While the government is working on short- to medium-term responses, India must, in the long run, focus on reforming its manufacturing sector to ensure global competitiveness. As highlighted in a recent CSEP study, India continues to lag behind its Asian peers in manufacturing competitiveness (Prabhakar et al., 2025). One of the critical reasons for this gap is India’s relatively high tariff barriers. As of 2024, the average tariff on non-agricultural goods in India stood at 13%, compared to significantly lower rates in China (6.5%), Malaysia (5.3%), and Vietnam (8.3%). These tariffs, combined with structural constraints, have adversely affected India’s ability to compete in global markets.

India’s protectionist approach has intensified in recent years. Tariffs began to rise sharply in 2018 and were reinforced in 2020 with restrictions on Chinese investments, along with the sustained use of anti-dumping duties to curb the inflow of cheap imports.

In parallel, the government has significantly expanded the use of Quality Control Orders (QCOs), especially since 2020. While these orders are designed by respective line ministries, their enforcement lies with the Bureau of Indian Standards (BIS). QCOs apply to both domestic producers and importers, although certain exemptions are provided for imports meant for re-exports. These orders mandate compliance with specific product standards, with consignments subject to testing. Based on the results, BIS issues certifications to producers or importers.

Although QCOs are intended to strengthen India’s manufacturing ecosystem, they have also generated supply chain disruptions

Although QCOs are intended to strengthen India’s manufacturing ecosystem, they have also generated supply chain disruptions. Certification delays, particularly affecting suppliers of critical components, have increased lead times for manufacturers and exporters. Lengthy testing procedures add further strain to production schedules.

A key challenge in evaluating QCOs has been the lack of systematic mapping between QCO regulations and their corresponding Harmonized System (HS) codes. To address this gap, an exercise was undertaken to map QCOs to unique HS codes. Drawing on this newly developed database, this blog provides a snapshot of key QCO trends.

Growth in QCOs over years 

As of December 2024, India had implemented 765 QCOs—up sharply from just 88 in 2019

As of December 2024, India had implemented 765 QCOs—up sharply from just 88 in 2019 (Figure 1). This surge in QCOs has unfolded alongside a broader shift in India’s trade and investment policy landscape. Since 2017, tariff levels have risen significantly, climbing from 13.5% in 2017 to 17.1% in 2018. In 2020, restrictions were introduced on Foreign Direct Investment (FDI) from China, followed by a sharp decline in overall FDI inflows—from a peak of US$ 64.4 billion in 2020 to just US$ 28.1 billion in 2023. In parallel, the government rolled out the Production Linked Incentive (PLI) schemes.

Taken together, these measures reflect a deliberate policy shift away from import dependence and toward strengthening self-sufficiency in manufacturing, both to meet domestic demand and to build competitiveness in foreign markets.

Figure 1: Growth in India’s QCOs

Source: Author’s analysis based on Goyal and Goyal (2025).

Sectoral Decomposition of QCOs 

A sectoral analysis of QCOs shows that metals, machinery and electronics, textiles, chemicals, plastics and rubber, and footwear are among the most affected industries

A sectoral analysis of QCOs shows that metals, machinery and electronics, textiles, chemicals, plastics and rubber, and footwear are among the most affected industries (Figure 2). 

Notably, sectors with a high incidence of QCOs also tend to display significant firm concentration. Acharya and Chauhan (2023) report that as of 2021, the top five business groups accounted for 68% of total assets in the Manufacture of Basic Metals sector and 26% in the Manufacture of Chemicals. This concentration, combined with the prevalence of QCOs, suggests a strong overlap between sectors with greater market power and those subject to more stringent regulatory measures.

Figure 2: Sectoral Composition of QCOs (Per Cent), 1987–2025

Source: Author’s analysis based on Goyal and Goyal (2025).

QCO decomposition across the category of goods

Majority of QCOs apply to intermediate goods (45.7%), raising concerns about potential disruptions to domestic supply chains

Notably, the majority of QCOs apply to intermediate goods (45.7%), raising concerns about potential disruptions to domestic supply chains (Figure 3). For instance, viscose staple fibres—widely used in synthetic garment production—and steel fasteners—critical inputs in the automotive industry—are both covered under QCOs. Such measures risk exacerbating existing challenges to India’s manufacturing competitiveness, an area where the country already lags behind its peers (Prabhakar et al., 2025).

Figure 3: Distribution of QCOs Across Supply Chain Stages

Source: Author’s analysis based on Goyal and Goyal (2025).

Key Takeaways and Road Ahead 

Overall, the assessment of the QCO database reveals a sharp surge in its imposition by line ministries and the Bureau of Indian Standards (BIS). This expansion has coincided with broader policy shifts toward import protection and self-reliance. The sectors most affected by QCOs are also those characterised by a high concentration of market power and domination by large firms. Most importantly, QCOs are concentrated in intermediate and capital goods—the backbone of domestic supply chains. This poses significant risks to the competitiveness of India’s industrial output.

Given these trends, it is important to adopt a calibrated approach to QCO implementation, particularly in the selection of products brought under these orders. QCOs should be imposed strictly on quality-related grounds, and not for protectionist purposes—especially in the case of capital and intermediate goods that are not produced in sufficient quantities within India.

At the same time, compliance procedures need to be streamlined to ease the burden on Micro, Small, and Medium Enterprises (MSMEs), which often face significant challenges in meeting complex certification requirements. Finally, regulatory bodies should carefully monitor the potential for QCOs to create pricing power and reinforce concentration in already concentrated sectors, thereby limiting adverse effects on competition in the Indian industry. 

The post India’s Quality Control Orders: Understanding Key Trends first appeared on CSEP.

Jabin Jacob and I recently released the second edited report of our China in South Asia project at CSEP. How China Engages South Asia: In the Open and Behind the Scenes (2025) features twelve case studies of Chinese influence in the region, from Afghanistan to Myanmar and from Nepal to Sri Lanka. Sectors examined include civil society and culture, economy and governance, conflict mediation, defence and security, and influence operations. This is the follow up to our 2023 report How China Engages South Asia: Themes, Partners and Tools.

This report is the most recent outcome of a multi-year research project that we jointly directed together with support from Shivshankar Menon, Shruti Jargad and – most importantly – over twenty regional experts who offer an in-depth perspective on the instruments and partners that China engages in and around the Indian subcontinent.

There are many important reasons to invest in a more granular understanding of how China operates in South Asia. For some, especially in India, the relevance will be to better deter or counter China and preserve New Delhi’s predominance. Others will be concerned about the authoritarian nature of the Chinese party-state and its impact on South Asia’s democratic and pluralist regimes, especially on policy-making accountability and transparency.

But in our introduction to the report, Jabin Jacob and I also refer to other, equally important reasons. For example, we argue that “there is also much to learn from Chinese diplomatic practices and outreach regarding effective engagement strategies.” China’s rise in the region in recent years has been formidable, as an economic actor (major trade partner and source of investments), as well as a security and political actor that is engaging different public and private actors, from political parties to the military, civil society and sub-national units.

All this is not something that can be achieved merely through the power of capital and coercion: Beijing wields several softer instruments of statecraft and diplomatic approaches that hold important lessons for India and other major powers. In what follows here, I share three broad learnings from my collaborative work on this project over the past three years.

Beijing wields several softer instruments of statecraft and diplomatic approaches that hold important lessons for India and other major powers

First, I noticed a significant knowledge gap about China across the region. There are still far too few scholars who specialise on China and even fewer have experience in China or the required language expertise to access primary materials and conduct interviews with Chinese government or company officials. The number of South Asian students going to China has risen fast in recent years – and in some cases (such as Bangladesh) that flow is now larger than those choosing India for higher education. It will take some time for this outflow to translate into a return “brain gain” in the form of cutting-edge research on China. But there are already positive indications, including the Araniko Project led by two of our contributors from Nepal.

The same holds true for the broader policy ecosystem, whether bureaucracy or industry: they are engaging in more frequent interactions with their Chinese counterparts, but that has not yet led to a critical mass of former technocrats or corporate leaders who are experts on China. There is a lag effect: China is engaging fast and deep with countries in the region but – unlike in other regions such as Southeast Asia or Europe – overall China literacy here remains limited. This knowledge gap naturally brings risks. As Jabin and I emphasise in the report’s introduction, “at the very least, the lack of such understanding—of China’s priorities and primary interests—will constrain countries engaged in negotiations with the Chinese from achieving better terms.”

There is a lag effect: China is engaging fast and deep with countries in the region but – unlike in other regions such as Southeast Asia or Europe – overall China literacy here remains limited.

One final note: India is not necessarily ahead of the Sinology curve when compared to its neighbour countries. The gap has been articulated repeatedly by Jabin Jacob, Madhavi Thampi, Arunabh Ghosh, and Tansen Sen, who have mapped the field of China studies in India and beckoned for more support. As Shruti Jargad and I argue in a forthcoming CSEP working paper that unpacks Chinese official discourse on the region: “Governments, particularly that of India, should increase investment in China studies programmes at universities, think tanks, and diplomatic training institutions. Strengthening policy-oriented research will ensure better decision-making and more accurate assessments of China’s regional role.”

I have interacted with several researchers who consider writing assessments about China in their respective countries to constitute a risky or “sensitive” task – except, of course, if it is to laud the BRI and portray the “middle kingdom” in a positive light.

My second, related learning from this project is that there are still significant concerns for scholars in the non-India neighbourhood to write about China. I have interacted with several researchers who consider writing assessments about China in their respective countries to constitute a risky or “sensitive” task – except, of course, if it is to laud the BRI and portray the “middle kingdom” in a positive light. One gets the same feeling during conferences and workshops I attend in Kathmandu, Dhaka, or Colombo: here, speakers frequently and comfortably criticize India or “the West” but when it comes to discussing the less rosy effect of Beijing’s political interference or governance conditionalities, the room often goes eerily silent.

The sad result of this is a balkanization of the research ecosystem across the region, as different groups of think tanks and scholars align with different geopolitical camps and funding sources. The effect is that critical, independent and evidence-based work suffers: with reference to China, this also leads to a subcontinental partition between two extremes; on the one hand, those who demonise China (the predominant tone in India) and, on the other hand, those who glorify China (the predominant tone in other countries).

Congrats and kudos to the 20+ scholars from across this region who agreed to contribute with empirically rich and well researched articles that compose our two CSEP reports. They understood and trusted our project’s objective: evidence-based, judgement-free case studies on China’s influence in different domains across the subcontinent. They offer a unique, local perspective that should inform future research and policymaking.

we sometimes overrate China’s influence because in several instances it is less about the push factor (from Beijing) and more about the pull factor (from South Asian countries).

My third and final learning: we sometimes overrate China’s influence because in several instances it is less about the push factor (from Beijing) and more about the pull factor (from South Asian countries). In one example, of what Shivshankar Menon calls “anticipatory compliance,” political leaders across the region take actions in expectation of – or hoping to curry favour with – China. They also do so as an attempt to increase bargaining power over India. Finally, they may also signal proximity to (and initiatives with) China to expand their political support base at home, especially during electoral periods or when recently voted into power.

Ironically, this is not always in Beijing’s interest. But it is a good example of smaller states’ geopolitical agency which transcends the India-China dimension and often also involves a third country or block (the US, Europe, Japan, Australia). Leaders are learning to play the different sides of this strategic triangle: through such dynamic balancing they seek to maximise their time in power and their country’s interests across economic, security and other indicators. So even if Beijing is presently not interested to cooperate or fails to reciprocate, from their perspective, the mere attempt to engage offers dividends: in game theory parlance, this is China’s shadow of the future across the subcontinent today.

As Nicolas Blarel and I show in this article on “reinventing non-alignment” with case studies on Nepal and the Maldives, South Asian countries have had different levels of success in achieving this. This depends on varying levels of state capacity (including leadership acumen and bureaucratic expertise) and on degrees of electoral instability and consequent incentives to politicise foreign policy.

Our China in South Asia project is continuous work in progress and relies on a growing regional research collaborative. Through workshops, we had the opportunity to also develop a comparative dimension with some of the world’s top Sinologists who work on China’s influence in other regions, including Southeast Asia, Europe, and Africa. Two areas interest me, in particular: 1) China’s legal influence in shaping governance through standards and regulations; and 2) China’s military diplomacy, with a focus on operational doctrines, training and new domains of warfare (for example: cyber). I look forward to more learnings!

The post China in South Asia: Three Things I Learned From Our Project first appeared on CSEP.

The pathways and technologies that India and China use to produce energy for their future development play a major role in global efforts to mitigate carbon emissions. This blog compares the national climate policies and goals set by the two countries and explores differences in governance and implementation models pursued by the two countries. The blog also seeks to understand how both countries operationalise their climate goals, and processes of policy co-ordination between difference levels of governance. The blog concludes with the policy challenges being faced by both countries, and the potential of learning from each-other for improved policy implementation.

Today, China is the world’s largest emitter, accounting for 31.5% of total emissions, while India is third at 8.1%. While both countries are significant contributors to emissions, a comparison of per capita emissions provides a more differentiated picture. Despite their comparable population, China’s per capita carbon emissions are around 9.24 metric tonnes, four times higher than India’s 2.07 metric tonnes, with the world average sitting in between at 4.69 metric tonnes.

Realising their critical role in combatting climate change, both countries have announced strong national climate goals.

Realising their critical role in combatting climate change, both countries have announced strong national climate goals. China has committed to peaking carbon emissions before 2030 and achieving carbon neutrality by 2060, while India aims to reach net-zero by 2070, without mentioning a peaking year. These targets not only reflect India and China’s climate ambition but also the scale and complexity of implementation required which is in turn shaped by their governance models.

Decarbonisation Targets in India and China

Table 1 below presents a comparison of India and China’s key climate targets, including their commitments on carbon neutrality, renewable energy capacity, and emissions intensity reductions.

Table 1: Climate Targets of India and China

Source: Author compilation from multiple sources

Graphs 1 and 2 illustrate the installed capacity and share of electricity generation from different energy sources in India and China respectively. These graphs help us understand how the two countries are progressing toward their clean energy targets and transitioning away from fossil fuels.

The first graph shows us the differences in the installed capacity of India and China. China’s significantly larger renewable and overall capacity reflects its ability to deploy large amounts of infrastructure in short spans of time. India’s smaller but growing capacity also highlights progress in solar and wind capacity, albeit at a lower scale. We can see that by 2024, China had already exceeded its 2030 targets for wind and solar.  In contrast, India’s annual run rate for adding wind and solar places it behind schedule for its 2030 targets.

Graph 1: Total Installed Capacity (in GW) in India and China in 2024

The second graph shows us that both countries have similar shares of solar (~6 percent) and natural gas (~3 percent). Hydropower (~13%) and wind (~9%) play greater role in China’s energy mix, while India has a higher share of coal (~75%). However, the existing electricity mix[3]  of both countries reveals that their current high dependence on coal makes energy transitions a key determinant to achieving their net-zero policies.

Graph 2: Percentage Share by Source in Electricity Generated in  India and China in 2023

Policy Frameworks in India and China

In this section, we analyse what policy measures and subnational strategies both countries have sought to operationalise and implement their climate policies.

India

The Indian government launched the National Action Plan on Climate Change (NAPCC) in 2008, which includes eight national missions.[4] These missions were designed to guide climate action across the country and are implemented primarily through state governments, allowing for region-specific adaptation and solutions. Based on the national missions, each state develops its own State Action Plan on Climate Change (SAPCC). This reflected India’s bottom-up approach, where the central government provides the framework, and the actual planning and action are led at the state level. For example, in their SAPCC’s Odisha has focused on reducing electricity losses, Sikkim prioritised protecting its Himalayan water sources, and Himachal Pradesh proposed payments for maintaining forest ecosystems. Through these plans, states aim to connect their specific local issues with the national climate agenda.

Although India does not currently have a formal National Adaptation Plan (NAP) under the UNFCCC, different national and sub-national actors have integrated adaptation across several missions and state-level plans . For instance, the Ahmedabad Heat Action Plan focuses on reducing the health impacts of extreme heat through early warning systems and community outreach. The Chennai’s Water Resilience Strategy targets urban flooding and water scarcity through integrated water management. The Mumbai Climate Action Plan outlines sets 24 strategies across six sectors, including energy, mobility, waste, and flood management, to cut emissions and build climate resilience. Importantly, India has announced that it will submit its first official NAP at COP30 in November 2025. This marks a significant step in strengthening national-level coordination on adaptation, especially for vulnerable sectors like agriculture, water, and health.

China

To operationalise its climate policy China has created a ‘1+N’ framework also known as “working guidance” . ‘1’ stands for one big national plan that sets the two main national climate goals – cutting carbon emissions by 2030 and becoming carbon neutral by 2060, while ‘N’ is a series of supporting documents which includes policy measures and action plan for key sectors and industries. While each province is free to create its own climate action plan that reflect its characteristics , it is still bound to follow the national goal. For example, Shanxi focuses on cutting coal use, while Jiangsu works on measuring carbon in products. Jiang Xiaoqian, project manager of the climate and energy programme at WRI China quotes “The central government would dissect the goals and pass them down to provinces. Provinces would dissect the goals again and pass them down to prefectures, which would then do the same”. State owned enterprises along with the provincial governments are also key implementing bodies of China’s climate agenda. This reflects a multi-level implementation model, with strict coordination and accountability mechanisms.

In addition to mitigation plan, China also introduced its National Climate Change Adaptation Strategy 2035, which outlines a long-term plan to strengthen resilience across sectors like agriculture, health, water, and infrastructure. It emphasises early warning systems, regional risk assessments, and the integration of adaptation into local development. Together, these strategies show how China’s climate approach combines centralised planning with localised execution, backed by evaluation and performance metrics.Top of Form

Comparing India and China’s policy frameworks

China’s provinces are not only expected to follow national climate goals but are also required to develop sector-specific action plans tailored to their local economic and environmental characteristics. These provincial plans often include region-specific targets and strategies, making them more detailed and performance driven. China’s climate policy includes both binding targets enforced through cadre performance evaluations and more flexible, aspirational targets.  The binding targets are associated with specific targets and timelines, ,while the aspirational goals are non-binding and envision ambitious scenarios. In contrast, India’s State Action Plans on Climate Change (SAPCCs) are guided by the National Action Plan on Climate Change (NAPCC) but remain non-binding in nature. Each Indian state creates its own SAPCC based on local priorities, and while many include adaptation planning, the absence of a single, unified national adaptation strategy like China’s Climate Change Adaptation Strategy 2035 makes coordination more difficult.

An important difference between India and China’s climate policy implementation lies in how progress is tracked and enforced. China has a well-structured evaluation system where provincial and local governments are assessed using a ‘Cadre Performance Matrix’ system. Provincial and local governments are assessed using a form of bureaucratic accountability that links environmental targets with the career progress of local officials. This ensures that provinces are under direct pressure to meet carbon, energy, and pollution targets, making climate goals legally and politically binding. China also uses internal performance standards for state-owned enterprises, and in recent years has introduced renewable energy consumption quotas similar to India’s Renewable Purchase Obligation (RPO) system.

In India, an important enforcement tool for promoting renewable energy adoption is the Renewable Purchase Obligation (RPO), which legally requires electricity distribution companies (DISCOMs) and large energy consumers to purchase a certain percentage of their electricity from renewable sources. RPO targets are set by the central government and monitored by state electricity regulators. On the other hand, India does not have a unified, nationwide evaluation matrix that monitors the implementation of SAPCCs or holds states accountable for climate performance. As a result, while policies exist, enforcement is weaker, and implementation varies widely across states.

Together, these systems reflect a key contrast, while China enforces climate progress through centralised performance reviews and political accountability mechanisms, India relies more on policy tools like RPOs and state-driven reporting, which are often uneven in practice.  This may be a reflection of the federal political structure in India. India could benefit from developing a structured, transparent monitoring and evaluation framework that strengthens inter-state accountability and suits democratic governance.

Challenges in Implementation

While China has set ambitious climate targets and built massive renewable capacity, it still faces serious structural and regional challenges in implementation. One major issue is energy curtailment when renewable energy is generated but not used due to overcapacity, poor grid integration or lack of transmission infrastructure. Although the West-to-East Corridor Project has improved connectivity, gaps such as poor provincial coordination and transmission bottlenecks persist. This is partly caused by provincial competition, where local governments race to build energy projects to meet targets or attract investment, often without proper coordination. As a result, resource-rich regions in China’s interior, such as Xinjiang or Inner Mongolia, produce surplus energy but lack the infrastructure to transmit it efficiently to demand centres in the east. These regions also tend to be economically less developed, creating a mismatch between energy generation and local development

While renewable energy capacity is expanding rapidly in the western and southern states, India’s coal-rich but underdeveloped areas, particularly in the central and eastern regions lag behind. As India plans its clean energy transition, it must ensure that it doesn’t repeat China’s mistakes in creating transmission bottlenecks. The social and economic consequences of coal phaseout, including job loss and regional disruption, need to be carefully managed through transition policies. By learning from China’s experience, India can aim for more balanced, long-term outcomes while avoiding some of the structural inefficiencies that could potentially hamper China’s progress.

Despite their different political systems, both India and China rely heavily on decentralised planning and implementation to drive their climate actions. Both countries have recognised the importance of involving regional and local governments in climate governance

Conclusion

Despite their different political systems, both India and China rely heavily on decentralised planning and implementation to drive their climate actions. Both countries have recognised the importance of involving regional and local governments in climate governance. China is a bit more top-down model with strong oversight and performance tracking while India has tended to use a more bottom-up approach rooted in state-level flexibility.

As they move forward, strengthening local capacity, improving accountability, and learning from each other’s systems can help both countries turn their climate promises into lasting progress.

