Indian Economy

FOREIGN DIRECT INVESTMENT (FDI): UNION CABINET ALLOW CHINESE INVESTMENTS

India amended the FDI policy under Press Note 3 (2020), defining “beneficial ownership” as per PMLA Rules, allowing up to 10% non-controlling investments via the automatic route, and introducing a 60-day fast-track approval for key manufacturing sectors to balance national security with economic growth and support Make in India.

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OPEN MARKET OPERATIONS (OMOS) EXPLAINED

Amid rising geopolitical tensions and crude oil prices, India’s economy faces pressure with a record rupee fall. The RBI is injecting liquidity via OMOs to prevent a cash crunch, support government borrowing, and manage risks from a widening current account deficit, inflation, and slower GDP growth.

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Essential Commodities Act (ECA) 1955: A Double-Edged Sword for Indian Economy?

India invoked the Essential Commodities Act, 1955 to secure LPG supply during a global oil crisis. Despite the 2020 amendment aimed at market liberalization, the Act remains crucial for consumer protection, highlighting the ongoing policy challenge of balancing market freedom with supply regulation.

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WEST ASIA TENSIONS: IMPACT ON INDIAN INDUSTRIAL SUPPLY CHAIN

Geopolitical tensions in West Asia threaten the Indian economy by disrupting imports of key industrial raw materials like limestone, gypsum, sulphur, and copper. This risks supply chain shocks, inflation, and project delays, prompting India to enhance maritime security, diversify imports, and strengthen domestic resilience.

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INSOLVENCY AND BANKRUPTCY CODE (IBC): CHALLENGES AND WAY FORWARD

The effectiveness of India’s Insolvency and Bankruptcy Code is being undermined by procedural delays and an overburdened NCLT, where excessive litigation under Section 60(5) has pushed resolution times to over 700 days, necessitating urgent structural reforms.

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INDUSTRIAL PRODUCTION INDEX GROWTH SLOWS TO THREE-MONTH LOW

India’s industrial growth slowed to 4.8% in January 2026, a three-month low, as manufacturing, mining, and electricity weakened. NSO data shows rural demand stress and softer capital goods output. Despite infrastructure spending, global pressures, tight monetary policy, and structural bottlenecks call for reviving consumption and private investment.

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STRAIT OF HORMUZ: HOW A BLOCKADE COULD CRIPPLE THE INDIAN ECONOMY

The Strait of Hormuz is vital for India’s energy security. Any conflict disrupting supplies would spike oil prices, widen the current account deficit, raise inflation, and hurt key sectors. India responds by diversifying imports, boosting reserves, securing sea lanes, and advancing INSTC and Chabahar connectivity.

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Securities Market Code Bill 2025 Explained

The Securities Markets Code Bill 2025 consolidates the SCRA, SEBI Act, and Depositories Act into one framework. It expands SEBI’s board, decriminalizes minor violations, and introduces a statutory Investor Charter. The Bill modernizes rules for digital assets and high-frequency trading, while raising concerns about oversight and independence.

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NITI AAYOG RELEASES REPORT ON ‘REVITALIZING APPRENTICESHIP ECOSYSTEM

NITI Aayog’s Revitalizing Apprenticeship Ecosystem urges transforming apprenticeships into strategic human capital investment for Viksit Bharat @2047. It recommends merging NAPS and NATS, linking credits with the National Credit Framework, covering gig workers, and adopting tools like an Apprenticeship Engagement Index, inspired by Germany’s Dual VET model.

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JUDICIAL REVIEW ON FREEBIES: WELFARE VS FISCAL PRUDENCE

The Supreme Court, led by CJI Surya Kant, criticized states for fiscally unsustainable freebies, raising concerns over revenue deficits and rising debt-to-GSDP ratios. Distinguishing welfare from non-merit goods, it warned of Capex erosion. Citing S. Subramaniam Balaji, reforms include targeted subsidies and stronger Election Commission oversight.

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INDIA-US INTERIM TRADE DEAL: NAVIGATING TARIFF WARS AND STRATEGIC AUTONOMY

India has shifted from trade defensiveness to a proactive Interim Trade Arrangement with the United States, capping tariffs at 18% to protect key exports like pharmaceuticals and aerospace. Amid WTO decline and protectionism, this reflects Strategic Autonomy 2.0, requiring faster reforms in contract enforcement and logistics upgrades.

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RBI holds repo rate steady: Key highlights and implications

The Reserve Bank of India kept the repo rate unchanged at 5.25% and retained a neutral stance, citing a favourable macroeconomic environment. With inflation projected at 2.1% for FY26 and GDP growth expected at 7.4%, the central bank opted for a cautious pause to allow the impact of earlier rate cuts to transmit fully. The decision ensures stability in borrowing costs and EMIs while preserving policy flexibility to respond to risks such as global uncertainty, crude oil volatility, and potential inflationary pressures.

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