.
- Create a Global Debt-Relief Framework.
- Promote South–South trade and local currency settlements.
- Strengthen public sector for strategic resilience.
- Develop sovereign AI/data ecosystems.
- Invest in R&D, education, and innovation.
THE ‘CRITICAL FACTOR’ IN CLEAN ENERGY
KEY HIGHLIGHTS
Context of teh News
- India targets 500 GW renewable capacity by 2030 and net zero by 2070.
- Govt launched National Critical Mineral Mission (NCMM) worth ₹34,300 crore to boost exploration, mining, processing, and recycling.
- GSI (2023) found 5.9 million tonnes of lithium in Jammu & Kashmir.
- Amendments to the Mines and Minerals (Development and Regulation) Act (2021 & 2023) allow private exploration.
- India imports ~100% lithium, cobalt, nickel and >90% REEs, creating supply risks.
Key Points
- Critical minerals like lithium, cobalt, nickel, and REEs are vital for EVs, solar panels, wind turbines, batteries.
- EV market to grow at 49% CAGR (2023–2030) under EMPS 2024.
- China controls 60% REE output and 85% processing.
- Mining GDP share: 2.5% (India) vs 13.6% (Australia).
- Recycling gap: 4 million tonnes of e-waste yearly, but only 10% recycled.
- Key agencies: IREL, NMDC, KABIL working in extraction and overseas sourcing.
Static Linkages
- Article 48A: Duty of State to protect the environment.
- SDGs 7 & 12: Clean energy and responsible production.
- NITI Aayog Strategy @75: Promotes resource efficiency and PPPs.
- Circular Economy: Based on 3Rs — Reduce, Reuse, Recycle.
- NCERT Geography: Minerals as non-renewable resources.
Critical Analysis
- Pros:
- Boosts self-reliance & energy security
- Reduces import dependence
- Creates jobs and R&D growth
- Supports green tech innovation
- Challenges:
- High cost and long project timelines
- Regulatory delays & land issues
- Weak recycling and refining capacity
- Environmental risks from mining
Way Forward
- Simplify clearances and offer fiscal incentives (PLI, tax breaks)
- Build PPP-based mineral & recycling hubs
- Promote urban mining and enforce Battery Waste Rules, 2022
- Strengthen R&D via IITs, CSIR, GSI
- Forge international partnerships (Australia, Chile, Argentina)
- Create strategic mineral reserves
REFUGEES, INFILTRATORS
KEY HIGHLIGHTS
Context of the News
- Union Home Minister Amit Shah called for distinguishing refugees from infiltrators.
- India has no single refugee law and is not a signatory to the 1951 UN Refugee Convention or its 1967 Protocol.
- From April 2025, the Immigration and Foreigners Act replaced three old laws, subsuming the Immigration (Carriers’ Liability) Act, 2000.
- A new notification exempted Tamil refugees (who entered before Jan 9, 2015) from penal provisions, highlighting selective humanitarian relief.
Key Points
- India hosts over 2.11 lakh refugees/persons of concern (UNHCR, June 2023).
- No legal definition of “refugee” — all foreign nationals fall under the Citizenship Act, 1955.
- CAA 2019 grants citizenship to six religious minorities from Pakistan, Afghanistan, Bangladesh — excluding Rohingya and Sri Lankan Tamils.
- Tibetan refugees (≈63,000) have a 2014 policy; Sri Lankan Tamils (≈90,000) do not.
- Lack of uniform policy leads to arbitrary treatment and religion-based exclusions.
Static Linkages
- Article 14 & 21 – Equality and Right to Life apply to all persons.
- Article 51(c) – Respect for international law. NHRC role in refugee protection.
- NHRC v. State of Arunachal Pradesh (1996) upheld refugee rights under Article 21
Critical Analysis
- Pros:
- Streamlined legal framework post-2025.
- Balances security with selective humanitarian aid.
- Cons:
- No comprehensive refugee law.
- Religion-based exclusions violate Article 14.
- Overlapping authority between Centre and States.
- Risks of harassment for genuine refugees.
Way Forward
- Enact a Refugee and Asylum Law ensuring uniform treatment.
- Set up an independent Refugee Commission.
- Improve Centre–State coordination and data systems.
- Train officials on human rights and refugee management.
- Pursue a regional framework (SAARC/BIMSTEC) for refugee cooperation.
EVOLUTION, REVOLUTION
KEY HIGHLIGHTS
Context of the News
- The 2025 Nobel Prize in Economic Sciences has been awarded to Philippe Aghion, Peter Howitt, and Joel Mokyr.
- They explored the drivers of long-term growth through innovation and the process of “creative destruction.”
- Their work, rooted in Schumpeter’s idea of capitalism as an evolutionary system, formalised this into the Endogenous Growth Theory (1992).