Importantly, both nations have set clear climate targets. China aims to peak emissions before 2030 and reach carbon neutrality by 2060, while India targets net-zero by 2070 with strong renewable energy goals. Their climate ambitions are bold and necessary, given their global roles in emissions and development. As they move forward, strengthening local capacity, improving accountability, and learning from each other’s systems can help both countries turn their climate promises into lasting progress.

Finally, it is important to note that while both countries have started the journey towards net-zero, Chinese industries have sufficient domestic capacity to supply raw materials and technologies required to undergo their transition. Whereas, India is still at a nascent stage in developing its clean industries, still having an import dependence on China to meet its needs.

The authors would like to thank Rahul Tongia for his valuable comments.

The post Decarbonising the Asian Giants: Comparing Indian and Chinese Models of Climate Action first appeared on CSEP.

The overall estimated climate finance or additional capex for India’s four key CO2 emitting sectors is estimated at $467 billion from 2022 to 2030, with an annual average capex of $54 billion or 1.3 percent of India’s GDP

Our new study, “India’s Climate Finance Requirements: An Assessment,” adopts a bottom-up approach, focusing on four key carbon-emitting sectors – steel, cement, power and road transport – that together accounted for over half of India’s carbon emissions in 2023. The study assesses the additional capital expenditure (capex) India would require to decarbonize these sectors, beyond the capex projected under a business-as-usual (BAU) scenario up to 2030.

Our study employs two distinct methodologies for the four sectors. For the power and road transport sectors, climate finance is estimated as the additional capital expenditure required for a progressive transition from fossil fuel-based sources to renewables (power) and from internal combustion engine vehicles to electric vehicles (road transport). For the steel and cement sectors, climate finance is estimated as the total capital expenditure required to mitigate existing as well as incremental carbon emissions that will arise in these two sectors up to 2030. In addition, the study also examines the macroeconomic consistency of estimated climate finance requirements and evaluates the fiscal space for financing climate action by the public sector.

Estimating Climate Finance Needs in Key CO₂ Emitting Sectors

The overall estimated climate finance or additional capex for India’s four key CO₂ emitting sectors is estimated at $467 billion from 2022 to 2030, with an annual average capex of $54 billion or 1.3 percent of India’s GDP (Figure 1). In other words, India would require $467 billion in additional climate finance to decarbonize just these sectors by 2030.

Note: The period covered is 2022-2030 for the steel and cement sectors, 2024-30 for the power sector and 2023-30 for road transport.
Source: Authors’ calculations.

Thus, contrary to the common narrative, the power sector does not entail large additional capex for abating carbon emissions in India when compared to steel and cement. Ironically, power is the sector that has received the most attention in mitigating the impacts of climate change.

Of the total estimated additional capex requirements, $392 billion alone is estimated for two high-emitting sectors, viz., steel ($251 billion) and cement ($141 billion). India’s steel sector faces large capital requirements because of rising production levels and carbon-intensive production methods. The sector is projected to grow by over 80 percent by 2030, i.e., from 125 million tons in 2022 to 225 million tons by 2030. India’s carbon emission intensity (tons of CO₂ produced per ton of steel) of 2.4 significantly exceeds the global average of 1.85.

India’s cement sector requires $141 billion additional capex, driven mainly by its dependence on coal for power generation and kiln operations, despite using efficient dry process technology. While the sector has a lower carbon intensity of 0.44 compared with the global average of 0.6, a sharp increase of 82 percent in projected cement production, from 370 million tons in 2022 to 674 million tons by 2030, significantly drives up the capex required for decarbonizing the sector. Both steel and cement are hard-to-abate sectors where reducing emissions is particularly challenging. Decarbonizing these sectors requires mainly the use of carbon capture and storage (CCS) –  the only feasible technology at this stage, but it is expensive to deploy.

India is estimated to require capex of about $57 billion for the power sector up to 2030. This also includes energy storage costs (battery storage costs and pumped storage costs) for renewable energy, which are estimated to entail capex of $10 billion. Thus, contrary to the common narrative, the power sector does not entail large additional capex for abating carbon emissions in India when compared to steel and cement. Ironically, power is the sector that has received the most attention in mitigating the impacts of climate change.

It is the steel sector which emerges as the most critical in terms of additional capex, followed closely by the cement sector. These findings underscore the substantial investment challenges in these hard-to-abate sectors, primarily driven by their carbon-intensive production methods and/or large production levels

India is also estimated to require $10 billion for switching over from internal combustion engine vehicles (ICEVs) to electric vehicles (EVs), and additional capex of $8 billion to develop the charging infrastructure for EVs. Thus, additional capex for road transport is estimated at $18 billion up to 2030.

Based on the above estimates, decarbonization of the four sectors would result in a large reduction in the use of fossil fuels – 291 million tons of coal and 72 billion liters of petrol and diesel – and mitigation of 6.9 billion tons of CO₂ in the power, steel and cement sectors. The road transport sector could not be included in CO₂ mitigation estimate as the relevant data was not readily available.

Conclusion

Our study presents a distinct perspective compared with existing research on India’s climate finance needs by estimating additional capex requirements in addition to capex already planned for the economy in the BAU scenario. The study disapproves the common narrative that the power sector needs large climate finance. It is the steel sector which emerges as the most critical in terms of additional capex, followed closely by the cement sector. These findings underscore the substantial investment challenges in these hard-to-abate sectors, primarily driven by their carbon-intensive production methods and/or large production levels.

The need for climate finance has arisen at a time when India is stepping up efforts to accelerate its growth rate by emphasizing physical infrastructure development and promoting manufacturing. As our findings demonstrate, India will need to manage its resources skilfully, balancing the competing demands of growth priorities and decarbonisation of the economy.

India will need to manage its resources skilfully, balancing the competing demands of growth priorities and decarbonisation of the economy.

Furthermore, India’ saving rate has declined in the recent period. Therefore, the key focus of policymaking needs to be on improving the saving rate of the general government (by reducing dissaving) and of the household sector. This would help India navigate the challenges of pursuing development goals and achieving the country’s environmental and sustainability targets without complicating macroeconomic management.

The post India’s Climate Finance Requirements – Steel and Cement Overwhelm Power first appeared on CSEP.

India’s vast land border has faced five wars and experienced other security threats such as illegal migration, cross-border human and narcotics trafficking, cattle smuggling, proliferation of fake currency notes, etc. Over the last three decades, the Indian state has sought to address this challenge through a calibrated mix of physical infrastructure, institutional mechanisms and development programs. Initiatives such as the setting up of  Department of Border Management (2004) in the Ministry of Home Affairs, expansion of the Border Area Development Programme (BADP, 1986-87), and the more recent Vibrant Villages Program (2023), reflect a growing policy consensus that securing borders requires not only fencing but increased state presence. Border Fencing is a part of the GoI’s  Border Infrastructure and Management (BIM) Scheme.

This blog examines the evolving state of implementation of border fencing with India’s neighbours – an issue that remains an understudied but crucial aspect of border management.

This blog examines the evolving state of implementation of border fencing with India’s neighbours – an issue that remains an understudied but crucial aspect of border management. Although border fencing defies uniform characterisation – ranging from barbed wire enclosures to concrete walls – it fundamentally refers to a physical infrastructure along an international boundary that restricts or regulates movement.

The blog also delves into the institutional architecture and political economy of border fencing, highlighting the decision-making structure at the center and state levels. It, however, does not assess the effectiveness of fencing as a border management tool. The focus is confined to India’s land borders and excludes the maritime domain, which is governed by a distinct maritime security framework.

Current Status: How Much of India’s Border Has been Fenced?

While the fencing project across the Myanmar border is in the initial stages, work on the other two border fences has been around for a long time and is at various stages of completion (Table 1).

Table I: Status of India’s Border Fencing

Source: author’s compilation using data from PIB, MHA Annual Report and media reports.

Note: % of unfenced border includes non-feasible stretches and disputed areas as well.

Notwithstanding some common border security threats that India faces along its various borders, each border also comes with its own set of challenges.

At the India-Bangladesh border, the primary concern has revolved around issues such as illegal immigration and cattle smuggling. The Border Security Force (BSF) estimates that about 20 lakh heads of cattle are smuggled out of India into Bangladesh annually. Fencing along this border was initiated in 1986, following the Assam Accords of 1985. Since then, 78.9% of the border has been fenced along stretches in Assam, West Bengal, Meghalaya, and Tripura.

India’s border with Pakistan presents a different security calculus, rooted in issues such as cross-border terrorism and drug smuggling. Fencing at this international border (IB), particularly along the Punjab, Jammu and Rajasthan borders, preceded the Kargil War and has since been fortified further, standing at 61.4%. This border has also seen technological upgrades, such as night vision cameras, motion sensors, etc., as part of an integrated security and surveillance architecture. Since the launch of Operation Sindoor in May 2025, the MHA has also approved a ‘comprehensive upgrade’ of the India-Pakistan border, combining surveillance with anti-infiltration technology such as night-vision cameras and motion sensors.

In contrast, fencing along the India-Myanmar border remains minimal, with only 30 kms of the border fenced (less than 2%) including a significant 10 km stretch in Moreh (Manipur). The complex security situation, marked by the effective control of the border areas by Ethnic Armed Organizations (EAOs) like the Arakan Army, and sensitivities around illegal cross-border movements, has pushed New Delhi to expedite its fencing project. The Free Movement Regime was also scrapped in February 2024 citing such concerns. However, recognising the shared deep ethnic linkages across the border, New Delhi in December 2024, allowed a new arrangement for cross-border movement for people living within 10 km of the Myanmar-Manipur border that would be regulated from 43 designated border crossing points where Assam Rifles (AR) personnel will issue ‘border passes’ to regulate entry and exit.

The AR, tasked with guarding this border, face a unique set of  challenges emanating from difficult topography, including dense forests that make patrolling an uphill task and create a breeding ground for drug trafficking, insurgent movement, and narco-terrorism. These conditions have necessitated a more nuanced, multi-layered approach to border management in the Northeast.

Lastly, along India’s other land borders, fencing has not been undertaken along the border with China due to differing perceptions of the Line of Actual Control (LAC) and related agreements. Likewise, the borders with Nepal and Bhutan remain unfenced, a reflection of long-standing treaty-based open-border regimes and relatively low levels of traditional border threats.

Institutional Framework: Who Fences the Border? 

Border fencing effort from India is a complex undertaking that involves multiple stakeholders, within the broader framework of border management. While the primary mandate lies with India’s Ministry of Home Affairs (MHA), the implementation of fencing involves coordination across several ministries, state governments and ground-level agencies.

Border fencing effort from India is a complex undertaking that involves multiple stakeholders, within the broader framework of border management. While the primary mandate lies with India’s Ministry of Home Affairs (MHA), the implementation of fencing involves coordination across several ministries, state governments and ground-level agencies.

The institutional foundation was strengthened following the recommendations of the Kargil Review Committee report. Following this, in April 2000, GoI set up a Group of Ministers (GoM) on Border Management to review the national security system in its entirety. Based on the recommendations of the GoM, the Department of Border Management was formed in 2004. The department comprises two divisions – Border Management (BM) I and II. BM-1 manages infrastructure in the border areas including construction of fence, floodlighting, roads and BOPs. BM-II is tasked with the implementation of schemes like BADP, Vibrant Villages Scheme, coastal security schemes, etc. It also exercises oversight over the Land Port Authority of India (LPAI).

The administrative control of the Centrally Armed Police Forces (CAPFs) also lies with the MHA. The CAPFs include the BSF, AR, Indo-Tibetan Border Police (ITBP), and Sashastra Seema Bal (SSB) that guard India’s different borders under the overall principle of ‘one border one force.’

In addition to the MHA, several other stakeholders play an important role. The state governments (including the state police), other ministries (such as the Ministry of External Affairs and Ministry of Defence), district administration and central/state agencies (Border Roads Organisation, Central Public Works Department, etc.) are key stakeholders that support the decision making, execution and maintenance of border fencing. The role of the state governments is critical, particularly due to land acquisition requirements, which is a major bottleneck in fencing projects.

At the grassroots level, the border communities also remain key, albeit often under-acknowledged, stakeholders. Their livelihood, mobility and security are directly shaped by fencing decisions.

Key Trends: How is India’s Border Fencing Strategy Evolving?

A review of the different border fencing initiatives across India’s land borders indicates four key trends.

1. Differentiated fencing priorities based on threat perception: New Delhi adopts a tailored approach to border fencing, determined by an assessment of the nature and intensity of threat perception, as well as strategic necessity, by the policymakers.

New Delhi adopts a tailored approach to border fencing, determined by an assessment of the nature and intensity of threat perception, as well as strategic necessity, by the policymakers.

For instance, the border with Nepal and Bhutan remains un-fenced due to treaty arrangements and minimal border security. The India-Nepal Treaty of Peace and Friendship (1950) and the India-Bhutan Friendship Treaty (2007) institutionalise open borders that reflect mutual trust and shared socio-cultural affinities. Conversely, borders with Pakistan, Bangladesh and Myanmar, where cross-border threats such as terrorism, smuggling or insurgency are viewed as more acute, have seen significantly higher levels of border fencing.

However, threat prioritisation or perception is not static. India’s recalibration of the FMR with Myanmar in 2024, shows how the approach to border management is also responsive to geopolitical and security flux.

2. Centralised decision making structure: The border fencing decision making architecture in India is highly centralised, led by the MHA. While states and local administrations are operational partners, playing an important role in land acquisition and village rehabilitation, they remain subordinate to national security imperatives determined by the Centre. While top-down, in some ways this structure can also accommodate local, socio-economic concerns of the border communities and border areas. One case in point is the Punjab Police’s initiative on the deployment of advanced anti-drone technology in a bid to check cross-border drug and arms trafficking while working in tandem with the BSF, which guards the India-Pakistan border. While such attempts are occasionally made towards a bottom-up approach to border management in general and fencing in particular, the decision-making apparatus, nonetheless, remains predominantly top-down in nature.

3. Regional sensitivities and neighbourhood perceptions: India’s fencing efforts, particularly when undertaken unilaterally, are not always perceived as friendly gestures by neighbour country governments and other political actors. For instance, in May 2025, the National Unity Government (government in exile) of Myanmar has urged India to suspend border fencing as it is “unilateral” and undertaken in “areas where the boundary remains unresolved”. Bangladesh has also objected , arguing that India’s attempts at fencing violate bilateral agreements, including 1975 Joint India-Bangladesh guidelines that prohibit construction of any defensive structures within 150 yards of the international border. India, however, does not regard wired fences as a defense infrastructure. These diverging interpretations lead to frictions, both at diplomatic and operational levels. Such concerns have also been recognised in parliamentary responses, and pose a persistent challenge to India’s border management objectives.

4. Supporting conventional fencing with technology: India’s border security has also incorporated technological solutions, to support the conventional barbed wired and physical barriers infrastructure. Advanced surveillance systems, as exemplified by the increasing use of UAVs (Unmanned Aerial Vehicles), CCTVs, motion sensors, underground sensors, Hand-Held Thermal Imager (HHTI), Night Vision Device (NVD), Twin Telescope, Unmanned Aerial Vehicles (UAV) act as a force multiplier to secure the borders. This is particularly important in terrains contained by topographical challenges, such as those along the India-Myanmar border.

This has also led to cross-learning among the CAPFs. For instance, the successful deployment of laser fences by the BSF along the India-Pakistan border inspired the SSB along the India-Nepal border to propose a similar venture in the Sonauli check post (UP) with a possibility of further extension. Institutional best practices are thus often replicated, which enables cross-fertilisation of ideas and better border management overall.

Enhancing multi-sectoral and multi-stakeholder border management

Fencing is an integral component of border management and plays an important role in securing India’s borders. As physical barriers increasingly become a part of national boundaries globally, India’s fencing project carries not just security implications, but also diplomatic and socio-economic consequences, particularly for the border communities.

As a high-impact and sensitive intervention, border fencing must be analysed both horizontally (across institutions and sectors) and vertically (from national to local levels) to inform responsive and resilient policymaking.

Given the high stakes, border fencing demands a nuanced, evidence-based approach, grounded in multi-sectoral and multi-stakeholder research. Furthermore, research on innovative practices, such as the BSF’s use of beehives on smart fences to offer the border communities an alternative source of income, needs to be encouraged for further replication. Strengthening research on smart fencing with a focus on technological gaps, can further enhance the operational capacity of India’s border guarding forces. Finally, these initiatives also require New Delhi to invest in diplomatic engagements with the neighbouring countries to overcome perception challenges.

As a high-impact and sensitive intervention, border fencing must be analysed both horizontally (across institutions and sectors) and vertically (from national to local levels) to inform responsive and resilient policymaking

The post Fencing, Security and Border Management: The Indian experience first appeared on CSEP.

As a result of the attacks, India suspended procedural cooperation under the Indus Waters Treaty (IWT) of 1960 until the treaty is renegotiated and Pakistan ceases its support for cross-border terrorism on Indian soil. Second, India asserted that it will no longer tolerate future terrorist attacks, and any cross-border terror attack will be considered an ‘act of war’. New Delhi’s actions reflect a strategic utilisation of the grey zones in international law to convey political messages to Pakistan.

New Delhi’s actions reflect a strategic utilisation of the grey zones in international law to convey political messages to Pakistan.

This blog examines India’s decision to put the IWT in ‘abeyance’ and exercise its ‘right to respond’ to terrorist attacks from Pakistan and Pakistan-occupied Jammu and Kashmir (PoJK). This analysis concludes that India has strategically engaged international law through implied rather than explicit legal reasoning. While avoiding formal legal claims, India’s actions nonetheless carry normative implications—reflecting a cautious effort to balance operational flexibility with the risks of setting precedents that could be used by other states.

 Abeyance of the IWT

 The IWT, facilitated by the World Bank in 1960, represents one of the most robust water-sharing agreements globally. The agreement divides six rivers of the Indus system, where India has exclusive rights over the eastern rivers, the Sutlej, the Beas, and the Ravi. Pakistan has similar rights over the western rivers, the Indus, the Jhelum, and the Chenab. The institutional framework of the IWT established a Permanent Indus Commission to oversee the treaty’s implementation and an elaborate dispute settlement mechanism to resolve any differences that may arise. Remarkably, Article XII of the IWT, which deals with general provisions, does not permit unilateral suspension, termination or withdrawal from state parties. In this context, India’s decision to place the treaty in ‘abeyance’ deviates from the provisions of the IWT.

By putting the treaty in ‘abeyance,’ India has neither withdrawn from the IWT nor altered the course of the Indus rivers. Instead, New Delhi will stop exchanging data concerning the IWT’s operation, withhold technical cooperation and notification, and refrain from participating in the dispute resolution mechanisms.

While the term ‘abeyance’ connotes a state of temporary inactivity, it is not a legally recognised term in international law. Neither the IWT nor the Vienna Convention on the Law of Treaties, 1969 (VCLT) refer to ‘abeyance’ as a mechanism to suspend treaty obligations.

Without formally denouncing the IWT, India has circumvented the treaty’s suspension procedures, which require the consent of both parties to suspend or terminate the treaty under Article XII. India has also skilfully embraced procedural ambiguity by invoking the doctrine of rebus sic stantibus under Article 62 of the VCLT. Simply put, this refers to a fundamental change in circumstances, which permits a party to the treaty to terminate or withdraw from the treaty. The official notification addressed to Pakistan identifies altered population dynamics and the advancement of clean energy development as fundamental changes in circumstances, necessitating renegotiation of the treaty.

By putting the treaty in ‘abeyance,’ India has neither withdrawn from the IWT nor altered the course of the Indus rivers. Instead, New Delhi will stop exchanging data concerning the IWT’s operation, withhold technical cooperation and notification, and refrain from participating in the dispute resolution mechanisms. In addition, procedural cooperation is suspended until the IWT is renegotiated and Pakistan ceases its support for cross-border terrorism. While India has been trying to renegotiate the IWT since 2023, Pakistan is unwilling to come to the table. So, the IWT’s suspension becomes crucial as Pakistan relies heavily on the Indus river for its agriculture and economy. The information about the flow of the Indus enables Pakistan plan for its agricultural and economic growth.

India faces a significant threshold when invoking rebus sic stantibus. For instance, in the Gabčíkovo-Nagymaros Project case of 1977 Hungary and Slovakia jointly notified the International Court of Justice (ICJ) about certain differences on the Budapest Treaty of 1977 regarding the implementation and termination of the Gabčíkovo-Nagymaros Barrage System.  The ICJ rejected Hungary’s claim of fundamental political and economic changes (para. 104) as it was unrelated to the Budapest Treaty’s object and purpose. Similarly, the court dismissed the claim of new developments in environmental law and environmental knowledge, considering them as probable changes in the future (para. 104). The high threshold set by the ICJ in the Gabčíkovo-Nagymaros Project case would make it difficult for India to argue population dynamics and advancement of clean energy as fundamental changes.

Nevertheless, it is implausible that the issue of the IWT would go before the ICJ. The dispute resolution mechanism under the IWT does not reference settling any differences before the ICJ. Instead, the IWT establishes a graded system, which involves submitting disputes to the Indus Water Commission, subsequently to a neutral expert, and finally to a court of arbitration if the issue remains unresolved. Due to India’s non-participation in the Permanent Court of Arbitration proceedings and plans to exit the World Bank’s neutral expert proceedings, the dispute mechanisms under the treaty are currently in limbo.

Right to Respond and Pre-empt Cross-Border Attacks 

 India’s utilisation of the grey areas of international law is further exemplified by the statements it made following Operation Sindoor on 7 May 2025.  The military campaign targeted four locations in Pakistan and five locations in PoJK reportedly housing terrorist infrastructure. Following the success of Operation Sindoor, India’s Foreign Secretary asserted that India exercised its ‘right to respond’ to ‘pre-empt’ and deter cross-border attacks. In addition, India briefed members of the United Nations Security Council (UNSC), barring Pakistan, about the actions that it had taken against the terrorists. While this suggests a subtle reference to the right of self-defence as outlined in Article 51 of the United Nations Charter (UNC), India seems to refrain from making this suggestion explicit. Four crucial points may be noted in this regard.

