Economy

With the India-Oman Comprehensive Economic Partnership Agreement (CEPA) taking effect on June 1, 2026, India now has 15 free trade agreements covering 27 countries, with around nine more pacts under negotiation. As this network rapidly expands, a debate has intensified over whether FTAs are genuinely strengthening India's economy or widening its trade deficits and weakening domestic manufacturing. This article explains what FTAs and CEPAs are, the difference between MFN and preferential tariffs, the concepts of rules of origin, FTA utilisation and inverted duty structures, the key concerns raised by trade analysts, and the case in favour of FTAs — giving aspirants a complete, balanced picture of India's trade-agreement strategy.

India is reworking the template for its Bilateral Investment Treaties (BITs) to make them more investor-friendly while protecting its sovereign policy space, after years of falling net foreign investment and costly arbitration defeats. Reports indicate the Centre is anchoring the new model on three principles: a minimum two-year window for exhausting local remedies before international arbitration, no Most-Favoured Nation (MFN) clause, and exclusion of tax matters. This article explains what BITs are, how India's treaty regime evolved from 1994 to the restrictive 2016 Model BIT, the arbitration losses (White Industries, Vodafone, Cairn, Devas) that reshaped policy, the working of Investor-State Dispute Settlement (ISDS), and what the proposed changes mean for India's FDI strategy and regulatory autonomy.

The Union Cabinet on 5 May 2026 approved the Mission for Cotton Productivity (2026-27 to 2030-31) with an outlay of about Rs 5,659 crore, aimed at raising India's lint yield from around 440 kg/ha to 755 kg/ha and reaching 498 lakh bales by 2031. The move comes against a sharp decline in cotton output since 2014-15 and a widening yield gap with Australia, China, Brazil and the United States, reigniting debate over Bt cotton, seed-price regulation and the GM regulatory framework. This article explains the Mission, the science and history of Bt cotton in India, the Cotton Seed Price Control Order and the IPR debate, the role of GEAC, and the arguments on both sides — all mapped to the UPSC syllabus.

The Reserve Bank of India's Annual Report for 2025-26 has flagged the risk of "elevated" sovereign bond yields and a possible reversal of the global monetary-easing cycle, while the Chief Economic Advisor has called the end of near-zero interest rates and quantitative easing the single most consequential shift in global capital markets. With foreign portfolio investors pulling out record sums and the India-US yield gap shrinking, this article explains government bonds, bond yields, quantitative easing, negative interest rates, push-versus-pull capital flows, and what the drying up of cheap global money means for India's markets, rupee and growth.

The Reserve Bank of India's Monetary Policy Committee (MPC) meets from 3 to 5 June 2026, with most economists expecting the repo rate to be held at 5.25% for a third straight time even as the West Asia conflict, rising crude oil prices, a weak rupee and foreign capital outflows push up inflation risks. This article explains the RBI's monetary policy framework, the repo rate, flexible inflation targeting, the MPC, the growth-versus-inflation trade-off, and how a global oil shock transmits to India's economy — everything an aspirant needs for Prelims and Mains.

Amid the 2026 West Asia conflict and the disruption of the Strait of Hormuz, global crude prices have surged sharply. A steep fall in China's oil imports has unexpectedly freed up non-Hormuz supplies for India and other Asian buyers, cushioning the shock. This article explains the Strait of Hormuz chokepoint, India's oil import dependency, the impact of high oil prices on the current account deficit and inflation, India's Strategic Petroleum Reserves, and the government's energy security response — fully explained for UPSC Prelims and Mains.

From June 1, 2026, India is enforcing a major new domestic-sourcing rule under which "net-metering" and "Open Access" solar projects must use solar PV cells made by manufacturers listed on the ALMM List-II, not just domestically assembled modules. Aimed at cutting import dependence and deepening Atmanirbhar Bharat in clean energy, the mandate has triggered concern that smaller, non-integrated module makers could be squeezed because India's cell capacity (~30 GW) lags far behind its module capacity (~200 GW). This article explains the ALMM framework, List-I vs List-II, the Domestic Content Requirement, net-metering and Open Access, PM Surya Ghar Yojana, the PLI scheme, BCD walls, the overcapacity problem, and the federalism and trade dimensions — everything a UPSC aspirant needs on India's solar manufacturing push.

Ahead of the RBI Monetary Policy Committee meeting (June 3–5, 2026) and amid a crude-oil spike triggered by the West Asia conflict, economists have flagged a key gap: policymakers target the inflation rate, but households experience affordability — whether incomes outpace the cumulative rise in prices. This article explains the difference between inflation and affordability, India's Flexible Inflation Targeting framework, CPI measurement, real vs nominal wages, PLFS worker data, and how RBI's tools work.

The Reserve Bank of India released its Annual Report for 2025-26 on 29 May 2026, projecting India's real GDP growth at 6.9% for FY27 while flagging the West Asia conflict, elevated crude prices and supply disruptions as near-term headwinds to growth and inflation. The report also announced a record ₹2.86 lakh crore surplus transfer to the Centre, a 20.6% jump in the RBI balance sheet, a sharp rise in bank fraud amounts to ₹48,021 crore, and proposed new digital-payment safeguards including a "kill switch." This article explains the RBI Annual Report's statutory basis, the Economic Capital Framework and surplus transfer mechanism, monetary policy and inflation targeting, forex reserve management, bank-fraud classification, and digital-payment security — everything an aspirant needs for Prelims and Mains.

India's chemical industry bodies and key ministries — including Textiles and Commerce — have urged a suspension of ongoing anti-dumping investigations on petrochemical intermediates amid surging input prices caused by the West Asia war and Strait of Hormuz disruptions. With the government already exempting customs duty on 40 critical petrochemicals till June 30, 2026, and DPIIT pushing indigenisation of 200+ import-dependent items, this article explains the anti-dumping framework under the Customs Tariff Act 1975, DGTR's role, WTO rules, the MSME vs large-manufacturer divide, and India's $31 billion chemical trade deficit.

India’s merchandise trade deficit eased marginally to $20.67 billion in March 2026 while goods exports for the full financial year 2026 grew by 1 per cent to $441.78 billion. Sharp decline in trade with West Asia due to the ongoing conflict pulled down both exports and imports, and China overtook the US as India’s largest trading partner. This article explains the key trade numbers, reasons behind the deficit easing, impact of West Asia crisis, shift in major trading partners and all basic technical concepts of India’s foreign trade for complete clarity.

The Central Electricity Regulatory Commission (CERC) has given relief to wind and solar power generators by postponing stricter deviation settlement norms by one full year. The new rules, which were to begin on April 1, 2026, will now come into force only from April 1, 2027. This decision comes at a time when renewable energy already accounts for more than 50 per cent of India’s total installed power capacity, making grid balancing more challenging.