Export Concentration in Few States

• RBI Handbook of Statistics on Indian States 2024-25 showcases export performance masked by a growing regional imbalance, raising concerns about inclusive growth.

Pattern of Export Concentration

• Top-Heavy Share: The top five States, Maharashtra, Gujarat, Tamil Nadu, Karnataka and Uttar Pradesh account for ~70% of India’s exports, up from ~65% five years ago.
• Core-Periphery Divide: Coastal western and southern States are integrating into global value chains, while large northern and eastern regions remain weakly linked.
• Rising Concentration: The Herfindahl–Hirschman Index (HHI) of India’s export geography has increased, indicating growing spatial concentration rather than dispersion.
• HHI: A standard indicator used to measure concentration, where a higher value shows dominance by a region and a lower value indicates a more even distribution.

Structural Reasons Behind Export Concentration

• Value Over Volume: Global merchandise trade growth has slowed to 0.5–3%, pushing capital towards high-complexity, high-value clusters rather than low-skill regions.
• High Global Concentration: Since the top 10 global exporters control ~55% of world merchandise trade, India’s smaller exporting base faces tougher entry barriers and higher competitive pressure.
• Capital Deepening: Fixed capital investment rose ~10.6% (ASI 2022–23) while factory employment grew only 7.4%, raising capital per worker to ₹23.6 lakh.
• Employment Stagnation: Manufacturing’s share in total employment remains stuck at ~11.6–12%.
• Financial Asymmetry: High-export States show credit–deposit ratios above 90%, while States like Bihar and eastern Uttar Pradesh remain below 50%, indicating capital flight.
• Credit-Deposit Ratio: A measure showing how much of a bank’s deposits are lent out as credit, with higher ratios indicating greater local use of savings for investment.

Implications for the Indian Economy

• Urban Congestion Costs: Export clustering in coastal metros has raised stress; E.g., industrial land prices in major export corridors have risen 2–3 times in a decade, discouraging decentralisation.
• Regional Income Divergence: Export-heavy States report per-capita incomes 2–3 times higher than low-export States, reinforcing long-term regional inequality.
• External Dependence Risk: India’s exports to the US and EU form ~40% of total exports, so a demand slowdown there can quickly transmit stress to export-linked States and sectors.
• Policy Measurement Gap: Using export growth alone as a success metric can mislead, because national aggregates may rise even when many States see limited export dynamism and spillovers.
• Forex Vulnerability: Merchandise exports are dominated by a few States, while India still ran a current account deficit of ~1.1% of GDP (FY24), making forex stability sensitive to regional export shocks.

Way Forward

• Financial Rebalancing: Improve local credit flow in hinterland States; E.g., targeted lending mandates and regional development finance institutions.
• Place-Based Policy: Tailor industrial strategy to State-specific strengths; E.g., agro-processing in eastern India and logistics-linked manufacturing in the north.
• Employment Focus: Complement export policy with labour-absorbing sectors; E.g., Vietnam’s export strategy combined electronics exports with large-scale textiles, footwear and food-processing clusters.
• Capability Building: Invest in skills, logistics and supplier ecosystems in lagging States; E.g., district-level industrial capability hubs rather than isolated parks.

Electronics Sector in India

• The Union Minister for Electronics and Information Technology recently said that India’s electronics sector is creating large-scale blue-collar jobs, especially for women.

About Blue-Collar Jobs

• Blue-collar workers are individuals who perform manual labour or skilled trades in sectors like manufacturing, construction, and logistics.
• They constitute about 80% of India’s non-agricultural workforce, with nearly 300 million workers.
• Blue-collar wages are rising by about 5–6% annually in 2025, supplemented by performance-linked incentives to manage high attrition.

India’s Electronics Sector

• Production: Domestic electronics output reached ₹11.32 lakh crore in FY2024–25, a six-fold increase over the last decade (2014–15).
• Export: Electronics became India’s third-largest export category in FY2024–25 and FY2025–26, with exports exceeding $40 billion.
• Mobile Manufacturing: India is the world’s second-largest mobile phone manufacturer, with exports touching ₹2 lakh crore after a rapid decade-long growth.
• Employment Base: The electronics sector employs about 25 lakh people nationwide and is India’s largest employer of women in organised manufacturing.
• National Target: The government aims to build a $500 billion electronics manufacturing ecosystem by FY 2030–31, with $120 billion in exports by FY 2025-26.