First, India did not categorise the Pahalgam incident as an armed attack. This is could arguably be on two grounds. First, due to uncertainty on whether an armed attack carried out by a non-state actor may invoke the doctrine of self-defence, as discussed below. Second, due to the high threshold of what constitutes an armed attack. As per the ICJ in the Nicaragua Case, 1986 (paras. 191 and 195), self-defence may be invoked against the most grave forms of force, which are determined by the gravity of the attack, measured by the scale and effects of the use of force. The Pahalgam attack, which led to the death of 26 individuals, may arguably not meet this high threshold established by the ICJ. A counterargument is that the Pahalgam attack should not be analysed in isolation. It should be assessed in the context of the numerous other attacks by Pakistani terrorists on Indian soil, including the Pulwama attack, the Uri attack, the 26/11 attack and the 2001 Parliament attack. In this regard, the accumulation of events theory (Tams, at 288) posits that small-scale attacks could collectively constitute an armed attack for self-defence. Although contentious, the ICJ has alluded to the accumulation of events theory in the Oil Platforms Case (para. 64) and the Armed Activities Case (para. 146). However, India has not relied on the accumulation of events theory to justify its actions.

Second, the attribution of the actions of The Resistance Force (TRF), an offshoot of the Pakistani terrorist group Lashkar-e-Taiba (LeT), to Pakistan is missing. The TRF initially claimed responsibility for the Pahalgam attack and later rescinded it. To overcome the breach of territorial sovereignty, jus ad bellum, or the conditions under which states may use force, requires a victim to attribute the activities of a non-state actor to a state to invoke self-defence. As per international jurisprudence, a state should either have ‘effective control’ (Nicaragua Case, 1986, paras. 105 – 110) or ‘overall control’ (Tadic Case (Appeal Judgment), paras. 116 – 123) of the actions of the non-state groups. Attribution of the conduct of non-state actors under the effective control test is based on a high threshold, requiring the state to direct or control specific operations. In contrast, the overall control allows attribution when a state organizes, supports and coordinates the activities of a non-state actor, even if it does not control every aspect of the operation. In addition, attribution under Article 8 of the Responsibility of States for Internationally Wrongful Act requires a state to provide instructions, direction or have control of the actions by the non-state group. So, attribution either requires clear evidence that a state directed or controlled specific operation in question or coordination of activities with a non-state actor. Mere harbouring or ideological sympathy – without proof – is insufficient to justify self-defence. While the link between Pakistan’s Inter-Services Intelligence with the LeT has been previously established, India still needs to attribute the acts of the TRF with Pakistani government entities. Compounding this challenge is that the terrorists responsible for the Pahalgam attack were killed by Indian forces on 28 July 2025 in what is labelled as ‘Operation Mahadev’ without any interrogation. Against this context, while India was shaming Pakistan for cross-border terror attacks, it has not directly attributed the attacks to the Pakistani army or government. India’s Foreign Secretary has asserted that India’s response to the Pahalgam terrorist attack was directed towards non-civilian, non-military targets; and confined to terrorist camps. The specific use of these terms implies that India does not view its initial military operations against terrorist infrastructure in Pakistan through the prism of self-defence, which may violate Pakistan’s territorial sovereignty.  It was only when Pakistani armed forces started attacking Indian territory, New Delhi resorted to attacking military targets in the subsequent days.

By not explicitly relying on the UNC framework on self-defence, India seems to be using the grey areas of the law on self-defence to carry out its long-standing objective of dismantling terrorist infrastructure in Pakistan. This is important in light of India’s recent assertion that any future terrorist attack emanating from Pakistan will be considered an ‘act of war’.

Third, India veiledly referenced the ‘unable or unwilling doctrine’ without explicitly invoking it. General international law imposes certain obligations on states regarding non-state actors within their territory. States are obliged to refrain from assisting non-state actors in carrying out armed activities against another state and ensure that their territories are not used to conduct armed attacks against another state. If the state is unable or unwilling to take effective action against the non-state actors, forcible action against the non-state actors in self-defence may be permissible. This doctrine is not only subscribed to by the United States, the United Kingdom and Australia, but also endorsed in the Chatham House Principles (at 969), the Leiden Policy Recommendations (para. 42) and the Bethlehem Principles (Principles 11 and 12). Although the Pahalgam incident would be a clear-cut exemplification of the unable or unwilling doctrine, India stated that “there has been no demonstrable step from Pakistan to take action against the terrorist infrastructure on its territory or on territory under its control.” India’s unwillingness to explicitly subscribe to the unable or unwilling doctrine aligns with its previous positions. As noted by Burra, although India was informed of its right to self-defence by the United States after the Balakot strikes in 2019, it risked being accused of committing an act of aggression instead of invoking the unable or unwilling doctrine. Similarly, the official categorisation of the military operations of 2016 is referred to as surgical strikes.

Fourth, the contours of India’s briefing to the members of the UN Security Council (UNSC) following Operation Sindoor remain ambiguous. Article 51 UNC offers no guidance on the obligation to report self-defence claims to the UNSC. However, state practice from the Congo (S/2004/489), Iran (S/1999/781), and Israel (S/2010/21) suggests that the language of Article 51 plays a crucial role in invoking the right to self-defence. India has reportedly informed 13 out of 15 members of the UNSC (barring Pakistan and Sierra Leone) about the targeted, measured and non-escalatory measures aimed at deterring and pre-empting further terror attacks. Yet, the language employed does not reflect its reliance on the argument of self-defence under Article 51.

By not explicitly relying on the UNC framework on self-defence, India seems to be using the grey areas of the law on self-defence to carry out its long-standing objective of dismantling terrorist infrastructure in Pakistan. This is important in light of India’s recent assertion that any future terrorist attack emanating from Pakistan will be considered an ‘act of war’.

India could adopt a dual-track strategy. While retaining flexibility in bilateral and operational contexts, it can begin clarifying its legal views in selective multilateral forums—such as the UN General Assembly or other multilateral debates—on issues like treaty adaptability, attribution standards for non-state actors, or the threshold for self-defence.

Understanding India’s Actions under International Law

India’s response to the Pahalgam terror attack reflects a carefully calibrated engagement with international law—one that leverages legal norms without fully committing to unsettled doctrines. By invoking ideas like rebus sic stantibus and the ‘right to respond’, India signals a willingness to act within a legal frame while avoiding rigid precedent that might constrain future policy.

Arguably, this strategic ambiguity is not without consequence. Even when not formally claimed, legal reasoning can contribute to precedent and shape international expectations. Two risks may be noted: weakening the clarity of legal standards India itself might wish to invoke in the future; and opening the door for other states to adopt similarly ambiguous approaches in ways India may oppose.

To address this, India could adopt a dual-track strategy. While retaining flexibility in bilateral and operational contexts, it can begin clarifying its legal views in selective multilateral forums—such as the UN General Assembly or other multilateral debates—on issues like treaty adaptability, attribution standards for non-state actors, or the threshold for self-defence. Doing so would allow India to shape evolving norms while preserving space for context-driven responses.

India has the opportunity to engage more assertively in shaping international law in areas aligned with its security and development interests. By contributing to normative clarity where it matters most, India can safeguard its strategic autonomy while reinforcing its role as a responsible actor in the international legal order.

The post Treading the Grey Zones of International Law: India’s Responses after the Pahalgam Attack first appeared on CSEP.

DOWNLOADS

• Download Data Set

1. Overview

This dataset compiles comprehensive electoral data for both state-level legislative assembly elections and national-level general (Lok Sabha) elections in India. It covers all 29 Indian states(Present 28 states and a former state Jammu & Kashmir) and parliamentary constituencies from 1991 to 2023. The dataset is structured as a balanced panel, with one row per State × Year (or Nation × Year, in the case of parliamentary elections), enabling longitudinal analysis of political trends, incumbency dynamics, and electoral outcomes across time and space.

All data have been meticulously compiled from the official Election Statistical Reports published by the Election Commission of India (ECI).

2. Unit of Observation

• For state elections:
  One row = One Indian state × One calendar year
• For national elections:
  One row = India-wide outcome × One calendar year

Time period: 1991 to 2023

3. Variables

4. Special Cases and Coding Decisions

• Coalition governments:
  • Winning_Party/Alliance = Full name of the alliance (e.g., “INC+NCP”)
  • Ruling_Party = Largest party within that alliance (e.g., “INC”)
• President’s Rule:
  • Ruling_Party = “President Rule”
  • All other election-related variables for that year are left blank
• General (Parliamentary) Elections:
  • The same structure and variables are applied to national-level data
  • State is coded as “All India” for these entries

5. Data Source

All data are extracted from the Election Commission of India’s Election Statistical Reports, available in the public domain. These are official documents that include constituency-level results and aggregate summaries for every Indian state and parliamentary election.

6. Structure and Data Quality

• Dataset is balanced: 30( all 29 states + India) × 33 years (1991–2023) = 990 observations at the state level
• Consistent formatting and spelling for all party and alliance names
• All vote figures are in absolute numbers, not percentages
• Handles edge cases like mid-term elections, early dissolutions, and President’s Rule uniformly

7. Public Use and Research Applications

This dataset is intended for open-access academic and public research. It enables a wide range of empirical investigations into the political economy of Indian elections. Researchers may use it to study incumbency advantage, the effect of party competition on vote shares, or the evolution of regional vs. national parties over time. It can be readily merged with fiscal, demographic, or policy datasets to support econometric modeling, event-study analysis, and comparative political research. The dataset’s panel structure, organized by state and year, enables rigorous empirical analysis of temporal and cross-sectional variation. The staggered scheduling of elections across states introduces natural variation over time, allowing for the identification of dynamic patterns and potential causal relationships in electoral and policy-related outcomes.

The post Election Dataset Documentation (India, 1991–2023) first appeared on CSEP.

August 5, 2025, will mark a year since a student-led uprising reshaped Bangladesh’s political future. The ‘monsoon revolution’ of 2024 resulted in the ousting of Prime Minister Sheikh Hasina after 15 years in power. Nobel Laureate, Prof. Muhammad Yunus, stepped in as Chief Advisor to the interim government. The effects of this transition have been felt closely in the South Asian region, particularly by India, Bangladesh’s closest neighbour.

Once at the core of India’s ‘Neighbourhood First’ and ‘Act East’ policies, Bangladesh was the largest recipient of Indian Lines of Credit (US$ 7.2 billion), among the top-five export destinations in Asia, and the largest source of India’s tourist exports. It was also a vital link in New Delhi’s regional connectivity ambitions, with road, rail, energy, and digital networks being stitched together across borders with Dhaka as a willing partner.

However, in the past year, political turbulence has affected this momentum. Bilateral ties have grown unpredictable. Non-tariff barriers have crept in, stalling trade flows and frustrating businesses on both sides. Connectivity linkages have been disrupted, with trade and transshipment rights suspended. The unease in bilateral relations deepened with the inaugural China-Pakistan-Bangladesh trilateral summit in Kunming on June 19, 2025. For New Delhi, the symbolism of that meeting was hard to ignore. Bangladesh’s growing comfort with Beijing and Islamabad presents a strategic and economic challenge for India, particularly for the connectivity projects.

That said, all is not lost. New Delhi recently provided medical support for burn victims in the tragic air crash in Dhaka. Earlier, Dhaka had extended ‘mango diplomacy’ and both countries exchanged Eid greetings. This offered a sliver of thaw in an otherwise frosty year. But the hard truth remains that until a permanent government takes charge when elections are held in Bangladesh, relations between the two countries will likely remain politically difficult. India’s challenge is not just to wait for political stability in Dhaka, but to adapt.

…until a permanent government takes charge when elections are held in Bangladesh, relations between the two countries will likely remain politically difficult. India’s challenge is not just to wait for political stability in Dhaka, but to adapt.

Against this backdrop, this blog explores how India can work towards functional connectivity with Bangladesh after elections are held. To influence the future contours of connectivity with Bangladesh, India must act now. From recalibrating its regional strategy to leveraging subnational channels, this blog outlines four actionable pathways for New Delhi to keep the connectivity agenda pragmatic.

Current state of connectivity projects

After investing heavily towards multi-faceted connectivity with Dhaka during a phase of relations that was described as “Sonaali Adhyay” (golden chapter), bilateral relations witnessed a tumult. Connectivity projects both physical like railway lines, and ones related to digital connectivity have been stalled and indefinitely suspended in many cases (Table 1).

Recent developments have underscored the extent to which cross-border connectivity and economic integration in South Asia remain highly susceptible to political relations. For India, the experience with Bangladesh illustrates that even well-structured connectivity and trade initiatives can be compromised when bilateral political trust is eroded.

Recent developments have underscored the extent to which cross-border connectivity and economic integration in South Asia remain highly susceptible to political relations. For India, the experience with Bangladesh illustrates that even well-structured connectivity and trade initiatives can be compromised when bilateral political trust is eroded.

Tensions began to overtly surface following India’s decision to provide political refuge to the former Bangladeshi Prime Minister Sheikh Hasina. While initial diplomatic friction was anticipated, a series of subsequent measures and public statements from Bangladesh’s interim administration, particularly concerning trade and connectivity, have further strained the relationship. A notable inflection point was the statement made by Chief Advisor Prof. Muhammad Yunus during a visit to China in March 2025, wherein he referred to India’s Northeast region as landlocked and promoted Bangladesh as the “only guardian of the ocean for all this region.” In April, India withdrew transshipment rights previously granted to Bangladeshi goods transiting through Indian territory. Tension further exacerbated after reports surfaced in May about China aiding Bangladesh in reviving an old air base at Lalmonirhat, located just 12 km from the Indian border.

Such measures, combined with the other trade restrictions imposed subsequently (Table 2), have raised concerns about the broader implications for regional economic cooperation. The suspension of land-route transshipment has had a tangible economic impact on Bangladesh, particularly its export-driven garment sector. According to recent reports, India’s restrictions on land-port imports from Bangladesh may affect trade worth approximately USD 770 million, amounting to nearly 42% of total bilateral trade.

Table 1: Status of Select Connectivity Project between India and Bangladesh

Source: Prepared by authors using various sources, including MEA, PIB and news articles. Note: The table covers projects that were affected after August 5, 2024.

Apart from hiccups in the physical connectivity linkages, India and Bangladesh have also taken steps to restrict bilateral trade and transshipment (Table 2)

Table 2: Trade and Transit Restrictions between India and Bangladesh since August 2024

Source: Prepared by authors using various sources.

The suspension of cross-border passenger trains, for instance, has undercut one of New Delhi’s most valuable tools in bilateral diplomacy – people-to-people ties.

India’s connectivity ties with Bangladesh are undergoing a phase of uncertainty, marked by suspended linkages, limited economic cooperation, and rising competition from China. The suspension of cross-border passenger trains, for instance, has undercut one of New Delhi’s most valuable tools in bilateral diplomacy – people-to-people ties. Consequently, medical tourism, which emerged as another pillar of India-Bangladesh relations, takes a hit. Bangladesh accounts for nearly 50% of India’s medical tourists, a statistic that underscores both the demand for Indian healthcare services and the broader economic value of this sector.

Additionally, amid the deterioration of connectivity, reports have emerged about China trying to attract medical tourists from Bangladesh. Recent reports also suggest that China is trying to take over Indian port projects in Bangladesh.

Such developments warrant urgent policy recalibration from New Delhi, particularly in preparation for engagement post elections in Bangladesh.

The Way Forward for New Delhi

This blog suggests four ways that New Delhi can prepare for a functional connectivity with Dhaka.

1. Focus on low-visibility, high-impact connectivity projects

Rather than large, politically sensitive infrastructure ventures that may trigger domestic opposition within Bangladesh, India can focus on less visible but economically vital projects.

Rather than large, politically sensitive infrastructure ventures that may trigger domestic opposition within Bangladesh, India can focus on less visible but economically vital projects. For example, the extension of the India-Bangladesh Friendship Pipeline, which was stalled due to political unrest, can be restarted. This pipeline transports diesel critical for powering Bangladesh’s textile industry, a key driver of its economy. Projects like these are mutually beneficial.  Additionally, India has already seen a positive turn with the resumption of freight train services in February 2025 after a nine-month pause. Building on this momentum by extending similar trade facilitation and logistical support projects can slowly rebuild trust and functional interdependence.

Lastly, India should also consider deepening cross-border power cooperation. The inauguration of the region’s first trilateral power agreement between Nepal – India – Bangladesh came in the midst of a turbulent political situation between New Delhi and Dhaka. A similar power cooperation agreement is being pursued with Bhutan, while bilateral power cooperation continues between Tripura in Northeast India and Comilla in eastern Bangladesh, despite financial challenges (Table 1). Strengthening such energy partnerships can enhance regional energy security and serve as a mutually beneficial pathway.

This would also embed Bangladesh more firmly in a regional cooperation framework led by India.

      2. Engaging Like-Minded Countries: Toward Triangular Cooperation

India should also expand its strategic bandwidth by further engaging with like-minded countries like Japan. Japan already has a strong institutional presence in Bangladesh through projects like the Matarbari deep-sea port. By developing triangular cooperation or coordination models, such as co-financing development projects, India can regain strategic influence without bearing the full financial or diplomatic burden alone. A case in point is Japan’s USD 641 million loan via Japan International Cooperation Agency (JICA) for the modernisation of the Joydebpur-Ishurdi railway, a vital segment of the Trans-Asian Railway connecting Bangladesh with Kolkata. India can indirectly further its own connectivity goals through such engagements.

India could explore the possibility of leveraging Quad-based cooperation, albeit in flexible, issue-specific permutations. This could take the form of digital infrastructure, health diplomacy, or regional connectivity…

Finally, India could explore the possibility of leveraging Quad-based cooperation, albeit in flexible, issue-specific permutations. This could take the form of digital infrastructure, health diplomacy, or regional connectivity, areas where India and its Quad partners, Japan, the US, and Australia, share long-term interests.

     3. Strengthen people-to-people ties and developmental partnership

With Bangladesh, complementing the narrative of shared history as well as shared future, India needs to expand on its developmental assistance for Dhaka. India has funded over 90 High Impact Community Development Projects (HICDPs) cumulatively worth over USD 50 million so far that includes the construction of student hostels, academic buildings, cultural centres, orphanages, and others. Additionally, Border Haats between India and Bangladesh need to be restarted. The imperative to undertake such projects is more now when India needs to find ways to reengage with Dhaka.

To solidify long-term linkages, the Ministry of External Affairs can perhaps increase the Indian Technical and Economic Cooperation (ITEC) slots from the current 800 annually (in 2024) and ensure regular budgetary support for existing scholarships to Bangladeshi students. Capacity Building programs and training programs for Bangladeshi civil service officers, judicial officers and judges, police officers need to continue unimpeded as it lies in New Delhi’s interests to foster deeper institutional linkages with various quarters of the Bangladeshi polity. Such initiatives need to be sustained from the Indian side to gain strategic advantage. The cancellation of judicial officials’ training in India scheduled for February this year when juxtaposed with the 2025 Bangladeshi Diplomats Training Program offered by China accentuates the point.

New Delhi often emphasises shared history, cultural and familial linkages that connect the two neighbours in bonds that far transcend the logic of strategic relations.

New Delhi often emphasises shared history, cultural and familial linkages that connect the two neighbours in bonds that far transcend the logic of strategic relations. India’s expression of interest to restore filmmaker late Satyajit Ray’s ancestral property in Mymensingh as part of a “shared cultural heritage” helps underline the message of both neighbors being co-custodians of Bengali heritage and culture.

     4. Engage via paradiplomacy/ sub-national engagements

Para-diplomacy as a strategy of engagement needs to be further explored. States like Tripura and West Bengal can take the lead due to their geographic proximity, linguistic and cultural affinities with India’s eastern neighbour. Such initiatives can complement national efforts, while also keeping the engagement relatively insulated from the political sensitivities that often characterise central-level diplomacy. For instance, Assam’s successful para-diplomacy push with Bhutan, including through high-level visits from both sides can serve as a replicable model for Agartala and Kolkata. Politically contentious issues like Teesta, however, need to be avoided. The Centre though not directly involved, can facilitate the engagement via vital inputs and assistance of its various agencies (such as the Land Port Authority of India). Additionally, other bordering states, including Meghalaya, Mizoram, and Assam, should be encouraged to explore similar engagement models, thereby contributing to a more decentralised and resilient framework for subregional cooperation in India’s eastern neighbourhood.

The recent political tensions have strained relations between New Delhi and Dhaka and disrupted the hard-won connectivity gains of the last two decades. Yet, the foundations of the relationship remain strong and are worth reinvesting in. While the current sensitivities may limit India’s ability to initiate or implement connectivity initiatives, this interim period leading up to election in Bangladesh in early 2026, offers India a crucial period to prepare. Over the next 6–12 months, New Delhi must focus on doing its groundwork, including identifying priority areas, strengthening internal coordination, and building the institutional and delivery capacity needed to act decisively once a new elected government takes office in Dhaka and is ready to re-engage.

The post What Future for India-Bangladesh Connectivity? first appeared on CSEP.

India’s automobile industry is one of its stars. It has scale, cost competitiveness, and engineering depth, supported by a large and growing domestic market.

India’s automobile industry is one of its stars. It has scale, cost competitiveness, and engineering depth, supported by a large and growing domestic market. Passenger vehicle (PV) production surpassed 5 million units in 2024–25, placing India third globally in total PV output. It leads the world in two-wheeler production and ranks second and third in bus and medium-to-heavy commercial vehicle output, respectively.

