• Both countries have agreed to avoid sensitive issues in the negotiations.
• The interim (early harvest agreement) aims to achieve up to 65 per cent coverage for goods and up to 40 per cent coverage for services.
• By the time the final agreement is inked, the coverage for goods is expected to go up to "90 plus a percentage" of goods.
• India is also negotiating a similar early harvest agreement with Australia, which is supposed to set the stage for a long-pending Comprehensive Economic Cooperation Agreement that both countries have been pursuing for nearly a decade.
• While the commencement of negotiations does mark a step forward in the otherwise rigid stance adopted and when it comes to trade liberalisation, experts point to impediments and the potential for legal challenges going ahead.

5.2. GATT (General Agreement on Trade and Tariffs)

CENSUS

1. Context

2. Key Takeaways

• India had conducted the Census every 10 years since 1881, but in 2020, the decennial exercise for Census 2021 had to be postponed due to the pandemic.
• Though the government has not announced fresh dates for the Census, the groundwork is being laid and details are emerging about some of the features.
• It will be the first digital Census allowing citizens to "self-enumerate". The NPR (National Population Register) has been made compulsory for citizens who want to exercise the right to fill out the Census form on their own rather than through government enumerators.
• For this, the Office of the Registrar General of India (RGI) has designed a "self-enumeration, Aadhaar or mobile number will be mandatorily collected.

3. Status of the Census exercise

• A January 2 notification extending the deadline for freezing administrative boundaries in States until June 30 has ruled out the exercise at least till September.
• As preparation and training take at least three months, the Census will have to be pushed to next year.
• Around 30 lakh government officials will be assigned as enumerators and each will have the task to collect the details of 650-800 people through both online and offline modes, covering an estimated population of 135 crore people.
• The Lok Sabha election is due in April-May 2024 and it is unlikely that the Census will be carried out before that since the same workforce will be dedicated to the elections.
• The completion of both phases of the Census will take at least 11 months, even if done at an accelerated pace from October 1.

4. Holding up the Census

• One reason which is holding up the exercise is the amendments proposed to the Registration of Births and Deaths Act, of 1969.
• The government wants to have a centralised register of births and deaths that can be used to update the population register, electoral register, Aadhaar, ration card, passport and driving license databases.
• The centrally stored data will be updated in real-time without a human interface leading to addition and deletion from electoral rolls when an individual turns 18 and after an individual's death respectively.
• A Bill to link the births and deaths registered with the population register and others are expected to be tabled in the next session of Parliament.

5.  NPR

• The NPR, unlike the Census, is a comprehensive identity database of every "usual resident" in the country and the data proposed to be collected at the family level can be shared with States and other government departments.
• Though Census also collects similar information, the Census Act of 1948 bars sharing any individual's data with the State or Centre and only aggregate data at the administrative level can be released.
• According to Citizenship Rules 2003 under the Citizenship Act, 1955, NPR is the first step towards a compilation of the National Register of Indian Citizens (NRIC/NRC).
• Assam is the only State where an NRC has been compiled based on the directions of the Supreme Court, with the final draft of Assam's NRC excluding 19 lakhs of the 3.29 crores applicants.
•  Assam Government has rejected the NRC in its current form and demanded re-verification of 30 per cent of names included in the NRC in areas bordering Bangladesh and 10 per cent in the remaining State.
• In 2020, the NPR was opposed by several State governments such as West Bengal, Kerala, Rajasthan, Odisha, Bihar, Andhra Pradesh, Telangana, Punjab and Chhattisgarh and Civil Society Organisations due to its link with the proposed NRC as it might leave many people stateless for want of legacy documents.
• There are apprehensions that the Citizenship Amendment Act 9 (CAA), 2019 allows citizenship based on religion to six undocumented religious communities from Pakistan, Afghanistan and Bangladesh who entered India on or before December 31, 2014, will benefit non-Muslims excluded from the proposed citizens' register, while excluded.
• Muslims will have to prove their citizenship. The government has denied that the CAA and NRC are linked and there are currently any plans to compile a countrywide NRC.

5.1. The current status of NPR

• The NPR was first collected in 2010 when the Congres government was in power at the Centre.
• It was updated in 2015 and already has details of 119 crore residents.
• In March 2020, the Ministry of Home Affairs (MHA) amended the Census Rules framed in 1990 to capture and store the Census data in an electronic form and enabled self-enumeration by respondents.
• The NPR is scheduled to be updated with the first phase of Census 2021.
• For this phase (house listing and household phase), 31 questions have been notified, while for the population enumeration, the second and main phase 28 questions have been finalised but are yet to be notified.
• The NPR is expected to collect details on 21 parameters of all family members, up from 14 questions in 2010 and 2015.
• The Sub-heads include passport number, relationship to head of the family, whether divorced/ widowed or separated, mother tongue if non-worker, cultivator, labourer, government employee, daily wage earner among others.
• The form also has a column on Aadhar, mobile phone, Voter ID and driver's licence.
• Though the government has claimed that the NPR form has not been finalised yet, the sample form is part of the Census of India 2021 Handbook for Principal/District Census Officers and Charge Officers in 2021.
• The NPR has retained contentious questions such as "mother tongue, place of birth of father and mother and last place of residence", possible indicators to determine inclusion in the Citizenship register.
• The questions were opposed by the State governments of West Bengal, Kerala, Rajasthan and Odisha in 2020.
• The final set of questions of both the phases and NPR was asked during a pre-test exercise in 2019 in 76 districts in 36 States and Union Territories covering a population of more than 26 lakhs.