Key Government Initiatives

• PLI Scheme 2.0: The Production-Linked Incentive scheme offers around 5% incentives on incremental sales of IT hardware such as laptops, tablets, and servers manufactured in India.
• ECMS 2025: The Electronics Components Manufacturing Scheme promotes ‘passive components’ and sub-assemblies to reduce import dependence.
• SPECS: The Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors offers 25% capex incentives for component manufacturing.
• DLI Scheme: The Design Linked Incentive scheme supports domestic chip design through financial and infrastructure assistance.
• EMC 2.0: Modified Electronics Manufacturing Clusters create world-class electronics infrastructure, including semiconductor parks.
• Skilling Push: The ‘Chip-in’ programme aims to train industry-ready engineers to meet demand for one million skilled workers by 2030.

India’s First National Counter-Terrorism Policy 

• The Union Home Ministry is set to introduce India’s first National Counter Terrorism Policy and Strategy.

Key Pillars of the New Counter-terrorism Policy

• Unified SOP: Establishes a common Standard Operating Procedure for all Indian states to ensure uniform responses to terror incidents.
• Online Radicalisation: Prioritises countering digital radicalisation occurring via social media platforms and encrypted messaging applications.
• Border Misuse: Addresses exploitation of the open Nepal border, where terrorists enter Nepal on foreign passports and infiltrate India via UP-Bihar border routes.
• Data Integration: Expands use of the National Intelligence Grid (NATGRID) to enable shared database access for early threat detection.
• Terror Financing: Targets terror funding through foreign-funded conversion networks, Aadhaar spoofing, and narcotics-based finance channels.
• Information Sharing: Shifts law enforcement culture from a “need-to-know model” toward a “duty-to-share approach”.

Need for a New Counter-Terrorism Policy

• Jurisdictional Gap: Despite NIA’s federal mandate, immediate jurisdiction rests with local police, causing coordination delays in the initial ‘Golden Hours’ after terror attacks.
• UAPA cases handled by state police show 20-30% convictions, compared to 95% under NIA.
• Border Exploitation: Weak border management allows terror networks to infiltrate India via open borders like Nepal.
• Following the Pahlgam attack, 35 infiltrators attempted entry through the Indo-Nepal border.
• Technological Asymmetry: Rising terrorist use of drones and cryptocurrency outpaces the technical capacity of most police stations. In 2025, micro-payload drone drops increased by 30%.
• Digital Radicalisation: Self-radicalisation via encrypted apps bypasses conventional intelligence collection and surveillance systems.
• Global Terrorism Index 2025 reports 93% of fatal attacks in Western countries involve lone-wolf actors.

India’s Current Counter-Terrorism Framework

Legislative Framework

• Unlawful Activities (Prevention) Act 1967: Allows designation of persons and organisations as terrorists, with asset seizure and up to 180 days’ detention without charge sheet.
• National Investigation Agency Act 2008: Gives the National Investigation Agency nationwide jurisdiction to investigate terror offences without state permission.
• National Security Act 1980: Permits preventive detention of persons for acts prejudicial to national security and public order.
• Bharatiya Nyaya Sanhita 2024: Defines “terrorist act” under Section 113, bridging the gap between local police action and NIA investigations.

Institutional Architecture

• National Investigation Agency: Serves as the primary federal agency for terror prosecution, with nearly 95% conviction in UAPA cases.
• National Intelligence Grid (NATGRID): Links 21 databases, including banking and travel records, to detect suspicious patterns and trace terror financing.
• Specialised Units: National Security Guard (NSG) and state Anti-Terrorism Squads (ATS) serve as primary strike forces for urban terror incidents and hostage rescue.
• National Security Council Secretariat: Headed by the National Security Adviser (NSA), it coordinates inter-agency responses and integrates defence, intelligence, and diplomacy.

Strategic Doctrine

• Decisive Retaliation: Treats any terror attack as an act of war, allowing India to choose timing, scale, and nature of response.
• Sponsor Liability: Removes distinction between terrorists and sponsoring states, holding both equally accountable for terror actions.
• Punitive Deterrence: Shifts from ‘deterrence by denial’ to ‘deterrence by punishment’, inflicting unacceptable damage to deter future attacks.
• Net Security: Frames counter-terror actions as defence of global norms rather than bilateral disputes.