Despite these achievements, India remains a marginal player in global automobile exports. While its cars are affordable and capable, they do not reach far-flung markets. This paradox, of world-class potential constrained by an inward-looking industrial strategy, raises important questions about incentives, trade policy, and the role of the state in shaping competitiveness.

A Thriving Domestic Market, But a Missing Export Engine

India’s domestic market is one of the largest in the world, with demand rising steadily, driven by urbanisation, income growth, and aspirational consumption. Domestic sales of passenger vehicles crossed 4.3 million units in 2024–25, up from 2.77 million in 2019–20, reflecting a growth of 48 percent. By contrast, exports grew by only 16 percent over the same period, from 0.66 million units to 0.77 million units. These trends have led automakers, both domestic and foreign, to focus overwhelmingly on the domestic market.

Table 1: Passenger Vehicle Sales

Source: Society of Indian Automobile Manufacturers

This highlights the core issue: although the fundamentals such as vendor depth, labour skills, and cost structure are in place, the incentives to build globally competitive businesses remain weak, almost inert.

…although the fundamentals such as vendor depth, labour skills, and cost structure are in place, the incentives to build globally competitive businesses remain weak, almost inert

A Protective Tariff Regime, and “Water in the Tariff”

India’s auto tariffs are among the highest in the world. The applied most-favoured-nation (MFN) tariff on passenger vehicles is around 125%, compared to 15% in China, 9.8% in Germany, and around 27.5% in the United States, where it was previously around 2.5% before President Trump’s 2025 announcements (see Table 2).

Why does the industry require such high tariffs? Surely these levels are not essential for its survival. What explains its resistance to lower rates? Put differently, why insist on such high “water in the tariff”, meaning tariff redundancy, where domestic prices remain well below what tariff-based pricing would suggest?

Table 2: Comparative Import Tariffs on Passenger Vehicles

Source: WITS

Note: After President Trump’s latest announcements, the US tariff has increased to 27.5% and India’s tariff has been reduced to 70%-110% in 2025. In both cases, the previous tariff rates are presented to allow for a clearer comparison(SIAM 2025)(Palmer & Desrochers 2025).

High tariffs, along with restrictions on used vehicle imports and local content requirements, have long been used to nurture fledgling car industries. However, the Indian automobile sector is no longer in its infancy, having enjoyed nearly eight decades of protection. Such tariffs enable price-cost markups, dull innovation, and discourage global ambition.

…tariffs enable price-cost markups, dull innovation, and discourage global ambition.

Moreover, incumbent firms operating in protected environments begin to view such protection as integral to their business model. Whether domestic or foreign, once firms invest under the promise of tariff protection, they naturally resist its removal. This was clearly seen in Australia, where GM, Ford, and Toyota lobbied aggressively to delay tariff reductions, a pattern echoed globally.

When high tariffs are combined with a large, under-penetrated domestic market (car ownership in India is only 57 per 1,000 people compared to 322 in China and 670 in Japan (Table 3)), it is unsurprising that many capable automakers prefer to focus on meeting domestic demand. As a result, Indian carmakers have made limited investments in building global brands, aligning with international standards, or developing export-oriented platforms. Consequently, India exports only 16.62 percent of its car production, down from 2019, compared to 93 percent in Germany, 62 percent in Japan, and 59 percent in South Korea (Table 3). Even China and the United States, with far larger domestic markets, export a greater share of their output.

It is instructive to look at the case of Brazil, a large car market and producer. In 2011, Brazil hiked import duties on cars by about 30 percentage points, hoping to boost domestic production (Magalhaes & Alerigi Jr 2025). In the short-term, production did increase, to a peak of 3.7 million vehicles in 2013. In 2024, production was only 2.55 million vehicles, down about a third from the peak. While Brazil suffers from several other economic problems, high protection for its car industry has created inefficiencies and lowered demand.

Table 3: Comparative analytics

Source: International Organization of Motor Vehicle Manufacturers, World Population Review,  The Global Economy, UNCOMTRADE

Could Car Prices be an Issue?

No, that hypothesis does not hold water. India’s car prices are globally competitive. The comparative vehicle price index for India is just under 70, one of the lowest in the world, with the world average benchmarked at 100 (Table 3).

Some cars with identical specifications, like the Suzuki Swift, clearly highlight India’s cost advantage. In India, the Swift is a popular hatchback, with base models starting at around ₹5.9 lakh and better variants costing ₹8–9 lakh including GST. In the UK, the same car (albeit with stricter safety specifications) is priced at approximately £15,000–£17,000, or about ₹20 lakh including 20% VAT—more than double the Indian price. Even in Japan, Suzuki’s home market, the Swift typically costs ¥1.5–2 million, equivalent to ₹10–13 lakh, still notably higher than in India (Kitamura 2023) (Srithar 2023) (Adams and Walton 2025).

Could Car Quality be an Issue?

The answer to this question is also no, although there are nuances.

India exports cars to a wide range of markets, including both emerging economies and developed countries. The United States and Germany have historically been major destinations. In 2019, the US and Mexico each imported nearly a billion dollars worth of Indian vehicles. Since then, exports to these markets have declined sharply, first due to the disruptions caused by COVID-19 and more recently because of rising protectionist policies across key importing nations (OEC 2025).

The point is that India cannot export to exacting markets unless it meets their safety and emission standards, so the capability to meet those standards exists.  Moreover, India has introduced upgraded standards – including the Bharat New Car Assessment Program (NCAP) for crash testing in 2023, aligning in protocol with the Global NCAP; and the Bharat VI emission norms, introduced in 2020, equivalent to Euro 6 standards.  Where India remains behind is on scope, scoring and enforcement. There are fewer testing facilities and less rigorous testing protocols. Domestic standards are somewhat weaker in some protocols, but the bigger gap lies in enforcement and test scores (Das 2023) (Jadhav et al. 2024).

Electric Vehicles: New Opportunities and Challenges

The global shift to electric vehicles (EVs) offers India both opportunities and challenges. A major hurdle is the global dominance of Chinese EVs, driven by China’s leadership in battery manufacturing. India’s strength lies in the size and growth potential of its domestic market, which is just beginning to embrace EVs.

Continued policy support, such as the 5 percent GST on EVs and subsidies for charging infrastructure, can help Indian manufacturers scale up, lower costs, and invest in research and development. These scale-driven advantages could provide a strong base for Indian EV makers to compete in global markets.

Trade Negotiations: The Auto Sector as a Stumbling Block

Domestic carmakers argue that steep tariff cuts could hurt local manufacturing and investment. The auto sector remains a key hurdle in India’s trade talks, especially with the EU, which has demanded significant tariff reductions as a condition for a deal (TOI Business Desk 2025) (Mishra 2025)

It is not realistic to expect that automobiles will continue to enjoy such high levels of protection that the sector has been used to. And this is not just about the United States and its recent trading strategy.

The world in general does expect much more reciprocity in trade, especially from a major partner like India that is now exporting more than $800 billion in goods and services (Kathuria 2025).

This defensiveness seems increasingly anachronistic. Countries such as South Korea and Japan did not succeed by permanently shielding their markets, but by gradually opening them to competition while supporting their exporters. India, too, needs to pivot, using trade policy not merely as a shield but as a lever to enhance competitiveness.

To complement tariff rationalization, India will need to deepen global engagement through free trade agreements, foster technological development, and enhance regulatory quality to reverse its declining competitiveness (Prabhakar et al. 2025).

The Way Forward

For India’s auto industry to become more export-oriented and dynamic, several steps are essential. Tariffs should be rationalized to reduce redundancy and sharpen competitive pressures. Even countries with protected markets, like Brazil, maintain car tariffs at “only” 35 percent. As free trade agreement partners push for lower duties, India would benefit from a more flexible stance on auto-sector commitments. Aligning domestic regulations more closely with global safety and emission standards, and improving enforcement, would enhance the industry’s international competitiveness. Most importantly, firms must view exports not as a risk but as a strategic goal. This shift will require long-term investment and a willingness to move beyond domestic comfort zones. Government backing, including incentives for research and development, and calibrated support for branding, and market access, can help nurture this ambition.

Conclusion

A typical car firm in India produces a reliable and respectable quality product that, especially in the smaller segments, is very competitively priced. It benefits from a strong auto components sector to support its growth. But it also enjoys unusually high protection from foreign competition, arguably more than any counterpart firm in other major markets. Since the firm’s domestic market is large and growing, it does not feel any pressure to cater to consumers in overseas markets. It does export a relatively small share of its output, typically to markets where meeting regulatory standards and catering to customer preferences is less demanding.

India has built cars for itself. Now it must build them for the world.

The real challenge for this firm lies not in capacity but in vision and ambition. Exporting is demanding since it requires long time horizons, openness to feedback, and the resolve to meet rigorous standards. Yet exporting fosters valuable learning and will also help the firm to compete better in its home market, especially once protection declines. The firm should remember that all world class firms are strong players not only in their respective home markets, but also significant players in multiple international markets.

India has built cars for itself. Now it must build them for the world.

The post India’s Auto Paradox: Competitive, Capable, but Still Circling the Home Track first appeared on CSEP.

In 2008, Japanese direct investment to India and ASEAN were nearly equal at $5.6 billion and $6.3 billion, respectively. While total FDI in India increased from 2008 to 2024, Japanese inflows were volatile and underperformed relative to ASEAN. In 2024, Japanese investment in ASEAN surged to $28.7 billion, more than five times the $5.3 billion invested in India (Japan External Trade Organization, 2025). The gap highlights how rapidly Japanese capital can shift toward business-friendly environments and how India’s policy frictions can undermine its market advantages.

Between 2008’s near parity and 2024’s disparity, India did not lose its share of Japanese capital to China, but to Southeast Asia.

The divergence in Japanese capital allocation stemmed partly from global disruptions such as the 2008 financial crisis and the COVID-19 pandemic, but primarily from India’s protectionist turn aimed at China amid rising security tensions. Throughout the 2010s, India introduced a range of non-tariff trade barriers, including anti-dumping investigations leading to duties on Chinese industrial inputs critical to Japanese supply chains, investment restrictions, and expanded technical standards for imported products.

Japan’s stagnant FDI into India reflects the unique vulnerabilities of Japanese firms to India’s trade restrictions targeting China. Unlike many international firms whose Indian operations focus on services or consumer goods, Japanese manufacturers produce complex, parts-intensive products reliant on Chinese inputs that local Indian suppliers can rarely provide.

Despite India’s efforts to reduce Chinese economic influence, its industrial ecosystem remained dependent on Chinese industrial components for scale, cost, and variety. Between 2007 and 2022, India’s industrial imports from China tripled, accelerating at twice the pace of imports from other nations as the country’s industrial growth outpaced its domestic supply capacity (Global Trade Research Initiative, 2025). The contradiction left Japanese manufacturers caught between India’s anti-China restrictions and their continued need for Chinese components, creating a climate of supply chain disruptions and regulatory uncertainty. Rather than emerging as a reliable investment alternative to China for Japanese capital, India has become a complicated one.

Rather than emerging as a reliable investment alternative to China for Japanese capital, India has become a complicated one.

From Convergence to Collateral Damage

Rising security tensions and global shifts away from China led India to implement restrictive measures targeting Chinese economic inputs and investments in the 2010s and early 2020s. India’s tariff increases were relatively modest in the period. Average applied tariffs rose modestly from 13-14% in the early 2010s to 15.9% by 2024. India’s tariff rates on Chinese industrial inputs between 2008 and 2024 also saw only modest increases (World Bank, 2025a; World Bank, 2025b). The key disruption to Japanese investment came from India’s surging use of non-tariff measures on Chinese imports and capital.

India’s 185 anti-dumping investigations into Chinese imports between 2014 and 2024 struck at the heart of Japanese manufacturing operations. The investigations are targeting steel, machinery, chemicals, and other critical manufacturing inputs, leading to duties that generated compliance costs and sourcing uncertainty (Directorate General of Trade Remedies [DGTR], 2025). The impact was stark: 76.4% of Japanese companies in India cited the ‘absence of suppliers that meet quality and technical capability requirements’ in 2024—over 24 percentage points higher than the ASEAN average of 52.2% (Japan External Trade Organization, 2024). India’s anti-dumping actions handed ASEAN the advantage of more reliable and efficient industrial ecosystems for Japanese manufacturers.

India compounded its operational challenges by layering on investment restrictions. In April 2020, the Indian government introduced Press Note 3, a regulation mandating cabinet-level approval for foreign investments originating from countries sharing a land border (Department for Promotion of Industry and Internal Trade, 2020). Over the four years that followed, authorities had approved only 124 proposals, rejected 201, and left more than 200 proposals stalled in bureaucratic limbo (Economic Times, 2024). Japanese firms with any Chinese equity stakes, joint ventures, or sourcing relationships were indirectly in Press Note 3’s crosshairs. Meanwhile, ASEAN countries were streamlining investment pathways and maintaining openness to foreign capital, a contrast that gave Japan an obvious choice.

In the competition for Japanese capital, India retains fundamental advantages over its regional competitors, but there is a narrowing window of opportunity to close ASEAN’s lead.

India also increased technical standards for foreign products entering its market. The Bureau of Indian Standards Act of 2016 enabled India to sharply increase mandatory certifications across sectors central to Japanese manufacturing, such as electronics, steel, and machinery (Government of India, 2016). Data collected in 2022 revealed that India had 4,618 coded non-tariff measures enforced by 38 different institutions, compared to Japan’s 1,278 measures across just 12 institutions (Sarmeen & Sundaram, 2022; Nabeshima & Obashi, 2022). While intended to promote quality and safety, India’s expanding standards system created compliance burdens that could make entering the Indian market unprofitable. When combined with sourcing disruptions and investment restrictions, the product scrutiny created a cumulative effect that pushed Japanese investors toward markets with smoother operations support, transparent processes, and regulatory predictability.

An Open, But Narrowing Window of Opportunity

Capitalizing on India’s strengths will require business-friendly reforms that ease regulatory processes, foster integrated manufacturing ecosystems, and strengthen institutional partnerships with Japan.

In the competition for Japanese capital, India retains fundamental advantages over its regional competitors, but there is a narrowing window of opportunity to close ASEAN’s lead. Capitalizing on India’s strengths will require business-friendly reforms that ease regulatory processes, foster integrated manufacturing ecosystems, and strengthen institutional partnerships with Japan. India’s next moves will determine whether it reclaims Japanese capital as a strategic pillar of Indo-Pacific growth, or allows ASEAN to consolidate its lead for good.

In Part Two, we examine a three-pillar strategy for turning the tide, focusing on policy predictability, operational support, and innovation diplomacy. Each will be key to restoring Japan’s confidence in India as a long-term investment partner.

The post The $23 Billion Gap: How India Lost Japan’s Capital first appeared on CSEP.

The barriers to investment and business operations that led Japanese investors to shift from India to ASEAN after 2008 and created the fivefold investment gap seen today are reversible. To win back Japanese capital, India must pursue a policy agenda focused on streamlining regulation, supporting business growth, and developing deeper institutional partnerships.

To win back Japanese capital, India must pursue a policy agenda that addresses the specific regulatory friction and supply chain challenges that drove Japanese manufacturers to ASEAN, while leveraging Japan’s unique strengths in technology and infrastructure development.

Streamlining Regulation

India can start to address its business environment’s regulatory challenges by developing industry-integrated roadmaps that outline industrial policy targets and timelines at five- to ten-year intervals. Singapore’s Industry Transformation Maps are a proven model that offers investors a clearly defined regulatory direction through specific targets and timelines (Singapore EDB, 2022). Future-facing policy frameworks with explicit commitments and progress reviews would provide Japanese stakeholders with the predictability needed to sustain investments.

Regulatory harmony between governments will also prevent overlapping red tape from increasing compliance costs for Japanese firms. Mutual Recognition Agreements (MRAs) similar to those established between Japan and the European Union have prevented duplicate testing of Japanese equipment sold in Europe and simplified market access for Japanese firms (European Commission & Government of Japan, 2001). A similar understanding between Indian and Japanese standards authorities focusing on high-value sectors of the future could align certification processes for the semiconductors, advanced batteries, and green technologies, where India-Japan collaboration has enormous potential.

India must combine regulatory clarity and harmony with speed. India has proven solutions in place, but they need to scale. The National Single Window System, launched in 2021, enables foreign investors to monitor their approval processes through a single, consolidated interface (Press Information Bureau, 2021). At the state level, Maharashtra’s Maha Parwana scheme offers companies investing over $5.8 million blanket approval within 48 hours, with the remaining clearances guaranteed to be completed within 30 days or automatically approved if delayed (Economic Times, 2020). Scaling these digital reforms nationwide would prove to Japanese investors that India can match ASEAN’s operational efficiency.

Building Integrated Supply Networks

India must create an environment that attracts Japanese capital while facilitating the growth of Japanese firms.

India must create an environment that attracts Japanese capital while facilitating the growth of Japanese firms. A critical untapped opportunity lies in Japanese small and medium-sized enterprises (SMEs) that have largely avoided the Indian market to date. Unlike in Southeast Asia, where Japanese firms typically bring networks of smaller firms, large Japanese companies in India have primarily worked with local suppliers and subcontractors. While this approach has reduced costs for major firms, it also means that Japanese SMEs lack the necessary support infrastructure to enter India’s market (Pajon & Saint-Mézard, 2018). The absence of integrated Japanese supply networks perpetuates the sourcing challenges that initially drove Japanese investment toward ASEAN.

India could build supplier parks that co-locate Japanese companies with their supply chains. Vietnam’s Thang Long Industrial Park exemplifies the potential of this model. It houses 106 Japanese companies that manufacture at both small and large scales while employing over 60,000 people (Japan Bank for International Cooperation, 2023). India can replicate this success by establishing Japanese-designed supplier parks near existing manufacturing clusters in Gujarat, Tamil Nadu, or Maharashtra, states that are already home to Japanese operations, including Toyota Tsusho’s facilities in Gujarat (Toyota Tsusho, n.d.). Suppliers positioned near existing clusters would provide Japanese SMEs with viable entry points into India.

To complement these industrial clusters, India should partner with Japan to expand logistics networks by inviting Japanese development agencies to co-finance rail links and logistics hubs in the Chennai–Bengaluru corridor. Japan has already demonstrated its commitment: Japan holds a 26% stake in the Delhi–Mumbai Industrial Corridor and pledged $12 billion for the Ahmedabad–Mumbai high-speed rail line (Pajon & Saint-Mézard, 2018). The initiatives are delivering results for India beyond infrastructure, as high-speed rail construction alone provided over 90,000 jobs in India in 2024 (JETRO, 2024). Expanding this model would strengthen India’s supply chains and deepen Japan’s manufacturing footprint, thereby creating the jobs and logistics infrastructure India needs to support its growth. 

Fostering Innovative Partnerships

India and Japan should co-launch joint R&D centers that combine India’s engineering talent with Japan’s technical expertise. To staff R&D facilities effectively, expanding bilateral fellowship programs focused on technology development and exchange would facilitate the cross-trained talent pipeline these innovation hubs require.

A revitalized bilateral innovation fund and startup exchange could deepen commercial ties between India’s tech ecosystem and Japanese investors. The original Japan-India Startup Hub initiative, launched in 2018, stalled during the COVID-19 pandemic and has potential for expansion. Targeted seed capital, accelerator programs, and regulatory fast-tracks could catalyze cooperation in future technologies and increase Japanese SME participation in India (Pajon & Saint-Mézard, 2018). India’s vibrant startup scene, combined with Japan’s capital-rich enterprises, could accelerate innovation and attract billions of dollars in Japanese venture capital to India’s tech sector.

Sustained bilateral partnerships require a pipeline of cross-trained professionals who understand both markets’ technical requirements and business practices. India should proactively invite Japanese universities and research institutes to create satellite campuses or co-branded innovation centers in its technology hubs. The University of Tokyo, Waseda University, and Kyoto University offer proven partnership models that Indian research organizations can replicate to cultivate bilingual talent, foster joint patents, and align Japanese capital with India’s research ambitions. Japanese universities would gain access to India’s engineering talent pipeline for joint research projects, while Indian partnerships would help them compete with Chinese universities for Southeast Asian students and research funding.

The Path Forward

India has a narrow window to implement these reforms and transform from a challenging to a reliable destination for Japanese capital.

India has a narrow window to implement these reforms and transform from a challenging to a reliable destination for Japanese capital. The barriers to investment and business operations that pushed Japanese toward ASEAN after 2008 are reversible, but only through decisive action across all three pillars: streamlining regulation to provide predictability, supporting business growth through integrated supplier parks and infrastructure partnerships, and developing the long-term partnerships that will sustain cooperation.

Success would close the $23 billion investment gap while establishing India as Japan’s strategic anchor in Indo-Pacific economic integration. India’s path will decide whether it reclaims its position in Asia’s high-value manufacturing networks, or watches ASEAN’s investment lead become insurmountable. India’s economic future depends on seizing the moment.

The post Closing the Gap: How India Can Revive Japanese Investment first appeared on CSEP.

With India’s plan to transition towards a greener economy, it is time once again to revamp trade and investment policies, especially for green goods and technologies that can enable this transition.

With India’s plan to transition towards a greener economy, it is time once again to revamp trade and investment policies, especially for green goods and technologies that can enable this transition. In this context, integrating into Global Value Chains (GVCs) for green goods presents a strategic opportunity, as India moves towards its net zero targets.

Key trends in India’s trade in green goods

Green goods—such as solar panels, wind turbines, water purification systems, and energy-efficient appliances—are critical for advancing a low-carbon economy and improving access to green technologies. Examining India’s current position in the global green goods market, its comparative advantages, and its tariff policies provides a good starting point to assess the country’s readiness to emerge as a global leader in this vital space. This blog attempts to do so by analysing India’s trade in Green Goods (GGs)[1].