- The award comes amid geopolitical protectionism, challenging the idea that free markets alone drive innovation.
Key Points
- Creative Destruction: Innovation replaces old technologies and firms, driving growth but also disruption.
- Endogenous Growth Theory: Long-term growth depends on internal drivers — R&D, education, and innovation.
- Schumpeter’s Vision: Capitalism thrives on innovation but assumes free markets and open competition.
- State-led Innovation: Models like China’s developmental capitalism show how governments can direct innovation.
- Relevance: The Nobel highlights the tension between market-led and state-led innovation systems in today’s fractured global economy.
Static Linkages
- Innovation as a factor of production in growth theories.
- Schumpeter’s role in defining capitalist evolution.
- India’s innovation policies — Startup India, Atmanirbhar Bharat, National Research Foundation.
- Industrial policy shift: from regulation to innovation-led development.
Critical Analysis
- Positives:
- Links innovation, human capital, and productivity.
- Useful for designing innovation ecosystems and competition policy.
- Limitations:
- Underplays the role of state-directed innovation.
- Assumes ideal market conditions.
- Overlooks inequality, monopolies, and geopolitical influence.
Way Forward
- Balance: Combine market competition with strategic state support.
- Reform: Strengthen institutions, IP rights, and academic freedom.
- Inclusivity: Build skills and safety nets for displaced workers.
- Global Cooperation: Revive multilateralism in trade and science.
- India: Align Viksit Bharat @2047 with innovation-led, inclusive growth
NATO NATIONS MOVE TO BOLSTER KYIV
KEY HIGHLIGHTS
Context of the News
- U.S. Defence Secretary Pete Hegseth expects more NATO countries to buy American arms for Ukraine amid rising Russian threats.
- NATO ministers met in Brussels after Russian airspace violations in Poland and Estonia and drone disruptions in Europe.
- U.S. President Trump is considering supplying long-range Tomahawk missiles to Ukraine.
- EU proposes a “drone wall” to counter aerial threats, reflecting lessons from Ukraine.
Key Points
- NATO aims to standardize rules of engagement and strengthen eastern flank forces.
- $2 billion already committed by some NATO countries for U.S.-supplied weapons to Ukraine; UK, France, Spain, Italy expected to contribute.
- NATO prioritizes anti-drone and low-cost defence technologies inspired by Ukraine.
- NATO members target 3.5% of GDP on core military spending by 2035.
- Divergent approaches among NATO members complicate coordinated response to Russian incursions.
Static Linkages
- NATO formed in 1949; Article 5 mandates collective response to armed attacks.
- Grey-zone warfare uses tactics between war and peace (cyber, drones, misinformation).
- Russia-Ukraine conflict (2014 onwards) reflects territorial disputes and sovereignty issues.
Critical Analysis
- Pros:
- Strengthens NATO deterrence and Ukraine’s defence.
- Harmonized engagement rules improve operational efficiency.
- Low-cost anti-drone tech enhances defence readiness.
- Cons/Challenges:
- Risk of escalation with Russia.
- Divergent national interests may hinder NATO coordination.
- EU-NATO overlaps could cause policy confusion.
- Long-range weapons may provoke Russia.
Way Forward
- Enhance NATO interoperability and joint training.
- Promote dialogue with Russia to avoid escalation.
- Fast-track anti-drone and missile defence systems.
- Align EU defence initiatives with NATO operations.
- Encourage broader European funding for Ukraine’s defence.
EXPORTS TO US DIP 12%
KEY HIGHLIGHTS
- India’s goods exports to the US fell 12% YoY in September 2025 after 25% US tariffs came into effect on August 27.
- Overall exports grew 6.74% to $36.38B, led by UAE (+24.33%) and China (+34.18%).
- Imports surged 16.6% to $68.53B, pushing the trade deficit to $31.15B, the highest in over a year.
Key Points
- Exports:
- Goods: $36.38B (+6.74%)
- Services: $30.82B (-5%)
- Labour-intensive sectors (textiles, jute, carpets, handicrafts): -5 to -13%
- Electronics: +58%; Iron ore to China: +60%
- Imports:
- Gold: $9.6B (+107%)
- Fertilisers: $2.3B (+202%)
- Petroleum products: $14.03B (-5.85%) US imports: +11.78%; Russia: -16.69%
- US Tariffs: 25% reciprocal/penal tariffs impacting 55% of Indian exports to the US.
- Industry Impact: CITI survey: 1/3 textile exporters faced >50% turnover reduction; 85% reported inventory build-up; ~1/3 offered discounts.