6. Expected expenditure for Census

• The initial draft was prepared by the office of the Registrar General of India and circulated to key Ministries and the Prime Minister's Office called for the conduct of Census 2021 at a cost of ₹9, 275 crores and not the NPR.
• The draft Expenditure Finance Committee (EFC) not was then revised and a financial provision of ₹4, 442.15 crores for updating the NPR was added on the directions of the MHA "subsequently".
• The proposal was cleared on August 16, 2019, and it received the  Union Cabinet's nod on December 24, 2019.
• It was decided that the enumerator engaged for Census would also collect details for NPR.
• The Covid-19 pandemic struck in March 2020 and since then both exercises are on hold.
• Now, the NPR has been made compulsory if citizens want to exercise the right to fill out the Census form on their own.
• The deleted Handbook said that it is "mandatory for every usual resident of India to register in the NPR".
• Census is also mandatory and giving false information is a punishable offence.

UNION PUBLIC SERVICE COMMISSION

 

1. Context 

 

In a significant administrative reform, the central government has revised the cadre allocation policy for the three All-India Services – the Indian Administrative Service (IAS), Indian Police Service (IPS) and Indian Forest Service (IFoS) – introducing a new grouping structure as per alphabetically that replaces the earlier zonal arrangement for allocation of cadres to successful candidates of the civil services examination.

2. History of UPSC

• The UPSC has its genesis in the Civil Service Commission set up by the British government in 1854.
• Before this, civil servants in India were nominated by the East India Company and then trained at Haileybury College in London.
• However, following a report by Lord Thomas Macaulay, it was decided that instead of nominations, civil servants should be selected through a competitive exam.
• Thus, the Civil Service Commission was set up and for some years, exams were held only in London.
• It was a decade later, in 1864, that Satyendranath Tagore (brother of Rabindranath Tagore) became the first Indian to clear the exam.
• The exam started being held in India only in 1922, after the First World War.

Image Source: The Indian Express

3. In Independent India

• The origin of the Public Service Commission in India is found in the First Dispatch of the Government of India on the Indian Constitutional Reforms on the 5th of March 1919 Which referred to the need for setting up some permanent office charged with the regulation of service matters.
• This concept of a body intended to be charged primarily with the regulation of service matters found a somewhat more practical shape in the Government of India Act, of 1919.
• Section 96(C) of the Act provided for the establishment in India of a Public Service Commission which should discharge, regarding recruitment and control of the Public Services in India, such functions as may be assigned thereto by rules made by the Secretary of State in Council.
• On October 1, 1926, the Public Service Commission was set up in India.
• The functions of the Public Service Commission were not laid down in the Government of India Act, 1919, but were regulated by the Public Service Commission (Functions) Rules, 1926 framed under sub-section (2) of Section 96 (C) of the Government of India Act, 1919.
• Further, the Government of India Act, of 1935 envisaged a Public Service Commission for the Federation and a Provincial Public Service Commission for each Province or group of Provinces.
• Therefore, in terms of the provisions of the Government of India Act, 1935 and with its coming into effect on 1st April 1937, the Public Service Commission became the Federal Public Service Commission.
• After independent India adopted its Constitution on January 26, 1950, the Federal Public Service Commission became the Union Public Service Commission, under Clause (1) of Article 378 of the Constitution.
• All expenses for the UPSC are paid from the Consolidated Fund of India.

 

4. Functions of UPSC

 

 Functions of UPSC include

1. Conducting  examinations for appointment to the services of the Union
2. Direct recruitment by selection through interviews
3. Appointment of officers on promotion or deputation or absorption
4. Framing and amendment of Recruitment Rules for various services and posts under the Government
5. Disciplinary cases relating to different Civil Services
6. Advising the Government on any matter referred to the Commission by the President of India.

For Prelims: Union Public Service Commission, Lord Thomas Macaulay, Haileybury College, Satyendranath Tagore, Indian Constitutional Reforms, Government of India Act, 1919, Public Service Commission, Public Service Commission (Functions) Rules, 1926,  Government of India Act, of 1935, Article 378 of the Constitution, Consolidated Fund of India,  For Mains: 1. What is Union Public Service Commission (UPSC)? Discuss its evolution and Explain the functions of UPSC. (250 Words)

 

 