The scope of green goods considered here is not limited to final green products alone but also includes intermediate goods and essential inputs which are not necessarily green. For instance, solar energy technologies include key components such as solar PV modules and PV cells, and upstream materials like silicon wafers and polysilicon, which form the backbone of solar panel manufacturing. Similarly, wind energy systems rely on components such as rotors, generators and towers, which are not green but support green manufacturing.

Figure 1 presents India’s exports and imports of GGs as a share of its total exports and imports over the past decade. In 2024, GGs accounted for 4.5% of India’s total exports growing at a compound annual growth rate (CAGR) of 9% over the past decade, more than double the 4.4% CAGR of non-GG exports. On the import side, GGs constituted 5% of total imports in 2024, with a decade-long CAGR of 7.8%, compared to 5.8% for other goods. While the volume of GG imports has consistently exceeded exports (Figure 2) over the decade, the higher growth rate of GG exports signals a promising trend. In 2024, India imported 42% of the total GG goods from China, followed by the United States (6%) and Germany (5%).

Figure 1: Share of Green Goods in India’s Total Exports and Imports (in per cent)

Source: World Integrated Trade Solutions (WITS)

Figure 2: Trade Volume of Green Goods (GGs) in India, 2015–2024 (in USD Billion)

Source: World Integrated Trade Solutions (WITS)

Distribution of green goods trade across the supply chain stages

In terms of various supply chain stages, India’s exports and imports of green goods are analysed for four product categories – raw materials, intermediate goods, capital goods, and consumer goods, in line with the World Integrated Trade Solution (WITS) classification [2].

India exhibits relative export strength in Intermediate goods, being a net exporter in nearly half (45%) of them (22 out of 49). However, it remains significantly import-dependent in other categories, particularly raw materials and capital goods category wherein India is a net importer in around 76% and 68% of products respectively (Figure 3).  This suggests that while India is building capacity in Intermediate goods, it still relies heavily on imports of key capital-intensive green technologies which are important for supply chain integration, and high value addition.

Figure 3: Distribution of India’s Net Green Trade Position by Product Type, in 2024

Source: World Integrated Trade Solutions (WITS)

India’s share in global green goods exports and imports

While India’s share in global exports of green goods increased between 2017 and 2024, it is still less than 1%.

While India’s share in global exports of green goods increased between 2017 and 2024, it is still less than 1%.  On the import side, India’s share in global imports stood at around 2.5% in 2024, and it rose at a higher rate as compared to exports, highlighting rising domestic demand for environmentally friendly technologies and products. A large share of green goods (107 out of 182) in which India is a net importer suggests that the country is actively building domestic capacity in these sectors. In this context, being a net importer need not be seen as a weakness. Rather, imports of green technologies and intermediate goods can play a constructive role in the early stages of capacity development, enabling technology transfer, and the creation of backward linkages that support domestic industry growth.

Figure 4: India’s Share of Global Trade in Green Goods (2017-2024) (in per cent)

Source: World Integrated Trade Solutions (WITS)

To corroborate the findings on India’s share in global GG exports, a Revealed Comparative Advantage (RCA) analysis was conducted. The RCA index measures a country’s relative advantage or disadvantage in exporting a particular product, compared to the world average. An RCA value above 1 indicates comparative advantage, while a value below 1 suggests disadvantage[3]. Revealed comparative advantage assessment reveals that India lacks a comparative advantage in 71% of traded green goods. This gap narrows when compared to specific countries—India trails China in 54% of GGs, Germany in 44%, South Korea in 42%, and Vietnam in 34%.

India’s tariff policies for green goods

The above assessment of India’s global standing in green goods reveals that the country still has a long way to go in this space and needs supportive policies to effectively integrate into green global value chains (GVCs). In this regard, lowering tariffs emerges as a fundamental policy decision to enhance India’s competitiveness and facilitate greater participation in green GVCs.

The tariff on GGs rose from 8.04% in 2012 to 11.41% in 2023, paralleling the increase in tariffs on all goods (from 13.30% to 14.82%). This protectionist approach may shield the domestic industry in the short term, but it risks inflating costs for downstream users and delaying the adoption of clean technologies.

While global trends reflect a steady decline in overall tariffs[4] to promote freer trade, India’s average tariff levels have been rising (Figure 5 and 6), raising the cost of final products where domestic production remains limited.

The tariff on GGs rose from 8.04% in 2012 to 11.41% in 2023, paralleling the increase in tariffs on all goods (from 13.30% to 14.82%). This protectionist approach may shield the domestic industry in the short term, but it risks inflating costs for downstream users and delaying the adoption of clean technologies. A more liberal tariff policy on GGs could play a critical role in fostering a competitive, affordable, and sustainable green economy in India.

Figure 5: Average effectively applied tariff on Green Goods: Global vs. India (2014–2023) (in %)

Source: World Integrated Trade Solutions (WITS)

As the international trade ecosystem evolves with rising demand for greener goods, it is important that India positions itself as an active player in this new trade paradigm. India must align its trade policy with its climate goals and adopt a proactive, strategic approach to green integration.

1. The government should create and officially recognise an internal list of green goods mapped to relevant HS codes.

1. Develop an official green goods list: The government should create and officially recognise an internal list of green goods mapped to relevant HS codes. This list should be derived through extensive industry stakeholder consultations to ensure practical identification of products critical for India’s green transition.
2. Reduce tariffs on essential Green Goods (GGs): Tariffs on green goods that India heavily imports—such as components for solar panels, water treatment systems, and other clean technologies—should be progressively reduced to lower costs and accelerate domestic adoption. Free trade agreements (FTAs) offer an ideal platform to negotiate lower import duties on these key green inputs.
3. Create a conducive investment ecosystem: India should establish a supportive environment to strategically attract foreign direct investment (FDI) in green technology, renewable energy, and clean manufacturing. This requires continued improvements in the ease of doing business.
4. Boost private sector R&D in green manufacturing: Indian private enterprises need to significantly ramp up their investments in research and development focused on green technologies, processes, and products to build long-term competitiveness.
5. Strengthen MSME participation in green goods: Targeted support—through financing, training, technology access, and capacity building—must be provided to micro, small, and medium enterprises (MSMEs) in the green goods space to ensure their effective participation and foster inclusive green growth.

The post Understanding the Importance of Trade Integration for India’s Green Transition: An Analysis of Trade in Green Goods first appeared on CSEP.

In November 2024, India and Japan convened their inaugural Economic Security Dialogue, emphasising a shared resolve to deepen strategic cooperation in the face of growing geopolitical volatility and technological competition. The statement recognised  that “both sides underscored the need for closer collaboration to protect economic interests, and build resilient supply chains…by way of policy facilitation for business and academic partnership between relevant actors in India and Japan.”

Japan and India have been partnering in the rare earth elements (REEs) space as far back as 2012 but these recent developments signal a shared sense of urgency: both democracies recognise that reliable access to minerals like lithium, cobalt, nickel, copper, rare earths and others is essential for clean-energy goals, industrial growth, and economic security.

This article explores the evolution of the India-Japan economic relationship, Japan’s domestic and international policies in the critical minerals sector, the evolution of India and Japan’s critical minerals cooperation, and the pathways for enhancing this partnership.

Geostrategic convergences underlining the India-Japan partnership

The India–Japan partnership is anchored in a broader partnership of shared values and economic ties. Both nations elevated their relationship to a Special Strategic and Global Partnership in 2014, built on democratic governance, rule of law, and civilisational links. Economically, their ties are institutionalised by landmark agreements. The 2011 India–Japan Comprehensive Economic Partnership Agreement (CEPA) is among India’s most comprehensive free-trade pacts, covering goods, services, and investment. This has liberalised over 94% of bilateral trade and spurred investment. India and Japan also coordinate through multiple joint forums. For example, the Industrial Competitiveness Partnership (launched in 2021) and the Clean Energy Partnership (CEP, launched in 2022) are agreements that foster joint ventures and financing in energy, steel, textiles, and advanced manufacturing. Japan pledged ~JPY 5 trillion (USD 42 billion) of public and private Japanese investment over five years for projects in India.

Concrete projects underline this industrial collaboration. Indian and Japanese firms are already working together on rare earths and clean energy. In the minerals sector, for example, Toyota Tsusho (a trading arm of Toyota Group) partnered with India’s Indian Rare Earths Limited (IREL) as far back as 2012, to separate and refine rare earths mined in India. This collaboration paved the way for Toyota Tsusho’s subsidiary, Toyotsu Rare Earths India, which processes thousands of tons of Indian rare earth oxides and purifies them for export back to Japan. Such ventures help Japan’s industries (automotive, electronics, defence) secure supply of magnet-grade rare metals, while giving India value-added industrial capacity. In clean energy, Japanese companies are also active partners. For instance, in 2022 DENSO Kirloskar Industries (a Japanese-Indian JV) installed solar-powered water-pumping systems in rural Karnataka to recharge aquifers and promote carbon-neutral water supply. This illustrates how Japanese expertise in green tech and manufacturing supports India’s sustainable infrastructure.

These ties are underpinned by shared multilateral interests. Both India and Japan are founding members of the Quad. They also coordinate in forums like the International Solar Alliance (ISA), the Mission Innovation, and the Indo-Pacific Economic Framework (IPEF) with partner countries. Under the Quad’s 2023 Summit, the leaders even launched the Quad Investors Network (QUIN) – a forum of major institutional investors and companies from each country – to co-invest in “critical technologies” and strengthen resilient supply chains.

India–Japan relations are deep and diverse: grounded in shared values and democracy, backed by agreements like CEPA, and exemplified by joint projects such as rare-earth refining with IREL amongst various other industrial and business level collaborations. This broad partnership provides a strong foundation for jointly tackling the challenges of critical mineral security.

Japan’s domestic ecosystem for energy security

Japan’s evolving strategy on critical minerals is deeply shaped by both past disruptions and forward-looking priorities. The 2010 incident with China, when rare earth exports were curtailed, served as a turning point, prompting Tokyo to strengthen the institutional role of the Japan Organization for Metals and Energy Security (JOGMEC) formerly called Japan Oil, Gas and Metals National Corporation. This allowed the agency to directly invest in overseas mining projects and secure access to vital inputs. Within a decade it slashed its reliance on Chinese rare earths from about 90% to roughly 58%. Japan invested in overseas mining projects, built strategic stockpiles, and supported new recycling and substitution technologies. For example, Japan’s Shin-Etsu Chemical has long operated world-class facilities for rare-earth separation, using advanced solvent-extraction methods since the 1960s. The momentum intensified after subsequent crises, notably the 2011 Fukushima disaster and, more recently, Russia’s invasion of Ukraine—both of which exposed Japan’s vulnerability due to its high dependence on imported energy and minerals.

In response, Japan’s domestic policy has become more assertive and structured (see Table 2). The approval of the 7th Strategic Energy Plan (SEP) in February 2025 reflects a major shift in how Tokyo approaches critical mineral security. The plan identifies copper and battery materials as essential for the country’s green transition, setting the tone for new initiatives. Financial tools and public-private partnerships are being deployed to support Japanese companies in acquiring overseas mining assets, while domestic capabilities are being enhanced through mineral recycling and exploration of seabed resources, especially in areas near Japan’s coastline that have shown promising reserves.

At the same time, Japan is paying closer attention to the environmental implications of deep-sea mining, with sustainability principles increasingly guiding its domestic exploration strategy. Taken together, these developments signal a broader effort by Japan to build greater technological autonomy and supply chain resilience, while remaining open to strategic international partnerships to meet its long-term critical mineral needs.

…these developments signal a broader effort by Japan to build greater technological autonomy and supply chain resilience, while remaining open to strategic international partnerships to meet its long-term critical mineral needs.

Strategic Alignment: India–Japan cooperation for critical minerals

India and Japan share a large majority of critical minerals in their official lists, with over 20 minerals in common (see Table 3), reflecting strong alignment in their strategic focus areas for technology, energy, and security.

The history of India–Japan cooperation in resources and clean energy goes back decades and has accelerated in recent years. Their partnership has evolved from general development aid to strategic joint initiatives. For example, Japan’s Official Development Assistance (ODA) to India originally focused on infrastructure (e.g. the Delhi–Mumbai Industrial Corridor and Mumbai–Ahmedabad bullet train), but has expanded to high-technology and green growth. Likewise, institutional mechanisms such as the India–Japan Energy Dialogue (est. 2006) and Steel Dialogue (est. 2020) integrate discussions of resource inputs and efficiency. Under the Clean Energy Partnership (CEP), Japan has extended over ¥300 billion (US$2.7 billion) loans for solar and wind projects. These ongoing frameworks mean that resource security is not a side issue, but a core part of planning: access to minerals like lithium for batteries or rare earths for wind turbines is built into energy and industrial planning.

These ongoing frameworks mean that resource security is not a side issue, but a core part of planning: access to minerals like lithium for batteries or rare earths for wind turbines is built into energy and industrial planning.

Within this context, rare-earth collaboration is a flagship example. The IREL–Toyota Tsusho joint venture demonstrates a long-term, sustained engagement. After the 2012 MoU and launch of Toyotsu Rare Earths India, both sides continue exploring further steps. But the cooperation can go beyond a single commodity. Japan’s can shared its newly developed deep-sea mining technology with India’s nascent efforts, dovetailing with India’s own Deep Ocean Mission. Meanwhile, India’s ambition to build gigafactories and expand EV production creates demand for Japanese battery technology and minerals. In both cases, joint labs and Research and Development (R&D) can be established. For example, partnerships between Japan’s National Institute of Advanced Industrial Science & Technology and Indian Institutes for Technology or the various labs under the Council of Scientific and Industrial Research, could be considered.

India–Japan mineral collaboration is already woven into a larger tapestry of industrial development and infrastructure investment.

Thus, India–Japan mineral collaboration is already woven into a larger tapestry of industrial development and infrastructure investment (see Table 1). Japanese investment and technology help build up India’s renewable energy capacity and semiconductor labs, both of which hinge on reliable mineral inputs. Conversely, India’s growing manufacturing base and resource potential allow Japan to mitigate supply risks. Together, they are turning the shared strategic vision of a diversified, resilient Indo-Pacific economy into concrete action – from tying supply chains in Quad initiatives to implementing the ambitious Clean Energy Partnership loans. All these efforts not only address energy transition goals, but also strengthen economic security: by ensuring neither country can be easily cut off from the minerals needed to sustain its industries and clean-tech future.

Table 1: India-Japan cooperation in the critical minerals sector

Source: Authors compilation based on various sources. Not exhaustive.

Strengthening Ties

India emerged at the most promising destination for Japanese business investments according to a 2024 survey by the Japanese Bank for International Cooperation (JBIC) surpassing China and Southeast Asia. This potential of expanding investment in India could also find resonance within the emerging critical minerals sector. To realise the full potential of India-Japan cooperation on critical minerals, targeted and strategic interventions are essential. The following policy options outline key areas where bilateral collaboration can deliver long-term economic and strategic gains.

1. Leverage the QUIN: India and Japan could channel QUIN’s funding into joint ventures for mineral processing in India, such as lithium or rare earth refineries. Harmonised export-credit and insurance support from Quad countries can enable long-term Japanese investment, framing these projects as strategic Quad-tech infrastructure.
2. Pursue triangular cooperation in Africa: New Delhi and Tokyo may consider joint investments in mining and logistics infrastructure in Africa and Southeast Asia. Through mechanisms like the India-Japan Cooperation Initiative for Sustainable Economic Development in Africa, they can co-finance extraction and transport, pool technical expertise, and offer coordinated bids to reduce Chinese dominance in resource-rich regions.
3. Promote a circular economy for minerals: India and Japan can assess opportunities to co-develop recycling technologies and urban mining capacities. Indo-Japanese R&D hubs and recovery plants for EV batteries or e-waste in India would strengthen domestic supply loops, reduce imports, and enhance sustainability.
4. Collaborate on green extraction and processing technology: The two countries can consider launching a joint Clean Metals Research Hub to develop eco-friendly mining and processing methods. This could include robotic mining, zero-waste processing, or safe handling of radioactive materials, drawing on Japan’s tech expertise and India’s operational scale. It could be jointly funded by Japan’s Science and Technology Agency and India’s Department of Science and Technology, with industry partners co-financing.
5. Invest in industry capacity-building and human capital: To ensure project success, Japan can consider investing in Indian training programs in mining and materials engineering, including expanding Japan-India Institutes for Manufacturing (JIMs) and technical exchanges. Building a skilled workforce and aligning operational standards will ensure long-term strategic compatibility for critical mineral partnerships.

By taking these steps, India and Japan would not only bolster their own economic security but also set an example of partnership. Joint processing hubs, co-financed mines abroad, circular-economy networks and collaborative labs would create redundancies and resilience in supply chains. Each suggestion is a concrete building block: they enable shared investments and technology exchange, reduce reliance on any one supplier (particularly China), and smooth the path of commodities from mine to factory. In an era where critical minerals power clean energy and digital industries, an India–Japan alliance makes strategic sense and reflects shared democratic values. Together, they can translate their growing Special Strategic and Global Partnership into tangible supply-chain security – strengthening both economies while supporting global efforts for a diversified, sustainable future.

Annex

Table 2:  Japan’s international partnerships and policy initiatives on critical minerals

Source: Authors compilation based on various sources. Not exhaustive.

Table 3: Critical Minerals on India and Japan’s lists (Updated as of June 2025)

Mineral	Indian List	Japanese List
Antimony
Beryllium
Bismuth
Cadmium
Cobalt
Copper
Gallium
Germanium
Graphite
Hafnium
Indium
Lithium
Molybdenum
Nickel
Niobium
Phosphorous
Platinum Group Elements (PGE)
Potash
Rare Earth Elements (REE)
Rhenium
Selenium
Silicon
Strontium
Tantalum
Tellurium
Tin
Titanium
Tungsten
Uranium
Vanadium
Zirconium

Source: Author’s compilation based on various sources.

Note: The author would like to thank Tejal Karad, Research Intern, CSEP for her research assistance and Dr. Constantino Xavier, Senior Fellow, CSEP for his feedback..

The post Economic Security in the Indo-Pacific: India-Japan Cooperation on Critical Minerals first appeared on CSEP.

Since 2014, India’s neighbourhood has witnessed a renewed push for engagement under New Delhi’s Neighbourhood First policy. As a result, there has been enhanced cooperation across various domains, ranging from infrastructure and connectivity to trade and defence. One indicator of the growing ties has been an increase in the frequency of high-level political engagements. For instance, Prime Minister Narendra Modi was the first leader in nearly two decades to visit Nepal and Sri Lanka in 2014 and 2015 respectively. This is significant as high-level ministerial visits often act as a tool to strengthen diplomatic ties and expedite agreements. Bilateral interactions between high level officials allow both countries to address issues faster compared to the standard bureaucratic processes, and can help pave the way for agreements between countries on a range of matters. For example, during Prime Minister Modi’s visit to Nepal in 2014, eight Memorandums of Understanding (MoUs) were signed between both sides across a diverse set of areas ranging from travel and connectivity to power and healthcare. Furthermore, a Line of Credit (LoC) worth US$ 1Billion was extended to the Government of Nepal and One Dhurv Advanced Light Helicopter (ALH) Mark III was handed over to the Nepal Army.

While India’s neighbourhood policy focuses on enhancing cooperation across various domains, this article focuses on India’s defence diplomacy with its neighbours. In particular, it maps the bilateral visits undertaken by Indian Defence Ministers between 2014 and 2024 to India’s immediate neighbourhood—Pakistan, Afghanistan, China, Nepal, Bhutan, Bangladesh, Myanmar, Sri Lanka, and the Maldives—based on open-source data collated from India’s Press Information Bureau (PIB) and Ministry of Defence (MoD) Annual Reports. This blog uses the term, “bilateral visits” to refer to official visits made by the Defence Minister to a country outside the context of multilateral forums or regional summits; that is, visits undertaken specifically for bilateral engagement rather than as part of broader multilateral gatherings such as the ASEAN Defence Minsters Meeting or the Shanghai Corporation Organisation Defence Ministers Meet.

Additionally, while high-level bilateral visits are an important aspect of defence diplomacy, they do not capture all aspects of India’s defence ties with its neighbours. Therefore, the blog does not aim to use the number of bilateral visits as a proxy to capture the overall health of India’s defence ties with its neighbours. Instead, the article limits its scope to a preliminary survey to understand the balance between regional and global visits by Indian Defence Ministers. It discusses trends in bilateral visits by the Defence Ministers, explores the potential motivations behind these visits, and examines their broader implications for India’s regional interests.

Overseas visits by India’s Defence Ministers

Between 2014 and 2024, India’s defence ministers have undertaken 39 visits across 23 countries. Notably, the United States has been the most frequent destination, with six visits, followed by four to Russia and Japan and three each to France, and Singapore.

Map 1: Countries visited by Indian Defence Ministers Since 2014

Source: Made by author using MapChart.net using data collected from PIB and MoD annual reports

Out of the 39 [Defence Minister] visits that have taken place abroad since 2014, India’s neighbourhood has received only three of them

Out of the 39 visits that have taken place abroad since 2014, India’s neighbourhood has received only three of them. In April 2016, then Defence Minister Manohar Parrikar paid a two day visit to China followed by a visit to Bangladesh in November later that year. In May 2023, Rajnath Singh undertook a three-day visit to the Maldives. A fourth visit to Sri Lanka was scheduled to take place in November 2023. However, it was cancelled, reportedly due to the domestic political situation in Sri Lanka at that time and Indian concerns over a Chinese ‘research vessel’ being granted permission to dock in Sri Lanka

These high-level bilateral defence engagements and visits have typically focused on enhancing defence cooperation by promoting joint military exercises, capacity-building initiatives and training and exchange programmes.