Static Linkages
- Bilateral trade agreements and tariff impact Export-oriented sectors and labour-intensive industries (textiles, handicrafts)
- Diversification of energy imports (crude oil)
Critical Analysis
- Pros: Export growth in UAE, China, electronics, and iron ore sectors
- Cons: Trade deficit surged; labour-intensive exports hit; inflationary pressures from precious metal imports
- Challenges: Sustaining exports under US tariffs; balancing energy imports; protecting domestic employment
Way Forward
- Boost domestic manufacturing and import substitution in critical sectors
- Diversify export markets to reduce dependency on the US
- Strategic bilateral negotiations to mitigate tariff impact.
RARE EARTHS
KEY HIGHLIGHTS
- Indian Commerce Secretary Rajesh Aggarwal is in Washington to revive the stalled India-US trade deal.
- US Treasury Secretary Scott Bessent highlighted China’s export controls on critical minerals as “China vs the rest of the world.”
- India-US cooperation on critical minerals could provide the political push for the trade agreement.
- Recent interactions between PM Modi and US President Trump, and meetings with the new US Ambassador, have added momentum.
- India may increase energy imports from the US to offset tariffs on Russian oil.
Key Points
- US may offer India 16–18% tariff access, easing current 50% tariffs on Indian exports.
- Critical Minerals Overlap: 40 out of 50 US critical minerals (~80%) overlap with India’s list, including REEs and Platinum Group Metals.
- India has deposits of thorium, neodymium, praseodymium, dysprosium, terbium; collaboration with Japan’s Toyotsu Rare Earth India Ltd. is promising.
- Approach Difference: US focuses on mining/extraction; India on research, recycling, and sustainability.
- China dominates global critical minerals, creating price gaps; US-China tensions may accelerate India-US collaboration.
- Regulatory and environmental hurdles exist in both countries.
- US-China “grand bargain” could complicate India-US negotiations.
Static Linkages
- Indian Rare Earths Limited (IREL), thorium in monazite sands.
- WTO principles; Section 232 (US trade law).
- Role of REEs in EVs, renewable energy, and electronics.
- Strategic autonomy in foreign policy.
Critical Analysis
- Pros:
- Strengthens India-US partnership.
- Provides tariff relief for Indian exports.
- Enhances energy security and tech development through mineral cooperation.
- Cons/Challenges:
- Risk to strategic autonomy if anti-China clauses are included.
- Regulatory/environmental challenges in mining.
- Geopolitical pressure due to US dependence.
- US-China trade deals may affect India-US negotiations.
Way Forward
- Preserve India’s strategic autonomy.
- Boost domestic research, recycling, and sustainable mining.
- Explore mineral collaborations in Africa and other third countries.
- Balance environmental safeguards with industrial growth.
- Coordinate diplomacy to engage US without antagonizing China.
SC COLLEGIUM DECISION CHANGES
KEY HIGHLIGHTS
Context
- SC Collegium, led by CJI B.R. Gavai, revised its earlier transfer recommendation for Justice Atul Sreedharan.
- Initially recommended to Chhattisgarh HC (Aug 25, 2025), now recommended to Allahabad HC after government sought reconsideration (Oct 14, 2025).
- Rare instance where Collegium explicitly mentions government request.
Key Points
- Justice Sreedharan appointed to Madhya Pradesh HC in 2016; practiced under Senior Advocate Gopal Subramanium.
- Voluntarily sought transfer to J&K and Ladakh HC in 2023; returned to MP HC in 2025.
- Known for suo motu interventions:
- Strengthened scrutiny in preventive detention cases (J&K).
- Took action against inflammatory remarks by MP minister against Indian Army officer.
- Seniority impact: Would be 2nd in Chhattisgarh HC; likely 7th in Allahabad HC.
Static Linkages
- Collegium system: Articles 124(2) & 222, Constitution of India.
- Judiciary independence and separation of powers.
- Preventive detention laws and Public Safety Act (J&K).
- Suo motu powers of High Courts.
Critical Analysis
- Pros:
- Shows Collegium’s flexibility and responsiveness
- Justice Sreedharan’s proactive interventions protect citizens’ rights
- Cons/Challenges:
- Perceived executive influence in transfers
- Frequent transfers may affect continuity
- Stakeholders:
- Executive: Administrative considerations Judiciary: Balances independence with practical needs
- Citizens: Benefit from rights-protective judicial actions
Way Forward
- Increase Collegium transparency while maintaining independence
- Codify guidelines for judge transfers
- Encourage inter-HC knowledge-sharing to mitigate transfer impact.
A CUT IN THE RIGHT DIRECTION
KEY HIGHLIGHTS
- On Sept 22, 2025, India implemented a major GST rate cut to reduce tax burden and boost consumption.
- Follows a February 2025 income tax cut.
- Reform aims to lower tax-GDP ratio and stimulate growth.
Key Points
- Effective GST rate: 11% → 6.2%.
- Projected revenue loss: Rs 10T (NSS data) vs Rs 1T (experts).
- Sector-wise ETR reductions: Food: 9.5% → 3.4%
- Education & Medical: 12.4% → 4.8%
- Household Services: 39.5% → 11.3%
- Progressive cut, benefiting lower/middle- income groups.