Previous Year Questions   1. The Union Public Service Commission of India has been established under the Article ______  (MP Patwari 2017) A. 315                   B. 234                    C. 421                             D. 56   Answer: A   2. T.B. Macaulay has penned his 'Minute on Education' in the year  (AP SET 2016) A.1735                B. 1753                  C. 1853                             D.1835   Answer: D   3. Which of the following is NOT true about Mill's History of British India? (UGC NET 2019)  A. It founded the traditional institutions of India static and retrogressive B. The analysis made by Mill suited the needs of imperial government. C. It became a textbook on India for the British officers of the Indian Civil Services at Haileybury College D. It was not informed by the English utilitarian philosophy   Answer: D   4. Who among the following was the first Indian to qualify for the Indian Civil Service?  (NDA 2019) 1. Satyendranath Tagore 2. Surendranath Banerjee 3. R.C. Dutt 4. Subhas Chandra Bose   Answer: A   5. Which among the following events happened earliest? (UPSC 2018) A. Swami Dayanand established Arya Samaj. B. Dinabandhu Mitra wrote Neel Darpan C. Bankim Chandra Chattopadhyay wrote Anandmath. D. Satyendranath Tagore became the first Indian to succeed in the Indian Civil Services Examination.   Answer: B   6. In the Government of India Act 1919, the functions of Provincial Government were divided into "Reserved" and "Transferred" subjects. Which of the following were treated as "Reserved" subjects? (UPSC 2022) 1. Administration of Justice 2. Local Self-Government 3. Land Revenue 4. Police Select the correct answer using the code given below: A. 1, 2 and 3             B. 2, 3 and 4              C.  1, 3 and 4           D. 1, 2 and 4   Answer: A   7. Features of the Government of India Act 1935 are: (Rajasthan Police SI 2016) (a) The provincial autonomy (b) The establishment of Federal Court (c) The establishment of All India Federation at the Centre 1. a and b               2.  b and c             3. a and c                     4. a, b and c   Answer: 4   8. With reference to the Union Government, consider the following statements: (UPSC 2015)  1. The Department of Revenue responsible for the preparation of Union Budget that is presented to the Parliament. 2. No amount can be withdrawn from the Consolidated Fund of India without the authorization from the Parliament of India 3. All the disbursements made from Public Account also need authorization from the Parliament of India. Which of the statements given above is/are correct? A. 1 and 2 only      B. 2 and 3 only    C. 2 only     D.  1, 2 and 3   Answer: C

 

Source: The Indian Express

 

 

SUSTAINABLE HARNESSING AND ADVANCEMENT OF NUCLEAR ENERGY FOR TRANSFORMING INDIA (SHANTI) ACT

 

 

1. Context

 

Weeks after the government enacted the SHANTI Act to open India’s nuclear sector to private players, a new draft National Electricity Policy (NEP) signals a clear policy shift — a strong pivot to nuclear power as a potential substitute for coal-based thermal generation.

 

 

2. Why is SHANTI significant?

 

 

• The SHANTI framework seeks to open India’s nuclear energy sector to private participation and may also facilitate the inflow of foreign investment.
• At present, the construction and operation of nuclear power plants are restricted exclusively to public sector entities.
• India aims to scale up its nuclear capacity from the existing 8.8 GW—roughly 1.5% of total installed power capacity—to 100 GW by 2047, thereby raising nuclear energy’s share in electricity generation from around 3%.
• Public sector nuclear utilities estimate that they will contribute nearly 54 GW of this expansion, with the remaining capacity expected to come from private players

 

3. What are the major differences in SHANTI?

 

 

• Because of nuclear energy’s association with atomic weapons, the movement and use of nuclear fuel such as uranium are subjected to rigorous oversight to prevent its diversion for the production of weapons-grade plutonium.
• Past disasters—including the 1979 Three Mile Island accident, the 1986 Chernobyl catastrophe, and the Fukushima core meltdown triggered by the 2011 tsunami—have reinforced a global culture of caution, leading to stringent controls over every stage of nuclear plant functioning.
• Internationally, there is now broad agreement that in the event of a nuclear accident, the operator of the facility bears the primary responsibility for compensating affected individuals in proportion to the harm caused.
• Such compensation must be provided promptly, without waiting for investigations into causation or fault.
• Subsequently, however, the operator may seek reimbursement if it can demonstrate that the accident resulted not from managerial failure but from defective equipment supplied by another party
• Under the earlier Civil Nuclear Liability framework, operators were permitted to pursue recourse against equipment providers in three situations: first, where an explicit contractual provision existed; second, where the incident was attributable to defects in the supplier’s equipment; and third, where the damage was caused by a deliberate act intended to inflict nuclear harm.
• The SHANTI legislation removes the second ground for recourse. Even after the 2008 Indo-US civil nuclear agreement, which reopened India’s access to uranium supplies and advanced nuclear technology following restrictions imposed after the 1974 and 1998 nuclear tests, reactor manufacturers from the United States and France remained reluctant to enter the Indian market due to the potential exposure to massive liability claims.
• By eliminating this clause—and even removing explicit references to “suppliers”—the proposed framework effectively addresses these concerns

 

4. Will SHANTI spur India’s nuclear vision?

 

• Homi Bhabha, regarded as the architect of India’s nuclear energy programme, envisaged nuclear power as a cornerstone of the country’s energy security while also overcoming India’s limited uranium reserves through the eventual use of thorium.
• His three-stage plan begins with the construction of pressurised heavy water reactors that utilise natural uranium (U-238) to generate electricity and produce plutonium as a by-product.
• The second stage involves fast breeder reactors, which are designed to generate additional plutonium and uranium-233 while producing power. In the third and final stage, uranium-233 is combined with India’s abundant thorium resources to generate electricity, creating a largely self-reliant thorium-based nuclear system.
• India has yet to transition fully into the second stage, having only a prototype fast breeder reactor so far. This project, delayed by nearly two decades, was earlier scheduled to become operational in 2025 but has now been postponed further, with commissioning expected in September 2026.
• To meet its near-term nuclear energy targets, India is increasingly exploring Small Modular Reactors (SMRs).
• These are scaled-down versions of conventional reactors currently deployed in countries such as the United States and France, and they require enriched uranium-235—a resource that India does not possess in sufficient quantities. Like India’s first-stage reactors, SMRs generate various radioactive by-products, including plutonium and strontium.
• SMRs are expected to be manufactured in modular components across multiple locations and assembled at a central site, much like the global production processes used for aircraft or smartphones.
• However, due to their smaller size, they produce less electricity per unit compared to large reactors. They also do not offer a fundamentally superior solution to nuclear waste management, although some designs incorporate enhanced safety features that allow automatic shutdown during emergencies.
• While SMRs may contribute to electricity generation, they do little to advance India’s long-term objective of transitioning to thorium-based nuclear power