Table 1: Defence Ministerial Visits to India’s Neighbourhood since 2014.

Source: author’s compilation using data from PIB and MoD annual reports

Parrikar’s 2016 visit to Bangladesh – the first by an Indian defence minister since diplomatic ties were established in 1971 – came amid China’s increasing defence cooperation with Dhaka. Earlier that month, Bangladesh had accepted the delivery of two refurbished Chinese Type 035G Ming-class diesel-electric submarines. Furthermore, in October 2016, Chinese President Xi Jinping had visited Dhaka, during which Bangladesh-China relations were elevated to a “strategic cooperative partnership.” Parrikar’s timely visit signalled India’s intent to recalibrate its defence engagement with Bangladesh.

New Delhi’s decision to send Parrikar to Bangladesh in 2016 also signalled a shift in India’s regional defence strategy. Unlike the earlier engagements with a traditional focus on military training, joint exercises, and exchanges, this visit was notable for its emphasis on the defence industry and exports.

New Delhi’s decision to send Parrikar to Bangladesh in 2016 also signalled a shift in India’s regional defence strategy. Unlike the earlier engagements with a traditional focus on military training, joint exercises, and exchanges, this visit was notable for its emphasis on the defence industry and exports. A key outcome of the visit was the decision to work towards institutionalising defence engagement between both countries and enhancing collaboration in the defence industry.

The momentum carried into 2017, when Bangladesh Prime Minister Sheikh Hasina visited India. During this visit, New Delhi extended its first-ever defence Line of Credit (LoC) to Bangladesh, valued at $500 million, for the procurement of defence equipment from India. Additionally, both countries signed a Memorandum of Understanding (MoU) on the framework for defence cooperation. The LoC and a new MoU reflected India’s evolving approach to regional defence diplomacy – anchored in industrial partnerships, strategic financing, and long-term collaboration.

Similarly, Rajnath Singh’s visit to the Maldives in May 2023 was pivotal in expanding the scope of India’s military and strategic engagement with Malé. During the visit, Rajnath Singh alongside his Maldivian counterpart, Mariya Didi, laid the foundation stone for the construction of  ‘Ekatha Harbour.’ The development of this naval facility at Sifavaru in Uthuru Thila Falhu (UTF) atoll is one of the biggest grant-in-aid projects of India. It is meant to be a repair facility for the Maldivian National Defence Force (MNDF) Coast Guard vessels. As per the agreement, the harbour would be developed over a period of 15 years during which India will provide professional, technical and logistical support to manage the harbour. Apart from this, Rajnath Singh also handed over a Landing Craft to the MNDF and both sides agreed to ramp up defence trade, people-to-people contacts and exchanges between the armed forces of both countries.

Limited visits to the neighbourhood

While India’s Defence Ministers have made relatively few visits to the neighbourhood, a closer look reveals two important paradoxes at play.

First, India’s neighbourhood is a politically sensitive region. As the largest country in the region in terms of area, population, economy, and military strength, India often struggles to shed the perception of being a ‘big brother.’ This dynamic has often contributed to growing anti-India sentiments in the region, as seen in Bangladesh (2024) and the Maldives (2023). In such contexts, high-level bilateral visits can attract intense public scrutiny and be politicised by local media and political actors. For instance, Rajnath Singh’s visit to the Maldives in 2023 was met with strong criticism from the opposition despite the emphasis on grant projects and people to people cooperation, which mounted an “India Out” campaign. They portrayed the development of the Ekatha Harbour – supported by India – as a veiled attempt to expand Indian military presence on the island, framing it as a threat to Maldivian sovereignty. The situation escalated when President Mohamed Muizzu formally requested the withdrawal of all Indian military personnel from the Maldives on 18 November 2023. In light of such sensitivities, India may have opted to limit Defence Minister-level visits to avoid fuelling controversy or provoking domestic backlash in host countries.

The infrequency of such visits does not imply an absence of defence engagement. In fact, India has maintained robust engagement [with its neighbourhood] through its military leadership.

However, the infrequency of such visits does not imply an absence of defence engagement. In fact, India has maintained robust engagement through its military leadership. Service chiefs often visit the region, suggesting a preference for low-profile, steady military-to-military ties rather than headline-grabbing ministerial diplomacy. In 2024 itself, the Chief of the Naval Staff (CNS) undertook a four day visit to Bangladesh and the Chief of the Army Staff (COAS) undertook a five day visit to Nepal, and in May 2023 the Chief of Air Staff (CAS) undertook a four day visit to Sri Lanka. These visits broadly focused on enhancing military to military ties and featured addresses by the Indian service Chief’s at the host nations military institutions including the Staff College and the National Defence College. This approach of managing relations through frequent visits by the service Chiefs allows India to sustain defence cooperation while sidestepping political sensitivities.

Second, in some cases, the limited number of visits could also reflect the stability and maturity of India’s existing defence relationships in the region. Historically, India has shared strong defence ties with many of its neighbours. For instance, the India-Bhutan Friendship Treaty of 2007 allows Bhutan to import arms, ammunition, and other defence equipment through India. Additionally, the Indian Military Training Team (IMTRAT), operational in Bhutan since 1961-62, trains personnel of the Royal Bhutan Army (RBA) and the Royal Bodyguard of Bhutan (RBG).

Such arrangements extend beyond Bhutan. India and Nepal maintain a longstanding tradition of awarding honorary General ranks to each other’s Army Chiefs. Similarly, India and Sri Lanka conduct annual joint military exercises under the “Mitra Shakti” framework, established in 2004. These examples highlight a broader trend – defence cooperation between India and its neighbours has remained consistent – largely through training programs, joint exercises, and officer exchanges. These ties are sustained through institutional links, largely managed at the service chiefs’ level. Historically, this has worked well and made frequent political engagement at the ministerial level less necessary.

India’s growing emphasis globally on defence manufacturing and exports, particularly since 2014, may push towards a more visible, political-level engagement with the neighbourhood.

Yet this model of quiet diplomacy may no longer be sufficient. India’s growing emphasis globally on defence manufacturing and exports, particularly since 2014, may push towards a more visible, political-level engagement with the neighbourhood. A key trend to watch will be whether India’s expanding defence production translates into more frequent ministerial visits and deeper bilateral outreach in the region. At the same time, the region’s sensitivities raise valid concerns: high-profile visits can be politically contentious, as seen in the case of the Maldives. Thus, two competing hypotheses emerge. One is that greater ministerial outreach will become necessary to support India’s evolving defence ambitions. The other is that such visits may remain rare, or even decline further due to increasing political risks and sensitivities. Both possibilities merit attention. How New Delhi manages to balance these imperatives amidst the changing regional landscape remains to be seen.

The post Defence Diplomacy in India’s Neighbourhood: Mapping Ministerial Visits Since 2014 first appeared on CSEP.

Are these enough for Karnataka to achieve high uptake of elementary schools and primary health care across all social and economic groups? Karnataka has a long distance away from this goal. Uptake of Urban Primary Health Care (UPHC) facilities in Karnataka is at a poor 7% (NFHS 5) and enrolment in class I in urban private schools a high 55% in 2021-22 for which data is publicly available as per the old school structure (UDISE). The initiatives seem few and far between in a context of low policy attention to these areas over the last decade 2014-2024.

Karnataka’s budget allocation for health and education – a crude indicator of the policy attention given to a particular sector – is low compared to other states. In 2025-26, the Health budget for the state was 4.9% while average across all Indian states was 6.2%. And education budget was at 10.8% which is lower than the average 15% across states (PRS budget analysis Karnataka 2025). Another way to understand state level policy focus is to look at state-level initiatives.   In primary care and elementary education for urban areas in the last decade (2014-2024) very few initiatives focus on strengthening UPHCs and urban elementary schools. Flagship programs such as the Karnataka Public School Program, Namma Clinics, Ayushmati Clinics focus on select facilities only. Most other initiatives focus on a small aspect of the school and primary care system- for example, classroom construction (Viveka Scheme), or medical helpline (Alpamitra Helpline). They improve schools and UPHCs but systemic issues remain neglected. This in turn keeps uptake of these facilities low even among the poor.

The impact on Karnataka’s health and education, particularly those at the level of primary care and elementary education are clearly visible. For many indicators, Karnataka’s performance is either marginally above national average or actually below it. For example, according to NFHS-5, immunization based on vaccination card in Karnataka is 88%, in India this is 89%.  OOPS for a delivery at a public facility in Karnataka is 4954 INR but the Indian average is 2916 INR. In elementary education, according to NAS 2021, the average Math competency in class VIII in Karnataka is 50% which is marginally higher than the Indian average of 46%.

What can be done? Karnataka needs higher budget allocation and more state-level initiatives which are designed and funded by the state and therefore under its own control and reflect Karnataka’s health and education priorities. It’s important that Karnataka’s own civil society groups, communities and political leaders own these initiatives within their own spheres of politics, community mobilization, and civic actions.

I propose four policy recommendations. Presently, health and education initiatives become part of election campaign narratives but seldom are political leaders engaged in ensuring outcomes. For enabling this, we need to create knowledge pathways. Health and education outcome data needs to be segregated assembly constituency wise and made publicly available. This data is needed for citizens and party workers to channel everyday challenges facing schools and UPHCs into an actionable political agenda. Second, we need to break the idea that government schools and UPHCs are the option of the last resort for the poorest of the poor. Unless we, as a society, need government provided health and education, there will always be dual standards: good schools for the Haves and rudimentary government schools for the Have-nots. To attract the middle classes, government schools need to reach the standards of the average private school. No one wants a costly school education. For this, a ‘Diversity Index’ needs to be created. Each assembly constituency must be ranked on health and education outcomes but also on the extent to which elementary schools/UPHCs are used by the non-poor people as well. This will provide a knowledge output for mobilisation for middle class constituents and create the knowledge to hold the bureaucracy accountable for ensuring standardisation between private and government schools, particularly in urban areas where the competition from low-cost private schools is very high. Third, government provided health, and education is not generosity towards the poor. It’s a constitutional commitment and fundamental for economic growth. Not just productivity, but bare bone growth. For a growing economy, you need consumption, for consumption people need money, and the less they spend on costly health and education, the more disposable income they have. This case needs to be made in raw numeric terms for Karnataka. How much can a household save when they use good government schools and UPHCs? And what does this mean for the economy? A government appointed commission which is answerable to the chief minister having representation from globally renowned economists and health and education experts needs to produce a report on contribution of government provided health and education to the economy.

Will it lead to an immediate increase in budget allocations and more state level initiatives on strengthening all schools and UPHCs emerge? No. But these are the essential first steps in pushing Karnataka to claim its rightful position as a leader in providing a visionary and socially irreplaceable health and education system. It needs to build on its long history of pathbreaking programs in Health (Yeshaswaini, Primary Health Care task force) and Education (Nalli Kalli).

The post Karnataka can be a Leader for Primary Care and Elementary Schooling first appeared on CSEP.

The National Sample Survey Organisation conducts large sample surveys across the country, querying households on the principal activity of each household member.  Individuals employed for the majority of the last 365 days are considered to be principally employed, and information is collected on what activity they undertake as well as their earnings.   In addition, data is also collected for those activities where a person may be employed for a minimum of 30 days, and this is termed as subsidiary employment.  It so happens that a large part of the subsidiary employment is work within the household enterprise including unpaid work.

What is the right way to measure employment in India?

Amaresh Dubey and I have argued repeatedly that the government should only consider principal employment as the core measure of employment in India.  And increasingly, other researchers are also coming to the same conclusion.  This is because subsidiary status employment is at best, additional work, and someone who does not have a principal status job for the last year but is employed in a minor subsidiary activity should not be considered to be employed.  The objective of economic policy is to ensure good quality, wholesome jobs, not those that are add-ons and pay little and therefore principal employment is the right metric.

Figure 1: Employment Growth between 1983 and 2023–2024

Source: NSS data are various rounds of EUS and PLFS from NSSO, GoI.

Is employment increasing in India? Since when?

Principal employment has been growing in India since the reforms period.  There has been no period since the early 1990s when jobs have not increased.  Moreover, principal employment has grown the most during the early 2000s and now during the period 2017-18 to 2023-24.  During these two periods, employment growth has been higher than population growth.  The period 2017-18 to 2023-24 has especially seen the highest growth in reported employment in the last few decades.

Figure 2: Annualised Growth of Population and Employment

Source: EUS and PLFS, NSSO, GoI, various rounds.

Are wages and salaries also growing?

Wages and salaries have also been growing; however, the growth has only been marginally higher than inflation.  Therefore, though employment has increased, the employed person’s ability to spend has not increased much.  There could be many reasons for this.  One factor may be related to productivity. Wages typically tend to grow most when productivity grows; therefore, if productivity growth is limited, wage growth is also curtailed. Another could be simply related to supply and demand dynamics, when the supply of workers is large, wages tend not to grow as much.  However, this is a short-term phenomenon; wages rise much faster than inflation in the long run when productivity increases are large.

What kinds of employment are growing the most?

The data are very clear: in the period 2017-18 to 2023-24, there has been consistent job growth across almost all major demographic and occupational segments.  However, there are some components where growth is much higher.  There is a very strong link between educational attainment and employment growth, in that the higher the educational level, the higher the employment growth.  Therefore, it was the lowest for the illiterates and highest for those with a graduate or higher degree.  Employment growth has also been very high for women and in urban areas.   All major age segments studied have seen a rise in employment, apart from children under 14 years, where it has been falling considerably.  Agriculture employment grew at 2.6 per cent annually, manufacturing at 2.8 per cent, services at 4.4 and construction at 5 per cent annually during this period.  However, within the agriculture sector, the bulk of the growth has been emanating from the non-cropping sector, such as livestock rearing.  Employment growth during this period has been in line with what one would expect in a modernising economy, where those with better education and skills find greater employment avenues.

Figure 3:  Annualised % of Employment Growth by Education Attainment Between 2017–2018 and 2023–2024

Source: PLFS, NSSO, GoI, various rounds.

Why is employment growth so high and deep in the period 2017-18 to 2023-24?

While high growth has been sustained for some time now, the greater growth in employment in recent years can be explained by greater government action.  Recent years have seen the institution of very large welfare schemes, plugging of leakages in those that existed before, and also programs aimed at supporting very small entrepreneurs.  On the welfare side, programs such as Jal Jeevan Mission and Ujjwal now cover the bulk of households in the country, and with access to tap water in the home and energy for cooking, and also electricity in every village, a significant part of the time of women has presumably been released from household work.  The spread of the PM Mudra scheme that disbursed upwards of Rs 5 lakh crore in 2023-24, and the loan disbursements to women’s SHGs were about 2.1 lakh crore.  In addition, the rise of Direct Cash Transfers in recent years would also have given a kickstart to local economies.  Taken together, self-employed in what is called own account work, those employing and also those employed would increase, as is seen.

Figure 4:  Growth of PMMY Loans

Source: Mudra (2024).

Will this employment growth continue?

Overall, employment has been growing for some time now, and there is a well-known and direct link between economic growth and employment opportunities.  Therefore, as long as we can sustain economic growth, some employment growth is expected to continue.   However, this is not a perfectly proportional relationship, and many other factors impact the extent of employment growth.  These include aspects such as the sectoral distribution of growth.   For instance, agriculture and related sectors, such as livestock and horticulture, create more employment, and so do construction and some types of services.  Organised sector growth, though desirable from many perspectives, tends to create fewer jobs than the unorganised sector.  Labour-intensive manufacturing creates such as garments, gems, and jewellery etc., creates far more jobs than other types of manufacturing.   Moreover, credit-driven employment growth can continue only for so long and will need both higher and more equitable economic growth for it to be sustained.

If employment growth for educated is so high, why are there so many educated unemployed?

Since the early 2000s, seats for higher education have grown substantially in India, leading to a very large number of those who are better educated.  Therefore, even if a job is available, many educated youth are not willing to work for a low wage.  In India, especially, those working in entry-level jobs in the government tend to get substantially greater compensation than those in the private sector.  This sets the expectations high for many youth who prefer not to take up a job with a lower wage.   Therefore, high employment growth and high unemployment can coexist if wages are not commensurate with expectations.

The post Explainer | India at Work first appeared on CSEP.

Gujarat’s rooftop-solar (RTS) boom exposes a policy tightrope: net metering delights households with four-year paybacks but slashes Discom revenue, gross metering safeguards utility coffers yet curbs adoption, while net billing—tuned to the right feed-in tariff—hits the sweet spot. Leveraging CSEP’s RTS Model and real-world cost, tariff, and subsidy data, the blog argues that smart meter-side tweaks, not megawatt-scale subsidies, will determine whether India’s 40 GW RTS target soars or stalls.

The Backdrop

Rooftop solar (RTS) offers distribution companies (Discoms) a win-win—easing local grid stress, postponing costly upgrades, and helping India stride toward its 500 GW renewables goal. With the launch of the PM Surya Ghar: Muft Bijli Yojana (henceforth PM Yojana), the government is redoubling efforts to spur household-level installations, with special emphasis on low- and middle-income families (PIB, 2024).

The scheme provides capital subsidies of up to Rs 78,000 (MNRE, 2024). Capital support helps, but the real determinant of viability is how exported solar power is metered and compensated. Net metering, net billing, and gross metering can swing a household’s payback period by years and can significantly impact distribution companies (Discoms) finances.

Gujarat, India’s RTS frontrunner with 3.3 lakh RTS installations (~1.23 GW) (TOI, 2025), shows what’s at stake. Using the CSEP RTS Model (Shanbog, Rao, & Tongia, 2025) we test three typical households under all three metering regimes, estimating:

• Payback periods for consumers
• Net-present-value (NPV) impact on Discom income

Here, Discom income captures the energy-charge impact under each metering regime. Fixed charges are excluded, since RTS customers continue to pay them.

Metering Made Easy: How Different Policies Credit Solar Exports

How is surplus RTS power credited? Whether a noon-time unit exported offsets a night-time withdrawal, is bought by the Discom at a discount, or is booked separately decides both household payback and utility revenue.

Before we turn to the Gujarat simulation, one question matters most: how is surplus RTS power credited? Whether a noon-time unit exported offsets a night-time withdrawal, is bought by the Discom at a discount, or is booked separately decides both household payback and utility revenue. India uses three templates—net metering, net billing and gross metering. Knowing how each works is crucial for expanding RTS while keeping Discom finances intact.

1. Net Metering – Solar first meets the home’s load; any excess is credited 1-for-1 against later imports (typically at evening/night). Bills reflect only the net kWh over the month, with any surplus carried forward or cashed out at a preset feed-in-tariff (FiT) rate. This delivers the best payback for consumers, but—because it values daytime exports the same as costly evening imports—it can erode Discom revenue.
2. Net Billing – Self-consumption still comes first, but all exports are metered separately and bought by the Discom at a fixed FiT that is lower than the retail rate. Consumers lose some savings compared to net-metering, yet Discoms recover more of their supply costs, making the arrangement fiscally fairer.
3. Gross Metering – Every unit generated is sent to (and paid for by) the grid at a regulated FiT; the household buys all its power at normal tariffs. This clean separation shields Discom finances, but offers the weakest economics for consumers unless the feed-in tariff is set attractively high.

Three Households × Three Metering Rules

We modelled Gujarat’s RTS economics for three typical homes and three metering options.

Table 1: Profile of three types of households engaged in the study

Notes: Author’s RTS system design, calibrated to annual usage, achieves the fastest payback under net-metering

The model captures Gujarat-specific RTS realities – regulatory tariffs (GERC, 2024) plus market factors such as capital costs and loan terms. With the FY25 net-metering FiT fixed at Rs 2.25/kWh, we stress-test viability under net-billing and gross-metering across four export rates—Rs 2.25, 2.75, 3.25, and 3.75/kWh—to reveal how higher compensation can ensure better returns when the base FiT falls short.

Building on these tariff scenarios, the cost stack assumes capital outlays of Rs 65,000, Rs 1,87,500, and Rs 3,00,000 for the three system sizes, each with a 25-year life, standard module degradation, and an inverter swap in year 15. Central Financial Assistance under the PM Yojana is applied by capacity (Table 2), while annual household demand is set to rise 5–6 percent—faster for smaller users—mirroring real-world growth; all remaining parameters are detailed in Table 3.

Table 2: Central Financial Assistance under PM Yojana for the three rooftop solar system sizes

Source: (MNRE, 2024)

Notes: *Total system-cost quotes from multiple Ahmedabad, Gujarat based integrators, averaged and rounded up.

Table 3: Values of other parameters used in the model

Notes: ^ Based on interactions with system integrators assuming a 3–4 kWh/kWp yield range;, results pertain solely to 3.75 kWh/kWp; ^#Loan terms from PM Yojana national portal; †Solar module degradation of 545 Wp Mono PERC module (Manufacturer: Waaree Energies Ltd. ) is considered; ‡ Price includes GST and is based on a Growatt make inverter, a comparable model is assumed for real-world installations.

Payback Clock: When do Solar Modules Pay for Themselves?

Net metering wins hands-down: 4 – 5 years across the RTS sizes because midday exports offset evening imports at the full retail rate. Every surplus unit is credited at the household’s own (often high-slab) tariff, maximising bill savings. The typical internal rate of return (IRR) for the systems is in the range of 21-28%.

Net billing stretches payback to 6 – 9 years (9-17% IRR) for different FiT rates simulated across RTS sizes; exports earn only the lower FiT instead of the retail rate, and households still pay the full fixed charges on their remaining grid purchases – unless they boost daytime self-consumption (we assume 45 % alignment) or FiTs rise, the gap stays wide.