- Tax-GDP ratio: ~18-19% → 15.5-16.5%, similar to China.
- Expected GST revenue gain from increased consumption minimal (~Rs 0.31T).
Static Linkages
- Fiscal policy, taxation, and growth principles (Economic Survey, NCERT).
- Progressive vs regressive taxes.
- Household consumption patterns (NSSO).
- Structural reforms and GDP growth.
Critical Analysis
- Pros: Reduces household tax burden, progressive, boosts growth.
- Cons: Large revenue loss, limited fiscal space, minimal revenue offset.
- Stakeholders: Households benefit; government must balance deficit and growth.
Way Forward
- Strengthen GST compliance.
- Combine with trade and investment reforms.
- Monitor consumption trends.
- Expand direct tax base.
- Enhance public expenditure efficiency.
USING SAFETY NET
KEY HIGHLIGHTS
- EPFO allows members to withdraw up to 100% of eligible balance, multiple times.
- Withdrawal categories simplified: Essential needs (illness, education, marriage), Housing, Special Circumstances (no reason needed).
- Aim: Ease liquidity for young workforce and urgent expenses.
- Committee with Finance Ministry, RBI, and Labour Ministry approved to enhance transparency.
Key Points:
- Members can withdraw multiple times; no justification needed for special circumstances.
- Streamlined categories reduce claim rejections.
- EPFO handled ~76.31 lakh COVID-19 advance claims till May 2021.
- Young workforce: 1.3 crore net payrolls annually; ~50% under 25.
- Many near-retirement members have ~Rs 1 lakh corpus.
- RBI recommends separating regulatory and fund functions, assessing liabilities, diversifying portfolio, increasing equity exposure.
Static Linkages:
- Social security schemes: EPF, Gratuity, Pension.
- RBI and Finance Ministry roles in fund management.
- Risk management lessons from IL&FS crisis.
- Workforce demographics (NSSO, Labour Stats).
Critical Analysis:
- Pros: Flexible withdrawals, reduced bureaucracy, improved oversight.
- Cons: Risk to retirement corpus, higher equity risk, potential misuse of special circumstances.
- Stakeholders: Young workforce benefits; EPFO must ensure financial sustainability.
Way Forward:
- Clear guidelines to protect retirement savings.
- Strengthen risk assessment and portfolio management.
- Educate members on prudent withdrawals. Enhance transparency through reporting.
THE NEW POWER OF RARE EARTH
KEY HIGHLIGHTS
Context
- China tightened control on rare earth exports, adding 5 elements and related materials to its restricted list.
- US threatened 100% tariffs on Chinese goods; trade talks with Xi Jinping at APEC could be affected.
- Rare earths are crucial for defence, electronics, EVs, and clean energy technologies.
Key Points
- Rare Earths: 17 metallic elements (lanthanum– lutetium) + scandium, yttrium; high density, conductivity, thermal stability.
- Applications: Electronics, EVs, wind turbines, MRI, robotics, magnets in devices and defence equipment.
- Misnomer: Abundant in crust, scarcity is due to concentrated deposits and costly extraction.
- China’s Dominance: >60% mined, >90% processed REEs globally; heavy REEs (terbium, dysprosium) strategically critical.
- Recent Move: Export licenses required for 12 REEs and refining technologies from Nov 8, 2025.
- India: Imports 65% from China; domestic production modest (~10,000 tonnes/year by IREL); EV & electronics sectors affected.
- US: Planning seabed stockpiling to reduce dependence on China.
Static Linkages
- Mineral Resources: India’s Mineral Policy, distribution of mineral resources in India (NCERT 8th–10th).
- Global Trade & Strategic Commodities: Lessons from Oil crises, geopolitics of resource dependency.
- Defence & Technology: Strategic minerals for national security and technology-intensive industries.
Critical Analysis
- Pros:
- China consolidates global leverage over strategic minerals.
- Pushes other countries to develop domestic rare earth capabilities.
- Cons/Challenges:
- Supply disruptions for tech-dependent economies like the US, EU, India.
- Environmental concerns due to rare earth extraction (toxic waste, radiation hazards).
- Geopolitical tension may escalate trade wars.
- Stakeholder Perspectives:
- India: Sees opportunity to ramp up domestic mining but faces technological and environmental hurdles.
- US: Push for diversification and stockpiling to reduce reliance on China.
- Global industries: Vulnerable to supply chain disruptions.
Way Forward
- Diversification of supply sources (Australia, Brazil, India, Japan).
- Investment in domestic mining, refining, and recycling of rare earths.
- International collaborations for sustainable and eco-friendly extraction.
- Strategic stockpiling for critical sectors (defence, EVs, electronics).
- Strengthening R&D for alternatives and substitution in high-tech applications