 

5. Way Forward

 

Under the previous legal framework, victims of a nuclear incident could seek compensation from the plant operator up to a ceiling of ₹1,500 crore. Any damage beyond this limit was to be covered by the Union government through an insurance mechanism, capped at ₹4,000 crore. The SHANTI legislation introduces a tiered liability structure instead. Operators of facilities with a capacity exceeding 3,600 MW would face a maximum liability of ₹3,000 crore. For plants in the 1,500–3,600 MW range, the liability limit is set at ₹1,500 crore; for capacities between 750 MW and 1,500 MW, it is ₹750 crore; for 150–750 MW plants, the cap is ₹300 crore; and facilities below 150 MW carry a liability limit of ₹100 crore. At present, all nuclear power plants in India have capacities of 3,000 MW or less.

Science Minister Jitendra Singh, who introduced the Bill in Parliament, explained that this differentiated structure was designed to avoid deterring private sector investment. However, during parliamentary discussions, concerns were raised that the actual costs of compensation in major nuclear accidents have historically run into several billions of dollars, far exceeding the proposed liability ceilings

 

 

For Prelims: Nuclear Waste Management, Prototype Fast Breeder Reactor, uranium, plutonium For mains:  1. Discuss the challenges associated with nuclear waste management in the context of India's nuclear energy program. How can these challenges be addressed effectively? (250 Words) 2. Ethical considerations play a crucial role in nuclear waste management. Discuss the ethical concerns surrounding the potential for environmental injustice and the responsibility of nations in dealing with nuclear waste.(250 Words)

 

Previous Year Questions 1. To meet its rapidly growing energy demand, some opine that India should pursue research and development on thorium as the future fuel of nuclear energy. In this on text, what advantage, does thorium hold over uranium? (UPSC 2012) Thorium is far more abundant in nature than uranium. On the basis of per unit mass of mined mineral, thorium can generate more energy compared to natural uranium. Thorium produces less harmful waste compared to uranium. Which of the statements given above is/are correct? (a) 1 only         (b) 2 and 3 only            (c) 1 and 3 only              (d) 1, 2 and 3 2. Which among the following has the world’s largest reserves of Uranium? (UPSC 2009) (a) Australia (b) Canada (c) Russian Federation (d) USA Answers: 1-D, 2-A

Source: The Hindu

 

FOREIGN DIRECT INVESTMENT (FDI)

 

 

1. Context

India’s net foreign direct investments (FDI) remained negative for the fourth consecutive month in November 2025, with outflows exceeding inflows by $446 million that month, an analysis of latest data from the Reserve Bank of India (RBI) shows.

 

2. FDI in India

• India's net foreign direct investment (FDI) inflows experienced a decline, decreasing by nearly 31% to $25.5 billion during the first 10 months of the 2023-24 fiscal year. The Finance Ministry attributed this decline to a broader trend of slowing investments in developing countries, while expressing optimism for a potential increase in investments in the current calendar year.
• Although global FDI flows overall saw a 3% rise to approximately $1.4 trillion in 2023, economic uncertainty and elevated interest rates impacted global investment, resulting in a 9% decrease in FDI flows to developing nations, as outlined in the Ministry's February assessment of economic performance.
• Reflecting the global trend of reduced FDI flows to developing countries, gross FDI inflows to India also experienced a slight decline, from $61.7 billion to $59.5 billion during the period from April 2023 to January 2024. In terms of net inflows, the corresponding figures were $25.5 billion versus $36.8 billion. The decrease in net inflows was primarily attributed to an increase in repatriation, while the decline in gross inflows was minimal.
• While a modest uptick in global FDI flows is anticipated for the current calendar year, attributed to a decrease in inflation and borrowing costs in major markets that could stabilize financing conditions for international investment, significant risks persist, according to the Ministry. These risks include geopolitical tensions, elevated debt levels in numerous countries, and concerns regarding further fragmentation of the global economy

 

3. Foreign Direct Investment (FDI)

Foreign Direct Investment (FDI) refers to the investment made by individuals, businesses, or governments from one country (the home country) into another country (the host country) with the objective of establishing a lasting interest or significant degree of influence in the foreign business or enterprise

Key Aspects:

• FDI involves the transfer of funds and resources from one country to another. This capital inflow can help stimulate economic growth in the host country by providing funds for investment in infrastructure, technology, and other areas.
• FDI often leads to the creation of jobs in the host country. When foreign companies establish subsidiaries or invest in existing businesses, they typically hire local employees, which can help reduce unemployment and improve living standards
• Foreign investors often bring advanced technologies, processes, and management practices to the host country. This technology transfer can enhance the host country's productivity, competitiveness, and industrial capabilities
• FDI can provide access to new markets for both the host country and the investing company. Foreign investors can tap into the host country's consumer base, while the host country gains access to the investing company's global distribution networks.
• FDI can contribute to overall economic development in the host country by promoting industrialization, improving infrastructure, and fostering innovation and entrepreneurship.