Gross metering is the least attractive option for consumers: unless the FiT exceeds much beyond ₹ 3.75/kWh, payback stretches beyond 20 years. The reason is simple—every solar unit is sold to the grid at the FiT, while the household must repurchase all its electricity at the retail tariff much higher than FiT.

Table 4: Consumer payback and Internal Rate of Return for different metering policies for different FiT rates across different RTS sizes

Source: Author-calculated values based on the three metering methods and model parameters.

Utility Ledger: What Happens to Discom Revenue?

Net metering credits daytime exports at the customer’s top-tier tariff, erasing Discoms’ highest-margin sales. Bigger RTS systems magnify the hit—high-consumption households offset more of their peak-priced evening demand with cheaper mid-day solar hour exports, steadily deepening the revenue shortfall. As Figure 1 shows, across all system sizes, net-metering leaves the Discom worse off than either net-billing or gross-metering. The revenue hit grows sharply as rooftop capacity—and the customer’s annual consumption—increase.

Net billing Net billing strikes a middle path: prosumers self-consume and sell only their surplus at a fixed FiT that sits below the retail tariff, so there’s no one-for-one offset of their imports. This lets Discoms keep their full energy-charge billing, earn a positive margin even at modest FiTs, and puts far less strain on cross-subsidy and tariff structures than net metering.

Gross metering shields the discom’s balance sheet: every kilowatt-hour generated by the rooftop system is purchased at a fixed (and usually lower) feed-in tariff, while the customer still buys all of their electricity at the full retail tariff. This preserves the discom’s sales revenue and keeps its tariff structure intact.

Figure 1: Discom Income Net Present Value for the different metering policies for different RTS sizes and Feed-in Tariff rates

Source: Author-calculated values based on the three metering methods and model parameters.

Figure 2 compares Discom revenue for a 5 kWp rooftop system under the three metering regimes across a range of feed-in tariffs (FiTs). Two patterns stand out:

1. Gross metering consistently delivers the highest revenue—outperforming net metering and net billing at every FiT level.
2. Lower FiTs boost Discom income under both gross metering and net billing, reinforcing the inverse relationship between FiT level and utility revenue in these two models.

Figure 2: Discom Income Net Present Value with 45% solar aligned consumption for three metering policies for a 5 kWp RTS system

Source: Author-calculated values based on the three metering methods and model parameters.

Policy Take-aways

Getting Metering Right Is the Linchpin

Rooftop solar will scale only if both sides of the meter win.

• Consumers move fastest when paybacks are short.
• Discoms invest only when revenues remain whole.

Table 5: Metering Policy Showdown: Consumer Payback vs. Discom Income Impact

Source: Author’s analysis

Our Gujarat simulations show that no single metering scheme—net metering, net billing or gross metering—delivers both outcomes perfectly. The policy task, therefore, isn’t picking a winner. It’s mixing and matching—tailoring system-size limits and time-of-day FiTs, so that households still see an attractive return and Discom balance-sheets stay healthy. Craft that balance, and rooftop solar can evolve from a growing success to a cornerstone of India’s 500 GW renewable-energy journey.

The post When the Sun Meets the Meter: Striking the Rooftop Balance first appeared on CSEP.

Since UHC requires that everyone, everywhere should have access to quality and affordable healthcare – which ultimately ensures healthy lives (WHO, 2010) – it is crucial for the government to ensure access to essential healthcare services for those without formal health insurance. 

Since UHC requires that everyone, everywhere should have access to quality and affordable healthcare – which ultimately ensures healthy lives (WHO, 2010) – it is crucial for the government to ensure access to essential healthcare services for those without formal health insurance. 

Mahal et al. (2024) estimated that 125 million households are covered under Pradhan Mantri Jan Arogya Yojana (PMJAY), 45 million households are covered by states (extending to Above Poverty Line [APL] families), 34 million households are covered under social insurance schemes (Central Government Health Scheme [CGHS], Employees’ State Insurance Scheme [ESIS], Ex-Servicemen Contributory Health Scheme [ECHS])1 and 57 million households are covered under private insurance (both individual and group). Considering a total of 325 million households in India, around 68–80 million households will remain uncovered, given that there will be some level of overlap between the insurance schemes (Mahal, Tiwari, Reddy, & Kane, 2024). 

The Periodic Labour Force Survey (2022–2023) data indicates that 57.3% of the total workforce aged 15 and above were self-employed, primarily in the informal sector. As noted, informal sector workers are not covered by any existing health insurance schemes. Furthermore, a significant proportion of individuals in the formal sector may not have health insurance (Mahal, Tiwari, Reddy, & Kane, 2024). It has been suggested that this uncovered population (or a portion thereof) has the ATP for healthcare, and thus a contributory health insurance scheme2 may be appropriate for this segment (Kumar & Sarwal, 2021). However, it remains unclear how much they can afford to pay. Additionally, even if they can afford to pay, are they willing to pay the necessary amount? 

Ability to pay (ATP) in healthcare has largely been understood as the relationship between available resources at the household or individual level and the cost of treatment. The WHO assesses affordability by considering the number of days a lowest-paid unskilled government worker must work to cover the cost of treatment (Beal & Foli, 2020). According to Russell (1996), a common method for determining affordability is the ratio approach, where healthcare expenditure is analysed as a percentage of household income or expenditure. Successive HCESs indicate that 4%–6% of total household expenditure is the average expenditure ratio on healthcare, thus considered the affordable ratio. Using the ratio method, a 45-degree line (equality line) plots, for instance, a health expenditure ratio of 6%. Any point above the equality line is deemed affordable, as it is less than 6%. A simple visual representation of the ratio method is explained below: 

Figure 1 illustrates that households whose medical3 expenditure (as a percentage of household expenditure) is either on or above the equality line are spending less than or proportionate to their overall household expenditure or available resources. Those above the equality line can afford the medical expenditure, whereas those below cannot. However, this method does not account for whether those in the affordable region of the graph are incurring opportunity costs by reducing their expenditure on essentials such as food, shelter, and education below their minimum needs. 

Figure 1: Ratio Approach to Ability to Pay (ATP) 

Source: Adapted from ​Russell (1996)​. 

The core question in the debate on the ATP has been whether the cost of healthcare for a household should be the sole criterion for ATP or whether other factors influencing households’ healthcare decisions should also be considered. Geographic availability can impact ATP for healthcare services (Levesque, Harris, & Russell, 2013), as do indirect costs such as transportation (Doran & Hornibrook, 2014) and financial stress (Yakob & Ncama, 2016). Several studies highlight competing costs, such as those related to food, clothing, education, and electricity bills (Cunningham, 2011; Perumal‐Pillay & Suleman, 2017). Bead and Foli (2020) note that affordability in healthcare is subjective, transactional, and circumstantial. 

As discussed above, the ratio approach does not consider factors such as disposable income and costs associated with merit goods. Disposable income is the income that households have available to spend or save after deducting taxes and other mandatory expenses, such as pension and provident fund contributions (Hosier, 2004).  

The concept of affordability was redefined by Hancock (1993) in the context of housing prices. He argued that if a household spends a certain percentage of its total budget (or available resources) on housing, it should not reduce expenditure on other merit goods like education and healthcare below the socially desired minimum standards of consumption, usually determined by household survey data. 

Hancock’s concept has been extended to understand affordability in health insurance and healthcare (Glied, 2009; Russell, 1996). Unlike the ratio approach, Hancock suggested incorporating other merit goods into the affordability analysis. Given information on how much healthcare and non-healthcare goods are consumed by households, it is possible to determine who cannot afford healthcare expenditure.  

A household is said to afford healthcare expenditure if it is left with sufficient resources to meet the minimum expenditure for non-medical goods (food, housing, and education). The trade-off can be represented in a 2×2 matrix, as shown in Figure 2 below. 

Figure 2: Categorising Affordability (Based on Hancock, 1993) 

Source: Adapted from Hancock (1993)   

It is evident from the figure 2 that there are four possible combinations of the two categories of goods, namely non-healthcare and healthcare, that can be consumed by the household. 

1. Region A: Minimal consumption. Households in this category do not meet the minimum standards of consumption for either type of goods.
   (P*H<P*H’ and P*Y<P*Y’)    
2. Region B: Households in this category achieve minimum standards of consumption for both medical and non-medical goods
   (Total Household Expenditure – P*H’) > P*Y’ or (Total Household Expenditure – P*Y’) > P*H’ 
3. Region C: Households in this category achieve minimum standards of consumption for medical goods, but the remaining resources do not enable them to meet minimum standards of consumption for non-medical goods.
   (Total Household Expenditure – P*H) < P*Y’ 
4. Region D: Households in this category achieve minimum standards of consumption for non- medical goods, but the remaining resources do not enable them to meet minimum standards of consumption for medical care.
   (Total Household Expenditure – P*Y) < P*H’ 

The horizontal and vertical red lines in the figure 2 indicate the minimum expected expenditure on these goods by households. Point E on the figure represents the minimum consumption bundle expected to be consumed by households. This implies that if a household’s income is just sufficient to allow spending H’ on medical goods and Y’ on non-medical goods, the household will be able to reach point E. Extending a line from point E towards Y and H, this straight line represents the minimum budget required for all households to achieve point E (the budget constraint line). Therefore, all households on or above the budget constraint line (including the shaded areas in regions C and D) can achieve point E. This means that households in region A can not achieve minimum expenditure for both medical and non-medical goods. 

Hancock’s affordability concept has been applied using Household Consumption Expenditure Survey (HCES) data (2022–2023). An average medical expenditure of 6% of total household expenditure is set as the threshold for underconsumption of healthcare, while 52% of total household expenditure is the threshold for underconsumption of non-medical goods. 

Applying the four scenarios suggested by Hancock, the HCES data reveal that 30% of households in region A can neither afford minimum healthcare expenditure nor minimum expenditure on other merit goods, while 8% of households in the third and fourth quintiles in region B can afford minimum expenditure for both medical and non-medical goods. The remaining 62% of households face a complex decision because they must choose between two merit goods due to budgetary constraints. Overall, it was found that at least 39% of households (comprising Regions B, C, and D) can afford both goods, and a maximum of 66% of households in the third and fourth quintiles can afford the minimum consumption set. 

Table 1: Household Expenditure for Third and Fourth Quintiles 

Source: Author’s analysis using HCES data 2022–2023.   

Further, the affordability calculation (applying threshold criteria of 6% for medical and 52% of non-medical expenditure as percentage of total household expenditure) suggest that 30% of households in the third and fourth quintiles who spend less than 6% of their total household expenditure on healthcare can contribute a maximum of INR 5,693 per year for both inpatient and outpatient services (Table 1). Eight per cent of households with sufficient resources can contribute a maximum of INR 24,466 per year. For the remaining 62% of households, which can just afford to pay 6% of their household expenditure, the contribution ranges from INR 13,344 to 15,132 per year.   

The HCES data for 2022–2023 reveal that less than 10% of the total households in the third and fourth quintiles are able to meet the minimum level of expenditure for both medical and non-medical goods. Most households have to choose one merit good over others.

Way Forward 

The HCES data for 2022–2023 reveal that less than 10% of the total households in the third and fourth quintiles are able to meet the minimum level of expenditure for both medical and non-medical goods. Most households have to choose one merit good over others. It is found that about half of the total households cut back on medical expenditure to achieve more than the minimum level of expenditure for other merit goods such as food, housing, and education. 

The affordability analysis suggests that to provide comprehensive coverage to all households in the third and fourth quintiles (where 30% of households can pay a maximum of INR 5,693 per year), the government will need to contribute at least 50% of the premium amount.

The affordability analysis suggests that to provide comprehensive coverage to all households in the third and fourth quintiles (where 30% of households can pay a maximum of INR 5,693 per year), the government will need to contribute at least 50% of the premium amount. This is because the minimum health insurance premium for comprehensive coverage is INR 20,466 per year1 for a family of four, and such a contribution would encourage households to participate. 

The affordability analysis indicates that households in the third and fourth quintiles can pay an average of INR 5,693 per year for their healthcare needs, covering all outpatient and inpatient services.

This discussion suggests the following key takeaways:   

The affordability analysis indicates that households in the third and fourth quintiles can pay an average of INR 5,693 per year for their healthcare needs, covering all outpatient and inpatient services. Since comprehensive coverage of services under health insurance requires a higher premium, there are two possible pathways to ensure healthcare services for middle-income households: 

1. Leveraging the ATP of households in the third and fourth quintiles to augment public financing and ultimately strengthen public facilities through policies such as user fees for all services received at public facilities by middle-income households. Currently, services at public facilities are provided at highly subsidised prices for households across all quintiles, regardless of their ATP. 
2. Introducing a contributory health insurance scheme (with contributions from both the government and households) for middle-income households to provide comprehensive services, especially as private health insurance is both costlier and exclusionary in nature. A lower ATP (adjusted for opportunity cost) for a considerable proportion of households indicates that the government needs to contribute more than 50% of the total premium to encourage greater participation and achieve UHC in the longer term. 

The post Affordability and Health Insurance in India first appeared on CSEP.

Competitive Index

A recent working paper by the Centre for Social and Economic Progress (CSEP) computes a Competitiveness Index (CI) that compares India with its key Asian peers—Indonesia, Malaysia, Thailand, and Vietnam. The index draws inspiration from Porter’s Diamond Model (PDM) and is structured around six core pillars: Factor Conditions, Demand Conditions, Related and Supporting Industries, Firm Strategy and Structure, Regulatory Quality, and Global Trade Policy. Each of these pillars is composed of relevant sub-components that align with the broader definition of the pillar. In total, the index includes 36 components, most of which are drawn from the World Bank’s Enterprise Survey, with additional data sourced from the ILO, WDI, WITS, and other relevant databases.

The CI analysis finds that, among the countries studied, India and Indonesia are the two least competitive countries.

CI Rankings

The CI analysis finds that, among the countries studied, India and Indonesia are the two least competitive countries. The top three spots are occupied by Malaysia, Vietnam, and Thailand (Figure 1).

Figure 1

Of the six pillars studied, India ranks poorly in two: firm strategy, structure, and rivalry; and global trade policy. India is among the lowest in three other pillars: “factor conditions”, “related and supporting industries” and “regulatory quality.”

• Of the six pillars studied, India ranks poorly in two: firm strategy, structure, and rivalry; and global trade policy. India is among the lowest in three other pillars: “factor conditions”, “related and supporting industries” and “regulatory quality.”
• The only pillar where India is not among the lowest rankers among the five countries studied is “demand conditions.”
• In the factor conditions pillar, India performs poorly overall, with gaps evident in Research & Development (R&D), access to finance, and land.
• India’s better performance in the demand conditions pillar is largely due to its large domestic market, which is a crucial subcomponent of this pillar.
• In the related and supporting industries pillar, India’s low rank is attributable to high import tariffs on intermediate goods.
• India’s low rank in the firm strategy, structure, and rivalry pillar is primarily driven by a high degree of firm concentration in Indian industry.
• For the regulatory quality pillar, India’s low rank is due to issues with customs and trade regulations, and tax administration.
• India’s lowest rank in global trade policy is primarily due to its high Most Favoured Nation (MFN) tariffs and its absence from major trade agreements.

Industry Discussion

These gaps, highlighted by the Competitiveness Index, are echoed by industry voices. Indian firms acknowledge their limited investment in R&D and an overreliance on domestic demand. For instance, the apparel sector remains focused on cotton-based garments, even as global demand increasingly shifts toward synthetic apparel. This inward orientation hampers innovation, limits economies of scale, and delays quality upgrades. Additionally, restrictive labour laws create disincentives for firm expansion, encouraging businesses to remain small, contributing to the persistent issue of a ‘missing middle’ in India’s industrial landscape.

Drawing on the findings of the Competitiveness Index and insights from industry consultations, the paper identifies key priority areas within the Porter’s Diamond Model framework that India must focus on to strengthen its export competitiveness (Figure 2).

Figure 2: Key Priorities for India’s Competitiveness Strategy

Sector Specific Priorities

Industry discussions also revealed sector-specific priorities that must be addressed for each sector to reach its full potential.

Apparel: Boost R&D for man-made fibre (MMF) innovation, diversify into Man-made fabrics (MMF) based apparel to meet global demand, liberalise import duties on MMF, and develop integrated local supply chains.

Auto-components: Scale up production, reduce import duties on critical inputs, and use FTAs to resolve international standards-related barriers.

Electronics: Expand beyond smartphone exports by scaling production of other electronic items; liberalise duties on parts and components.

Pharmaceuticals: Increase R&D investment for drug innovation, co-locate labs, companies, and training centres, and use FTAs to harmonise quality standards with trading partners.

To expand the manufacturing sector from 13 per cent to 25 per cent of GDP over 10 years, it needs to grow at 13.6 per cent per year. This growth cannot be achieved by serving only the domestic market, and Indian manufacturers have to rely on exports

Based on the identified priority areas, the paper outlines policy directions under four broad categories: lowering import tariffs, engaging in deeper FTAs, enhancing regulatory quality, and fostering technology adoption. While past policies have attempted to address these challenges, they have not delivered the desired outcomes for the manufacturing sector.

The current global landscape offers India a timely opportunity to correct its competitiveness deficits. More critically, it provides a chance to meaningfully integrate into global value chains—an area where India has historically lagged. To expand the manufacturing sector from 13 per cent to 25 per cent of GDP over 10 years, it needs to grow at 13.6 per cent per year. This growth cannot be achieved by serving only the domestic market, and Indian manufacturers have to rely on exports.

The post A Comparative Assessment of Competitiveness: India Trails its Asian Competitors first appeared on CSEP.

Road transport in India is one of the key pillars for the country’s economic growth. It accounts for about 87% of passenger traffic and 60% of freight traffic movement in the country. It also accounts for 12% of India’s energy-related carbon dioxide emissions and is a major source of criteria air pollutants.[1] The increasing demand for private motorised mobility and the transport of goods are likely to strain the existing road infrastructure, drive up energy consumption, and consequently transport-related emissions in a business-as-usual scenario. With the emergence of new energy vehicles driven by batteries or hydrogen, there is a rising need to invest in a very different format of support infrastructure in the form of charging and hydrogen refilling stations. Motorised road transport in India is growing and evolving and so must transport planning. This warrants meaningful analysis based on credible and granular transport data to produce insights that help in effective policymaking and planning.

Vehicle Kilometres (VKM) forms the empirical basis to carry out a wide gamut of analyses with several applications.

Vehicle Kilometres, an important parameter to track in detail

Obviously, when one talks about data, it essentially means monitoring and studying specific parameters that possibly helps understand the scenario. Distance travelled by vehicles is a critical information that leads to a parameter usually referred to as Vehicle Kilometres (VKM) or Vehicle Kilometres Travelled (VKT). It is the total distance travelled by motor vehicles in a given period. Although its meaning sounds simple, it is a versatile factor. It forms the empirical basis to carry out a wide gamut of analyses with several applications. These include but are not limited to:

• Profiling vehicle-stock based on the degree of road usage. This helps, for example, identify the set of vehicles in terms of vehicle form factor, use-case or type of registration that currently utilises or requires road infrastructure more than others.
• Understanding the energy or motor fuel consumption pattern by type of vehicle that can possibly be linked to contribution to emissions.
• Getting a sense of the economic attractiveness of transitioning to new-age vehicle technologies like electric drivetrain as the cost-effectiveness of adoption depends on VKM travelled.
• Planning new-age road transport infrastructure like charging stations and associated upstream electricity network and supply.

By studying multi-year VKM statistics, one would be able to decipher the change in pattern across all these issues. While analysing the data, it is paramount to take cognizance of the fact that motorised road transport has significant heterogeneity and so has VKM statistics.

It is paramount to take cognizance of the fact that motorised road transport has significant heterogeneity and so has VKM statistics.

Therefore, it is critical to collect and analyse the VKM-related data with due consideration of the diversity (in terms of vehicle form factor, use-case, registration, etc.) in the vehicle stock. There can be even other factors for divergence in the VKM value like the size of an urban agglomeration or the type of motor fuel used (since there are differences in fuel prices). Are the VKM statistics able to reflect such heterogeneities? This depends on the techniques employed to estimate.

Methods for VKM estimation

No direct measurement of annual VKM travelled has ever been tried; the available information consists of estimates based on various assumptions.

No direct measurement of annual VKM travelled has ever been tried; the available information consists of estimates based on various assumptions. The accuracy of the assumptions and the sampled data influence the reliability of the estimates. Historically, the importance of evaluating VKM travelled has been from the perspective of roadways planning and other non-energy-related areas. Understanding traffic density on key road stretches has been the focus.

There are two main conventional methods used to understand travel-distance data: the vehicle-count method and the fuel-consumption method. Both are indirect ways.[2]

Vehicle count method is the most widely used technique for estimating VKM travelled. This procedure assumes that VKM travelled during a year can be estimated by counting the traffic on a representative section of a roadway, usually between two major intersections, during short periods of time and extrapolating these results to the entire geography, be it state or country. The reliability of this monitoring is based on the equipment used, as well as on the location and the frequency of the counts. Equipment is extremely costly to use on an extensive network of roads. Moreover, the traffic flow differs significantly between urban, peri-urban, and rural roads.