ISRO Launches Heaviest Satellite BlueBird Block-2

• ISRO successfully launched the BlueBird Block-2 satellite (BlueBird-6) aboard the Launch Vehicle Mark 3 (LVM3).
• The launch was conducted by NewSpace India Limited (NSIL), the commercial arm of ISRO, from the Satish Dhawan Space Centre in Sriharikota.
• It marked the sixth operational flight of LVM3, designated as LVM3-M6.
• Significance: The launch marked two milestones for India – deployment of the heaviest satellite from Indian soil and the largest commercial communications satellite into the Low Earth Orbit (LEO).
• LEO ranges from about 160 km to 2,000 km above Earth’s surface.

About BlueBird Block-2 Satellite

• It is a next-generation communications satellite developed by a U.S.-based company.
• It enables 4G/5G voice and video calls, data transfers, and messaging directly to phones without needing specialised ground equipment or antennas.
• Key Features: It carries a 223 sq m phased-array antenna and weighs about 6,100 kg.
• Capacity gain: It delivers nearly ten times higher data capacity, enabling continuous 24/7 coverage.

About Launch Vehicle Mark-3 (LVM3)

• The LVM3, earlier called GSLV Mk-III, is ISRO’s most powerful and heaviest launch vehicle; it is also known as “Baahubali“.
• It is a three-stage launch vehicle consisting of two solid motors (S200), a liquid propellant stage (L110), and a cryogenic-fueled upper stage (C25).
• Payload Capacity: It can lift about 4,000 kg to Geosynchronous Transfer Orbit (GTO) and nearly 8,000 kg to Low Earth Orbit (LEO).
• Key Feature: It is powered by the indigenous CE-20, India’s largest cryogenic engine.
• Key Missions: It launched Chandrayaan-2, Chandrayaan-3, LVM3-M6, and is designated for the Gaganyaan human spaceflight mission.

China files WTO complaint against India

• China has filed a fresh complaint against India at the World Trade Organization (WTO) challenging India’s solar subsidies and tariff measures.

What is the issue?

• China has sought formal consultations with India under the WTO framework regarding subsidies for India’s photovoltaic (solar) sector.

It claims that India’s policies:

• Violate bound tariff commitments and national treatment obligations.
• Constitute prohibited import-substitution subsidies, favouring domestic producers over foreign firms.
• This follows an earlier Chinese complaint (October 2025) against India’s EV and battery subsidies, signalling rising trade frictions over green industrial policies.

WTO Dispute Settlement System:

• The WTO Dispute Settlement System (DSS) is a rules-based, compulsory and multilateral mechanism to resolve trade disputes between WTO Members.
• It operates under the Dispute Settlement Understanding (DSU), which is an integral part of the WTO Agreement.

Aim:

• Ensure security, predictability and stability in international trade.
• Uphold WTO rights and obligations while preventing unilateral trade retaliation.

Key stages of WTO dispute settlement

• Consultations: The disputing members first hold formal consultations to resolve the issue amicably without litigation, reflecting the WTO’s preference for negotiated and mutually agreed solutions.
• Panel stage: If consultations fail, an independent panel of experts examines factual evidence and legal arguments to determine whether WTO rules have been violated.
• Appellate review: Parties may appeal panel findings on points of law before the Appellate Body, though this stage is currently stalled due to non-functioning of the body.
• Adoption of reports: Panel or Appellate Body reports are adopted by the Dispute Settlement Body (DSB), making the rulings legally binding on the parties.
• Implementation: The losing member must bring its measures into compliance within a “reasonable period of time,” monitored by the DSB.
• Retaliation (if needed): If compliance is not achieved, the complainant may seek DSB authorisation to impose proportionate trade countermeasures.

Key features

• Compulsory jurisdiction: All WTO Members are bound once they join the WTO.
• Time-bound process: Normally ~12 months (or ~16 months with appeal).
• Ban on unilateral action: Members cannot impose trade sanctions without WTO authorisation.
• Exclusive forum: WTO disputes cannot be taken to parallel international bodies.