4.FDI Routes in India

India has several routes through which Foreign Direct Investment (FDI) can enter the country. These routes are regulated by the Reserve Bank of India (RBI) and the Department for Promotion of Industry and Internal Trade (DPIIT), and they define the conditions, limits, and sectors in which FDI is allowed

1. Automatic Route: Under the automatic route, FDI is allowed without the need for prior approval from the RBI or the government. Investors only need to notify the RBI within a specified time frame after the investment is made. This route is available for most sectors, except those that are prohibited or require government approval.

2. Government Route: In sectors or activities that are not covered under the automatic route, FDI requires government approval. Investors must apply for approval through the Foreign Investment Facilitation Portal (FIFP) or the Foreign Investment Promotion Board (FIPB), depending on the sector.

4.1. Examples

• Under the automatic route, FDI of up to 100% is allowed for manufacturing of automobiles and components.
• For the manufacturing of electric vehicles (EVs), 100% FDI is allowed under the automatic route.
• In single-brand retail trading, 100% FDI is allowed, with up to 49% allowed under the automatic route. Beyond 49%, government approval is required.
• Multi-brand retail trading (supermarkets and department stores) with FDI is permitted in some states, subject to certain conditions and restrictions. The FDI limit is typically capped at 51%.
• FDI in the insurance sector is allowed up to 74%, with up to 49% under the automatic route. Beyond 49%, government approval is needed
• In the telecom sector, 100% FDI is allowed, with up to 49% under the automatic route. Beyond 49%, government approval is required
• In the defense sector, FDI up to 74% is allowed under the automatic route, with government approval required for investments beyond 49%
• In most segments of the media and broadcasting sector, including print and digital media, 100% FDI is allowed, with up to 49% under the automatic route

4.2.Sectors where FDI Prohibited

• FDI is prohibited in the atomic energy sector, which includes activities related to the production of atomic energy and nuclear power generation.
• FDI is generally prohibited in the gambling and betting industry, which includes casinos and online betting platforms
• FDI is not allowed in the lottery business, except for state-run lotteries
• FDI is prohibited in chit funds, which are traditional Indian savings and credit schemes.
•  Nidhi companies are non-banking finance companies (NBFCs) that facilitate mutual benefit funds. FDI is typically not permitted in these entities
• While FDI is allowed in single-brand retail trading, it is generally prohibited in multi-brand retail trading of agricultural products. Some states have allowed it under specific conditions, but this remains a highly regulated area.
• FDI is not allowed in the trading of transferable development rights (TDRs) pertaining to the construction of real estate

5. Foreign Portfolio Investors (FPIs)

Foreign Portfolio Investors (FPIs) refer to foreign individuals, institutions, or funds that invest in financial assets in a country, such as stocks, bonds, mutual funds, and other securities. FPIs are distinct from Foreign Direct Investors (FDIs), who typically make long-term investments in companies and assets to establish a lasting interest

Key Aspects:

• FPIs invest in a country's financial markets, primarily by buying and selling securities traded on stock exchanges and fixed-income instruments like bonds and government securities
• FPIs often seek to diversify their investment portfolios by spreading their investments across different asset classes, sectors, and countries. This diversification helps manage risk and enhance returns
• FPIs have the flexibility to buy and sell securities in the secondary market, providing liquidity to the market and contributing to price discovery
• FPIs typically have a shorter investment horizon compared to Foreign Direct Investors (FDIs). They may engage in short-term trading or hold securities for a few months to a few years.
• FPIs are subject to regulatory frameworks and restrictions in the countries where they invest. These regulations are designed to ensure that foreign investments do not pose undue risks to the local financial markets and economy.

6.Foreign Portfolio vs. Foreign Direct Investment

 

FPI (Foreign Portfolio Investment)	FDI (Foreign Direct Investment)
FPI involves the purchase of financial assets such as stocks, bonds, mutual funds, and other securities in a foreign country. These investments are typically made with the intention of earning returns on capital and do not result in significant control or ownership of the underlying businesses	FDI entails making an investment in a foreign country with the primary objective of establishing a lasting interest and significant control or influence over a business enterprise or physical assets. FDI often involves the acquisition of a substantial ownership stake (typically at least 10%) in a company or the establishment of new business operations.
FPI is generally characterized by a shorter investment horizon. Investors in FPI may engage in trading and portfolio rebalancing activities, and their investments are often more liquid. The focus is on earning capital gains and income from investments.	FDI is characterized by a longer-term commitment. Investors in FDI intend to engage in the day-to-day management or decision-making of the business, contribute to its growth and development, and generate profits over an extended period.
FPI investors typically have little to no influence or control over the companies in which they invest. They are passive investors who participate in the financial markets and rely on market dynamics to drive returns.	FDI investors actively participate in the management and decision-making of the businesses they invest in. They often seek to exercise control over company operations and strategy, which may include appointing board members or key executives.
FPI investments are often made through financial instruments like stocks, bonds, and securities. Investors may use instruments like mutual funds or exchange-traded funds (ETFs) to gain exposure to foreign markets	FDI investments involve a direct equity stake in a company, either through share acquisition or the establishment of a subsidiary or branch in the host country. FDI can also involve the purchase of real assets such as land, factories, or infrastructure
FPI can provide short-term capital inflows, but it may be more susceptible to market volatility and sudden capital outflows. It may not have as direct an impact on job creation and economic development as FDI.	FDI often contributes to long-term economic development by creating jobs, stimulating infrastructure development, transferring technology and expertise, and enhancing the competitiveness of local industries
FPI investments are subject to regulations that vary by country and may include foreign ownership limits, reporting requirements, and tax considerations.	FDI is subject to regulations that can be more stringent and may involve government approval, sector-specific conditions, and investment protection measures

