Indian Economy: Growth, Development & Employment

The Union Cabinet has approved Semicon 2.0, the second phase of the India Semiconductor Mission (ISM 2.0), with a total outlay of ₹1,27,500 crore to build India's semiconductor design and manufacturing ecosystem on six pillars. Media reports indicate the Centre will not subsidise land acquisition or technology transfer costs under the new scheme, with states expected to take the lead on land, and capital subsidies for silicon fabs reduced from 50% to 40%. This article explains what semiconductors are, the achievements of ISM 1.0, the six pillars of Semicon 2.0, the revised incentive structure, the role of states, India's chip targets for 2029 and 2035, and the challenges ahead — all from the UPSC Prelims and Mains perspective.

The Gujarat government has announced the Viksit Gujarat Data Centre Policy 2026-29, targeting investments of about ₹6 lakh crore and the creation of 7.5 gigawatts (GW) of data centre capacity — claimed to be the highest in the country. The policy offers tax and duty exemptions, power and water guarantees and building-norm relaxations, mandates that 51% of electricity for core operations come from green energy, and seeks to develop Dholera as a global data centre city. This article explains what data centres and hyperscale AI data centres are, the policy's incentives, the Reliance-Meta Jamnagar project, India's data centre landscape, and the associated energy, water and policy challenges.

The India-UK Comprehensive Economic and Trade Agreement (CETA) and the companion Double Contribution Convention (DCC) entered into force on 15 July 2026, operationalising India's first comprehensive free trade agreement with a major developed economy. The UK has eliminated tariffs on 99% of Indian tariff lines, while India has cut duties on around 90% of products, including first-ever FTA concessions on cars and Scotch whisky. This article explains what CETA is, its negotiation journey, sector-wise gains and concessions, the DCC for professionals, the new self-declaration rules of origin, the steel quota arrangement, the CBAM concern, and CETA's place in India's FTA strategy.

The Union Cabinet on 15 July 2026 approved Semicon 2.0, the second phase of the India Semiconductor Mission, with a total outlay of ₹1,27,500 crore to build a complete semiconductor ecosystem across six pillars. The Cabinet also cleared the Mobile Phone Manufacturing Scheme (MPMS) worth ₹62,500 crore as the successor to the PLI scheme for smartphones. This article explains what semiconductors are, the journey of ISM 1.0, the six pillars of Semicon 2.0, the incentive structure of MPMS, India's mobile manufacturing success story, approved chip plants and their locations, and the challenges ahead.

India has amended the Foreign Trade Policy 2023 through DGFT Notification No. 23/2026-27 to prohibit imports produced wholly or partly through forced labour. The amendment inserts Paragraph 2.20B, establishes an enquiry mechanism and adopts the International Labour Organization’s definition of forced labour. The decision comes while the United States Trade Representative is considering a 12.5% additional tariff on Indian goods under its Section 301 investigation.

India's wholesale inflation measured by the Wholesale Price Index (WPI) surged to 9.87 per cent in June 2026 — the highest in the revised series with base year 2022-23 — from 9.68 per cent in May, driven by a sharp acceleration in food prices even as fuel inflation eased, with economists warning that inflation is becoming more generalised. The Ministry of Commerce and Industry also released the new Producer Price Index (PPI), which rose to 9.57 per cent. This article explains the June data, the revised WPI series, the WPI-to-PPI transition, the WPI–CPI distinction, and the implications for monetary policy and the economy, for UPSC Prelims and Mains.

US President Donald Trump has reversed his plan to charge a 20 per cent fee on commercial vessels transiting the Strait of Hormuz, replacing it with trade and investment deals by Gulf states, days after announcing the levy amid the ongoing US–Iran conflict over control of the strait. The proposal had drawn scepticism over its legality and calculation, with the International Maritime Organization opposing tolls on straits used for international navigation. This article explains the episode, the geography and law of the Strait of Hormuz, UNCLOS and transit passage, the US–Iran standoff, and the implications for India's energy security, for UPSC Prelims and Mains.

The Ministry of Power is expected to issue an advisory to power-sector stakeholders amid El Niño uncertainty, especially because deficient rainfall and erratic weather can affect hydropower, wind generation, thermal-plant water availability, transmission assets and peak electricity demand. The issue is important for UPSC because it links climate variability, energy security, grid resilience, renewable integration, coal dependence and India’s power-sector planning.

India’s rapid transition to E20 petrol has triggered debate over fuel choice, vehicle compatibility, mileage, pricing, feedstock use and consumer communication. A recent discussion on Brazil’s long ethanol journey highlights why India can learn from Brazil’s gradual, consumer-choice-based biofuel model while strengthening its own Ethanol Blended Petrol Programme. Brazil’s first ethanol blending law dates to 1931, while India’s E20 push accelerated after the National Policy on Biofuels target was advanced to ESY 2025–26.

Prime Minister Narendra Modi and Australian Prime Minister Anthony Albanese held the Third India-Australia Annual Summit in Melbourne, where both sides advanced defence cooperation, maritime security, energy security, uranium supply arrangements and trade negotiations. The summit is important for UPSC because it links India-Australia Comprehensive Strategic Partnership, Indo-Pacific geopolitics, civil nuclear cooperation, CECA, critical minerals and India’s clean-energy transition.

The International Monetary Fund’s July 2026 World Economic Outlook Update has lowered the global growth projection to 3.0% and India’s FY 2026-27 growth forecast to 6.4%, citing the economic impact of the Middle East war, higher energy prices, trade uncertainty and uneven gains from artificial intelligence. The update is important for UPSC because it links global macroeconomic shocks, India’s energy-import vulnerability, inflation, trade slowdown and policy choices for a resilient economy.

The Employees’ Provident Fund Organisation has completed a major database consolidation and software upgrade under CITES 2.01, aimed at centralising EPFO’s member database, automating interest credit, reducing claim-settlement delays and enabling members to access services across EPFO offices. The reform is important for UPSC because it links digital governance, formal-sector social security, labour welfare, database integration, portability of benefits and citizen-centric service delivery.