 

 

 

 

For Prelims: Economic and Social Development-Sustainable Development, Poverty, Inclusion, Demographics, Social Sector Initiatives, etc For Mains: General Studies III: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment

 

 

Previous Year Questions   1. Both Foreign Direct Investments (FDI) and Foreign Institutional Investor (FII) are related to investment in a country. (UPSC CSE 2011)   Which one of the following statements best represents an important difference between the two? A.FII helps bring better management skills and technology, while FDI only brings in capital B.FII helps in increasing capital availability in general, while FDI only targets specific sectors C.FDI flows only into the secondary markets, while FII targets primary market D.FII is considered to the more stable than FDI   Answer (B)

 

Source: indianexpress

 

 

GREEN HYDROGEN 

 

 

 

 

1. Context

 

 

Andhra Pradesh Chief Minister N. Chandrababu Naidu has declared Kakinada as the “Green Hydrogen Valley of India.”

 

 

2. What is Green Hydrogen?

 

Green hydrogen refers to hydrogen gas that is produced through a process called electrolysis, which involves splitting water molecules into hydrogen and oxygen using electricity generated from renewable energy sources such as solar, wind, or hydropower. Unlike conventional methods of hydrogen production, which rely on fossil fuels and emit greenhouse gases, green hydrogen production is considered environmentally friendly because it does not generate carbon emissions. Green hydrogen is thus a clean and sustainable energy carrier that can be used in various sectors, including transportation, industry, and power generation, to help reduce reliance on fossil fuels and mitigate climate change.

 

Difference between Green and Grey Hydrogen

 

Characteristic	Green Hydrogen	Grey Hydrogen
Production Method	Electrolysis of water using renewable energy sources (solar, wind)	Steam methane reforming from natural gas
Environmental Impact	Virtually emissions-free, utilizing renewable energy and water as feedstock	High carbon emissions contribute to environmental degradation
Carbon Emissions	No carbon emissions during production or consumption	High carbon emissions during production
Sustainability	Represents an end-to-end green pathway for hydrogen production	Contributes significantly to carbon emissions and environmental degradation
Purpose	Offers a sustainable alternative to traditional hydrogen production	Predominantly used in industrial applications

 

 

3. India's Push for Hydrogen-Powered Transportation

 

• Major Indian commercial vehicle manufacturers like Tata Motors, Volvo Eicher, and Ashok Leyland are intensifying their efforts in developing hydrogen-powered trucks and buses. They are investing heavily in research and development while expanding manufacturing capacities.
• Simultaneously, Indian energy companies are striving to scale up green hydrogen production and drive down costs to enhance their competitiveness against other fuels.
• Hydrogen is poised to become a cornerstone in the transportation sector shortly. With India being a substantial and growing market for both vehicles and energy, the widespread adoption of green hydrogen as a vehicular fuel holds immense potential for the country.
• The utilization of green hydrogen offers substantial emissions reductions, crucial for combating global warming and climate change. India sees various benefits, including pollution mitigation, achieving climate targets, reducing dependency on costly fossil fuel imports, and seizing the opportunity to establish itself as a global hub for green hydrogen production and export.

 

4. MNRE Scheme for the Transportation Sector

 

The Ministry of New and Renewable Energy (MNRE) launched a pilot project scheme in February to assess the viability of green hydrogen as a transportation fuel.

The scheme focuses on three key objectives

1. Technical Feasibility and Performance: Validate the technical capabilities and performance of green hydrogen when used as a fuel for vehicles.
2. Economic Viability: Evaluate the economic feasibility of green hydrogen-powered vehicles, including factors like costs and potential returns.
3. Safe Operation Demonstration: Showcase the safe operation of both hydrogen-powered vehicles and the associated refuelling stations.

The Ministry of Road Transport & Highways will appoint a dedicated agency to manage the scheme. This agency will then invite proposals for pilot projects. Following a selection process, the chosen company or consortium will become the executing agency responsible for carrying out the project.

Funding for these pilot projects will come in the form of viability gap funding (VGF) approved by the MNRE based on the recommendations of a Project Appraisal Committee. The VGF amount will be determined on a project-by-project basis, considering factors like specific needs, merits, and overall feasibility. The executing agency will have two years to complete the pilot project.

 

 

5. Hydrogen Fuel Cell Vehicles

 

A hydrogen internal combustion engine (ICE) vehicle operates similarly to traditional cars powered by diesel or petrol, but with a key difference: there are no carbon emissions produced during combustion.

Hydrogen Fuel Cell Electric Vehicles (FCEVs)

Hydrogen fuel cell electric vehicles (FCEVs) utilize hydrogen electrochemically by converting it into electricity through a fuel cell. This process involves storing hydrogen in a high-pressure tank and generating electricity, with water being the only byproduct. While hydrogen ICE vehicles don't emit carbon, research suggests that burning hydrogen is less energy-efficient compared to converting it into electricity in a fuel cell.

Advantages of Hydrogen FCEVs Over Battery Electric Vehicles (BEVs)

Compared to battery electric vehicles (BEVs), where the battery constitutes the heaviest part of the vehicle, hydrogen FCEVs are typically lighter. This is because hydrogen is a lighter element, and a fuel cell stack weighs less than an electric vehicle (EV) battery. This feature makes hydrogen fuel cell technology a promising alternative to EV battery technology, particularly for heavy-duty trucks that can benefit from increased payload capacity without emitting smoke from burning diesel.

The Promise of Hydrogen Fuel Cell Technology

Research indicates that long-haul FCEVs can carry freight amounts comparable to diesel trucks, whereas long-haul BEVs face a weight penalty of up to 25% due to heavier batteries. Given the imperative to reduce carbon emissions in the transportation sector while maintaining revenue-generating payload capacity, green hydrogen emerges as a promising solution.

 

6. Challenges Facing the Adoption of Green Hydrogen in Transportation

 

The widespread adoption of green hydrogen in the transportation sector encounters several significant challenges

• The primary obstacle is the high cost of green hydrogen production. Additionally, challenges related to storage and transportation at scale further compound the issue. However, ongoing technological innovation and increased production scaling are expected to drive costs down in the coming years.
• Despite advancements, green hydrogen-powered vehicles are not yet perceived as a viable alternative to four-wheel electric vehicles (EVs). Challenges such as fuel costs and the establishment of supporting infrastructure hinder their widespread acceptance. Recent closures of hydrogen refuelling stations in California, despite remaining operational for heavy-duty vehicles, underscore the challenges in this regard.
• For hydrogen fuel cell electric vehicles (FCEVs) to compete effectively with battery electric vehicles (BEVs), the cost of green hydrogen needs to range between $3 and $6.5 per kilogram by 2030. However, current retail prices in California are substantially higher, and the cost of building hydrogen refuelling stations for trucks is significantly greater than that of BEV stations.
• Specialized cylinders capable of storing green hydrogen pose another challenge. Existing cylinders designed for compressed natural gas (CNG) are unsuitable due to the higher pressure requirements of hydrogen. Developing high-pressure hydrogen cylinders with sufficient strength, typically using carbon fibre, incurs high costs, hampering hydrogen's adoption as a transport fuel.
• Hydrogen's flammability necessitates stringent safety measures compared to conventional fuels like diesel, petrol, or even CNG. Robust handling and safety standards are imperative before large-scale adoption can be pursued.
• Advancements in battery technologies, resulting in lighter EV batteries, may pose a long-term challenge to the viability of green hydrogen-powered heavy-duty commercial vehicles. As battery weight decreases, the attractiveness of hydrogen-powered vehicles may diminish.

 

7. The Way Forward

 

The advantages of green hydrogen, including its versatility, zero-emission profile, and potential for large-scale production, position it as a key player in the global transition towards sustainable transportation solutions. With continued innovation, investment, and collaboration, green hydrogen has the potential to revolutionize the way we power vehicles, mitigate climate change, and create a more sustainable future for generations to come.

 

 

For Prelims: Green Hydrogen, compressed natural gas, Electric Vehicles, Hydrogen Fuel Cell vehicles, Grey Hydrogen, The Ministry of New and Renewable Energy For Mains:  1. Green hydrogen production utilizes electrolysis, a process powered by renewable energy sources. However, large-scale production of renewable energy also has environmental implications. Discuss the ethical considerations involved in promoting green hydrogen as a sustainable solution. (250 words) 2. India aspires to become a global hub for green hydrogen production and export. What are the strategic advantages India possesses to achieve this goal? Discuss the policy measures and technological advancements needed to make India a leader in this emerging field. (250 words)

 

 

Previous Year Questions   1. With reference to 'fuel cells' in which hydrogen-rich fuel and oxygen are used to generate electricity, consider the following statements: (UPSC 2015) 1. If pure hydrogen is used as a fuel, the fuel cell emits heat and water as by-products. 2. Fuel cells can be used for powering buildings and not for small devices like laptop computers. 3. Fuel cells produce electricity in the form of Alternating Current (AC) Which of the statements given above is/are correct? A. 1 only        B. 2 and 3 only         C. 1 and 3 only        D. 1, 2 and 3     2. With reference to green hydrogen, consider the following statements: (UPSC 2023) 1. It can be used directly as a fuel for internal combustion. 2. It can be blended with natural gas and used as fuel for heat or power generation. 3. It can be used in the hydrogen fuel cell to run vehicles. How many of the above statements are correct? A. Only one      B. Only two        C. All three      D. None   Answers: 1-A, 2-C

 

Source: The Indian Express

 

 

CHABAHAR PORT

 

 

 

1.Context

 

India remains engaged with both the United States and Iran about ways to continue operations at the port of Chabahar in southeastern Iran, officials said on Friday.

 

 

2.Why is Chabahar back in the news?

 

• Ahead of the visit to Iran, where Mr Sonowal met with senior Ministers as well as officials connected to the Shahid Beheshti terminal project development.
• An official statement said that the visit would be a chance to "Strengthen ties and the maritime relationship" between the two countries.
• Due to the pandemic, there were fewer visits from India to Iran and vice-versa.
• This visit will also highlight the importance of Chabahar as a gateway for Indian Trade with Europe, Russia and the CIS (Commonwealth of Independent States) Countries.
• Mr Sonowal reviewed the progress in the work on the terminal and handed over six mobile harbour cranes to improve efficiency and invigorate the potential of chabahar in the loading and unloading operations at the port.

 

Image source: The Iran Primer 

 

3.India's strategic vision

The first agreement for Chabahar was signed by then Prime Minister Atal Bihari Vajpayee in 2003, the plan had a three-fold objective.

1. To build India's first offshore port and to project Indian infrastructure prowess in the Gulf,
2. To circumvent trade through Pakistan, given the tense ties with India's neighbour and build a long-term, sustainable sea trade route and 
3. To find an alternative land route to Afghanistan, which India had rebuilt ties with after the defeat of the Taliban in 2001.

 

Prime Minister Manmohan Singh's government constructed the Zaranj-Delaram Highway in Afghanistan's South, which would help connect the trade route from the border of Iran to the main trade routes to Heart and Kabul, handing it over to the Karzai government in 2009.

 

4.Trilateral Agreement 

 

• In 2016, Prime Minister Narendra Modi travelled to Tehran and signed the agreement to develop Chabahar port, as well as the trilateral agreement for trade through Chabahar with Afghanistan's President Ashraf Ghani.
• Since the India Ports Global Chabahar Free Zone (IPGCFZ) authority took over the operations of the port in 2018.
• It has handled 215 vessels, 16, 000 TEUs (Twenty-foot Equivalent Units) and four million tons of bulk and general cargo, the government said in Parliament last month.

 

5.Chabahar Route

• In the last few years, a fourth strategic objective for the Chabahar route has appeared, with China's Belt and Road Initiative making inroads in the region.
• The government hopes to provide Central Asia with an alternate route to the China-Pakistan Economic Corridor (CPEC) through Iran for Future Trade.

 

Mr Sonowal in his Speech at the Chabahar Day function said that it is India's vision to make the Shahid Beheshti port a transit hub and link it to the International North-South Trade Corridor (INSTC) that also connects to Russia and Europe.

 

6.Reasons for the delay

• Since the beginning, the development of the Shahid Beheshti terminal in Chabahar, as well as surrounding infrastructure, has hit geopolitical roadblock after roadblock.
• The biggest issue has been over Iran's relationship with western countries, especially the United States.
• In years when Western sanctions against Iran increased and the Chabahar project has been put on the back-burner, while in the years when nuclear talks that resulted in the Joint Comprehensive Plan of Action (JCPOA) in 2015 came into being, the Chabahar port has been easier to work on.
• In 2018, the U.S. Trump administration put paid to India's plans by walking out of the JCPOA and slapping new sanctions on dealing with Iran.
• This led to the Modi Government "Zeroing out" all its oil imports from Iran, earlier a major supplier to India, causing a strain in ties.
• Even though the U.S. made a special "carve-out" on sanctions for Chabahar.
• On the ground, has been difficult to source equipment for the port construction from infrastructure companies that continue to fear secondary sanctions, as well as to engage in shipping and insurance companies for trade through Chabahar.

7.Ties with Taliban

• The Modi Government also snapped ties with Afghanistan after the Taliban takeover in August 2021, which put an end to the Humanitarian aid of wheat and pulses that were being sent to Kabul via Chabahar.
• When India restarted Wheat aid to Afghanistan this year, it negotiated with Pakistan to use the land route instead.
• With the government now reopening the Indian Embassy in Kabul and Establishing ties with the Taliban government.
• The Chabahar route may once again be employed, another reason for the recent flurry of activity at the Iranian port the terminal that India has pinned so many hopes on.

 

 

For Prelims: Chabahar Port, Belt and Road Initiative   For Mains: Significance of Chabahar Port to India, Relation between Iran and India

 

Previous Year Questions    1.What is the importance of developing Chabahar Port by India? (2017) (a) India’s trade with African countries will enormously increase. (b) India’s relations with oil-producing Arab countries will be strengthened. (c) India will not depend on Pakistan for access to Afghanistan and Central Asia. (d) Pakistan will facilitate and protect the installation of a gas pipeline between Iraq and India Answer (c) The development of Chabahar Port by India is crucial because it provides India with an alternative route to Afghanistan and Central Asia, bypassing Pakistan. The port, located in Iran, helps India enhance its strategic and economic ties in the region, facilitating trade and transportation while reducing its reliance on Pakistan for land access to Afghanistan   Mains   1. In what ways would the ongoing U.S-Iran Nuclear Pact Controversy affect the national interest of India? How should India respond to this situation? (2018) 2. The question of India’s Energy Security constitutes the most important part of India’s economic progress. Analyse India’s energy policy cooperation with West Asian countries. (2017)

Source: Hindu