Fuel-consumption method assumes that vehicle kilometres travelled in a year is a function of the total volume of fuel consumed by vehicles during the given year and the average fuel economy of vehicles. The simplicity of the method has some inherent flaws. On one hand, the data for fuel consumption by vehicles is not captured by type of vehicle. The origin of this data is usually the aggregate fuel sales figures reported by the fuel-refilling stations.[3] On the other hand, the average fuel economy values although can be disaggregated by vehicle form factor are usually based on lab tested conditions which differ from on-road vehicle performance.[4]

New-age VKM measurement technique

In addition to the conventional approaches, there is a potential new-age technique thanks to the digital footprint of human activities including travel. The ubiquitous mobile smart phones have turned out to be a novel and useful source of collecting granular travel data. The very feature of mobile smart phones, enabled by GPS[5], to check real-time vehicular road traffic on a map during travel can be utilised to get a sense of the travel pattern over a geography. From the pattern, VKM travelled by an individual all the way up to the population can be derived. However, there can be multiple challenges due to high uncertainty in mobile phones-generated distance travelled data. It is difficult to attribute GPS-based individual travel data to kilometres covered by a vehicle.[6] It is even more challenging to filter the data by vehicle form factor which effectively limits the usefulness of the derived VKM data. There are also concerns that use of real-time digital tracking of individual activity can be considered invasive in nature and hence, any analysis based on such data may face regulatory and public scrutiny.

Need for an out-of-box solution

While there are multiple ways to estimate VKM travelled, more often than not the captured VKM-data suffers from issues like questionable quality, expensive or time-taking process, less data-granularity restricting the scope for meaningful insights, over reliance on assumptions and extrapolations, and limited opportunity for time-series analysis. Also, the data available lack clear reference to the underlying measurement method which raises doubts about the validity of the data.

Considering these shortcomings, there is a need to look for alternative ways that produce more reliable data on VKM travelled in Indian context and are easy and cost-effective to employ. Why not leverage an existing monitoring system in India’s road transport sector?

A regular touchpoint between motor vehicles on road and the state machinery are the vehicle pollution testing centres that are commonly co-located with fuel refilling stations dotting major urban agglomerations across most parts of the country. As mandated by the Central Motor Vehicle Rules (CMVR), 1989, every motor vehicle has to come to an authorised pollution testing centre for periodic testing and obtaining PUC (Pollution Under Check) Certificate which usually has a validity up to 6 months.[7] With the current digital integration of the pollution data collection system with a national database managed by the Ministry of Road Transport and Highways (MoRTH), it makes vehicle data recording and archiving easier. Apart from capturing pollutants-related parameters, a PUC Certificate has data fields concerning the vehicle such as registration number, date of registration, fuel type, etc.

Clearly the existing system of vehicle pollution testing at the PUC Certificate issuing centres can be piggybacked on to collect other useful vehicle data including VKM travelled.

The existing system of vehicle pollution testing at the PUC Certificate issuing centres can be piggybacked on to collect other useful vehicle data including VKM travelled.

How to record VKM data using the vehicle testing system

Every motor vehicle has an odometer that displays the total distance travelled by the vehicle since its purchase. This value is essentially the VKM travelled by the motor vehicle. The odometer reading (Figure 1) can be easily recorded using visual, photographic, or videographic method.

Further, currently it is mandatory to video record the testing process and upload the footage on the “PARIVAHAN” portal.[8]  This gives the opportunity to record the odometer reading of a vehicle when it comes for testing.[9] Adding this new data field essentially does not require a different step, a new technique or technology or re-training of the personnel at the pollution testing centres. The personnel at the testing centre just have to take the reading and feed to the new data field online that will subsequently get populated on the existing national database of MoRTH.

To formalise the VKM data collection exercise, an amendment of the existing testing norm allowing the recording of the odometer reading would suffice. This needs to be complemented by awareness-building through mass media about the new requirement.

How can the odometer readings be used to measure annual VKM?

The reading taken every time the vehicle goes for testing generates time-series data from which VKM travelled by the vehicle during the time intervals can be derived and in a span of a year i.e., after two consecutive 6-monthly testing, the annual VKM for the vehicle can be calculated. Linking with other information of the vehicle already captured, the VKM data thus collated can be analysed by filtering with different factors like vehicle type, registration, fuel, vehicle age (based on registration date), and geography (depending on the registering state or the location of the testing centres).

To allay any concern of the vehicle owner, the amendment should categorically mention that the collected odometer data will be available on PARIVAHAN portal at an aggregate level and not at an individual vehicle level. Also, the captured reading should not appear on the issued PUC Certificate to prevent individual-level attribution.

Key advantages

This ingenuous way of collating VKM data offers several advantages over the existing conventional methods. The proposed process:

1. Ensures collection of far better quality of VKM data as it is a direct method and does not involve assumptions or low-confidence extrapolations.
2. Allows logical segregation (filtering) of the data, thus capturing the heterogeneity of the road transport sector.
3. Makes available updated data as the database will be a living repository. This helps track changes in mobility pattern.
4. Provides a wide geographic coverage at state and national levels.
5. Is simple and cost-effective to execute.
6. Does not infringe into vehicle-owners’ privacy and data confidentiality.

Is there a possible challenge in the process? The suggested system would be effective as long as the pollution testing centres remain relevant in India. This implies that only a scenario when the vehicle stock (not sales) is dominated by new energy vehicles may potentially make the proposed data collection system obsolete. For India, this possibility is still far-fetched and distant.

Additional details

Fuel-consumption method

This method assumes that vehicle kilometres travelled in a year is a function of the total volume of fuel consumed by vehicles during the given year and the average fuel economy of vehicles. This means:

FC = Total fuel consumption by vehicles in a geography during a year;

FE = Average fuel economy of vehicles.

The advantage of this fuel-consumption based procedure is it neither requires any expensive, complicated instrument for monitoring nor involves a complex analytical method to derive the result. Both the fuel consumption data and the average vehicle fuel economy values at a broad level can be collated with relative ease. However, the simplicity of the method has some inherent flaws.

Vehicle count method

To express the estimation logic mathematically, as per this method total VKM travelled during a year is:

where

C_i,j = traffic volume (count) passing location i during period j;

L_i = length of the representative section of the roadway where i is located;

w_i = assigned weight (or expansion factor) to equate L_i with the total set of roads it represents;

t_i,j = assigned weight (or expansion factor) to equate the count during period j with the total annual count at location i.

There is no standardised sampling procedure to apply this technique.

The post The Curious Case of VKM Measurement first appeared on CSEP.

What is driving the making of state-level initiatives? Why and when does a state make new initiatives for its health and education systems, irrespective of whether the initiatives end up improving the systems or not? These questions would not tell us why outcomes are not being met. They will; however, tell us where the solutions are coming from and what kinds of solutions are being proposed. One may ask, why do we need to know what is driving the initiatives, so long as the initiatives themselves are solving the problems? Does it really matter if a solution to a health and education challenge is led by a junior level bureaucrat or an NGO leader or an MLA or a strategy consulting firm. Why is the ‘origin of intent’ for a policy, the raison d’etre, whose interest the policy meets important, if the idea is great? The answer is, in the short run, it should not matter but it does. In the long run, it most definitely does.

One may ask, why do we need to know what is driving the initiatives, so long as the initiatives themselves are solving the problems? Does it really matter if a solution to a health and education challenge is led by a junior level bureaucrat or an NGO leader or an MLA or a strategy consulting firm. Why is the ‘origin of intent’ for a policy, the raison d’etre, whose interest the policy meets important, if the idea is great?

The drivers of policy making impact the outcomes in four ways. First, perhaps the most obvious is that when outcomes are not being met and the new initiatives are not able to solve the problems, we need to know what’s preventing better initiatives from emerging. Second, the drivers of policy reflect the policy solutions proposed. For example, if a focus on governance challenges is driving new initiatives, the solutions may result in lesser community ownership of schools and poor connect between parents and frontline staff. A focus on hiring of staff at UPHCs may prioritise setting up of systems which make it easy to hire over identifying those candidates who are comfortable with working at the primary care level. If policy emerges only when a small group of stakeholders push for it, say only senior bureaucrats at the state level, or top politicians, or just civil society led social movements, without engagement with other groups, both the ideas in the policy and the support it gets in its implementation would miss out critical components. Third, the very process of policy making is not just about proposing a solution to a problem, it is also about building consensus on the ground level challenges which are to be prioritised. Every actor within health and education sector, from the poor parents to the local leaders of teacher’s associations to the state-level education secretary has different perspectives. New initiatives work when there is convergence, in ideal cases, consensus, on the problem priority. If none of these happen, there needs to be at least some kind of bargaining between opposing groups around their disagreements. If the drivers of new initiatives are not inclusive, both the implementation of the solution as well as its value in solving the problem becomes complicated. For example, if an initiative prioritises providing pre-school education while parents want English speaking classes, then the initiative would not enhance the value of government schools to parents. Fourth, policy-making, just like much of social and political life around the world, runs on institutional and long-established pathways. When new health and education challenges emerge, at times they don’t get addressed because the old pathways cannot bring new challenges to light. For example in the Health sector, Maternal and Child health have been a part of policy focus for decades. It is difficult for issues of geriatric care, non-communicable diseases to gain prominence (and funding) for new initiatives. In recent years, insurance has been widely accepted solution to achieve UHC and the cost of strengthening primary health care has received lesser focus.

To improve outcomes, policy discourse must not just focus on budgets and program implementation, but ask deeper questions, why is that big, system focused initiatives in a state like Karnataka are limited and largely driven by external pressures and a limited cohort high state level actors.   

What we see in Karnataka, during the decade of 2014-2024 is that there have been very few initiatives which focus on strengthening elementary education and urban primary health care which are led and/or financed by the state government on its own. The few which are there have emerged due to a policy push from the central government and the restrictions imposed by a local policy context. Due to this, it is less likely for new initiatives to emerge which require significant increase in the state health and education budget or deep structural changes in hiring or accountability framework for frontline bureaucracy to emerge. Initiatives which are populist in nature and which can be used to create visibility for local political leaders are the possible ones. It’s the senior bureaucracy and political leaders who push for new initiatives with other pathways and stakeholders being less prominent, such as internal bureaucratic feedback, social movements, electoral pressures and expert bodies and commissions.

This particular configuration through which new initiatives emerge in Karnataka provides some insight about why it is not a world leader in public primary health and elementary education. Karnataka is not a poor state, or one without local capacities for policy ideation and implementation. It is a state where the drivers of policymaking are such that primary health and elementary education have not been focused by the state political and bureaucratic leaders over the last decade.

To improve outcomes, policy discourse must not only focus on budgets and program implementation, but ask deeper questions, why is that big, system focused initiatives in a state like Karnataka are limited and largely driven by external pressures and a limited cohort of high state level actors.

The post Why we Need to Study Drivers of State-Level Initiatives for Health and Education: Unpacking the Case of Karnataka first appeared on CSEP.

Two earthquakes of magnitudes 7.9 and 6.4 struck Myanmar on the afternoon of March 28, causing immense loss of life and property in regions of Sagaing, Mandalay, and Shan state. The effects of the disaster, which has now been labelled ‘the Big Mandalay Earthquake’ caused wreckage in the neighbouring Yunnan province of China and in Thailand.

India swiftly responded with emergency assistance to Myanmar under “Operation Brahma,” highlighting its role as the first responder in the region. Further, unlike in the past, India showed willingness and ability to collaborate with external partners to provide humanitarian assistance in its neighbourhood, in this case, the QUAD and ASEAN. It can be seen from the joint statement issued by the governments of India, US, Australia and Japan, that Humanitarian Aid and Disaster Relief (HADR) is a key component in achieving shared goals of regional stability and security in the Indo-Pacific.

China has also emerged as a major provider of HADR in South Asia in the recent decades, for instance in the aftermath of the 2015 earthquake in Nepal. In Myanmar, China was one of first countries to respond in the search and rescue operations which involved teams from 20 countries. Given the geo-political salience of disaster relief operations in the region, this blog examines the relief efforts carried out by China in Myanmar, outlining the activities and institutional channels involved, and the messaging in media. Effective implementation of Humanitarian Aid and Disaster Relief by China is not only a display of state capacity and soft power but also shows China’s growing influence in the region.

Effective implementation of Humanitarian Aid and Disaster Relief by China is not only a display of state capacity and soft power but also shows China’s growing influence in the region.

China’s Disaster Diplomacy

Disaster diplomacy refers to the strategic use of diplomatic efforts to address disasters, including natural calamities, pandemics, and environmental crises; and involves international cooperation to address humanitarian needs and rebuild communities. However, international aid and assistance in response to disasters is not a given. Research shows that there must pre-existing interest amongst those in power, before they are convinced to use their power to achieve disaster diplomacy goals.  China has both economic and strategic interests in Myanmar. It blocked a UNSC statement condemning the military coup in 2021 and since then has formally recognised the military regime, even providing financial and political backing. Following Operation 1027 and the joint resistance movement against the Junta launched by the Three Brotherhood Alliance, China had attempted to mediate and put an end to violence, particularly in the Rakhine state, where it has multibillion-dollar investments in infrastructure projects, particularly under the Belt and Road Initiative (BRI). China’s rising influence in Myanmar is thus based on various channels, of which disaster aid is one component.

…there must pre-existing interest amongst those in power, before they are convinced to use their power to achieve disaster diplomacy goals.

China’s response included search and rescue teams, eight batches of emergency and humanitarian supplies including medical kits, food, tents, foldable beds, mosquito nets, and disease prevention materials, as well as more than 1 Billion RMB in emergency humanitarian aid. A Chinese university developed a ‘DeepSeek-driven’ Chinese-Myanmar-English translation system, while a global network of volunteers collected distress signals and mapped the disaster updates to help rescue teams. There are also plans to assist Myanmar in post disaster reconstruction and preservation and repair of damaged cultural relics and buildings.

Institutional Channels

About 28 civilian and governmental rescue teams and a wide range of institutions were involved in the rescue efforts.

Central and Provincial Governments:  While coordinated by the central government, the initial emergency response was implemented by the provincial government and party committee in Yunnan, the province bordering Myanmar. There were four official rescue teams, including Yunnan Rescue Team, Ministry of Emergency Management’s China Search and Rescue team, China International Search and Rescue team, and  Hong Kong SAR’s rescue team.  The Chinese PLA and PLAF also provided personnel and transport services. Special cross border clearance mechanism was also put into place for swift clearance. The Chinese rescue forces worked with both local forces and the rescue team from Russia. Financial aid was dispensed by the China International Development Cooperation Agency (CIDCA), also known as China Aid. CIDCA is affiliated with the State Council and works under the supervision of the Ministry of Foreign Affairs in Beijing.

Foundations, Business Enterprises, and Civilian Volunteers: More than 15 civilian volunteer teams came from areas like Hunan, Zhejiang, Shenzhen, and Shanghai. Social organisations and businesses were also mobilised as an institutional channel for providing aid and relief work. These included the Red Cross Society of China which donated 1.5 million RMB to Myanmar Red Cross Society via the Chinese Embassy in Myanmar. Some agencies also provided relief supplies directly to people. For instance, the China Foundation for Rural Development’s Myanmar office[1] distributed relief packages to households in Mandalay. Chinese state-owned enterprises in Myanmar like CITIC (which is involved in the implementation of the planned Kyaukphu Special Economic Zone and deep-sea port under the Belt and Road Initiative), and business associations like the Myanmar Chinese Chamber of Commerce and General Association of Dian Entrepreneurs also provided support in logistics and translation services.

Messaging in media

The Chinese Embassy in Myanmar proactively provided updates about the rescue efforts on the Embassy website and via social media. The messaging shows two important trends – one, to highlight China’s as the first international response in the aftermath of the crisis; and two, to weave this narrative into the larger Chinese narratives of neighbourhood diplomacy, community with a shared future, etc.

The messaging shows two important trends – one, to highlight China’s as the first international response in the aftermath of the crisis; and two, to weave this narrative into the larger Chinese narratives of neighbourhood diplomacy, community with a shared future, etc.

In the reporting about the rescue efforts, there is focus on the swiftness, effectiveness, and scale of the relief efforts. The embassy website has multiple updates on rescue and relief activities, often with time stamps; example, every day between 29^th March to 11^th April, the sixth batch of emergency aid was delivered. Rescue of survivors with the use of state of the art technology and machinery was also reported in detail on Chinese news channels and the embassy news. Several reports emphasise that “China was the first to provide aid, to send rescue teams, and to pull survivors from the rubble.” Notably, in its press release on ‘Operation Brahma’, India has also asserted its role as the “first responder in the region” and reported its rescue team as the “first international assistance flights to Naypyitaw.”

China’s disaster relief activities have been framed as a remarkable display of age-old ‘Pauk-Phaw’ friendship between China and Myanmar. There are multiple references to building the “China-Myanmar community with a shared future” and neighbourhood diplomacy guided by principles of “amity, sincerity, mutual benefit, and inclusiveness.” The use of these terms while delivering aid and assistance have the effect of giving a concrete and positive reference to these concepts. They are also aimed at strengthening China’s image as a provider of public goods in the region.

Furthermore, Chinese embassy news highlighted the appreciation from Junta leader Min Aung Hlaing for the rescue efforts. The presence of regional leaders like Yangon Chief Minister U Soe Thein to receive emergency supplies also added to the spectacle of receptivity for Chinese aid and assistance. This is crucial as in the past, Myanmar junta has refused international aid and even banned news items of relief efforts by domestic and international actors. Presently, there have been reports of Myanmar’s military blocking aid to earthquake survivors, and firing warning shots at the Chinese Red Cross envoy delivering aid in a conflict zone. Displaying support from the people and political authorities is hence an indication of the success of China’s soft power in Myanmar.

What this means for India

China’s response to the March 28 earthquakes in Myanmar reflects a strategic use of humanitarian aid as a tool of regional diplomacy. Beyond the immediate humanitarian imperative, the scale, speed, and publicity of the relief efforts underscore Beijing’s interest in deepening its influence in Myanmar through a multifaceted approach that includes infrastructural investments, political engagement, and now disaster diplomacy. The coordination between central and provincial institutions, the mobilization of civilian and commercial actors, and the deliberate media messaging collectively signal a comprehensive effort to integrate humanitarian relief into China’s broader foreign policy goals. By framing its aid within narratives of “Pauk-Phaw” friendship and a “shared future”, China not only reinforces its presence in Myanmar but also seeks to project itself as a responsible regional leader and a provider of public goods.

The coordination between central and provincial institutions, the mobilization of civilian and commercial actors, and the deliberate media messaging collectively signal a comprehensive effort to integrate humanitarian relief into China’s broader foreign policy goals.

China’s growing influence has implications for India and its ambitions as a regional leader. In the past, HADR has been a tool for strengthening India’s ties with Myanmar. Through ‘Operation Brahma’, which is guided by the policies of Neighbourhood First, Act East and SAGAR, India has sought to efficiently provide material aid and relief. Improving co-ordination with state governments, civil society, and media could help extend the scale and reach of operations. Further, while collaboration with Quad partners denotes greater Indian comfort in letting the Quad come closer into its immediate neighbourhood, India could take charge in reviving regional cooperation through forums like BIMSTEC. Developing a doctrine of proactive humanitarian support, with a regional cooperation aspect, would help India deliver better and faster.

Note: The author would like to thank Dr. Constantino Xavier, Senior Fellow, CSEP and Dr. Jabin Jacob, Non-Resident Fellow, CSEP, for their feedback.

The post China’s Disaster Diplomacy in Myanmar first appeared on CSEP.

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Key Takeaways 

• The database includes 20 heritage projects and 4 potential projects, spanning 12 countries across 3 continents 

• Funded by India’s Ministry of External Affairs (MEA), 14 projects of the 20 are fully or partially managed by the Archaeological Survey of India (ASI), a division of India’s Ministry of Culture (MoC), with the rest managed by different implementing partners 

• Each site entry includes a brief description, information about the project’s budget and implementation, whether it is a United Nations Educational, Scientific and Cultural Organisation (UNESCO) World Heritage Site, and a timeline of events with sources 

India’s Heritage Diplomacy Database: Archaeology and Conservation Initiatives since 2014 attempts to collate sites abroad where India has engaged in heritage diplomacy in the domain of archaeology and conservation in the last decade.  Although such projects have recently become a more prominent part of India’s foreign policy, no other public database exists with all such projects as of March 2025.  So far, there are 20 sites included in the database and 4 potential project sites.  Although the scale remains small given the heightened importance of India’s “civilisational and cultural ethos” and “civilisational linkages,” the demand for more initiatives is likely to grow.   

Relevance 

This database contributes to bridging the gap in scholarship on India’s heritage diplomacy.  Identifying patterns in the process of India’s heritage diplomacy can help develop useful policy recommendations for the future.  Specifically, further research could evaluate how timelines for sites in certain countries compare against bilateral relations, or how patterns across countries show how the program has evolved over time. The data may also assist policymakers in identifying where to allocate resources, whether technical or financial, to increase India’s heritage diplomacy capacity for the future. This database can help understand one way by which India projects its influence and interests abroad as a civilisational power. 

The database is meant as a starting point for more detailed analyses from a variety of potential angles.    

Objectives 

1. Develop a unique database mapping India’s archaeology and conservation projects abroad since 2014. 
2. Present longitudinal data for each project along with other site-specific information such as a description, information about budget and implementation, and whether the site is on the UNESCO World Heritage List. 
3. Pave the way for further detail-oriented research about India’s heritage diplomacy using this database.

Methodology 

Entries in this database include site-specific archaeology and conservation initiatives abroad which are funded by India’s Ministry of External Affairs (MEA) and have been engaged with since 2014.  First, most projects were selected from the annual reports of the Ministry of External Affairs (MEA) and Ministry of Culture (MoC) based on keyword searches.  A few others—Bala Hissar citadel in Afghanistan, Prambanan and Borobudur temple complexes in Indonesia, and Wat Pakea temple in Lao PDR—were added based on mentions in other official documents or speech. 

Second, mentions in annual reports became the frameworks for timelines supplemented with other MEA and MoC sources and online reporting.  Annual report sources in the timelines follow a separate format and include year and page number, i.e., “MEA 2023-2024, 10.”  Timelines focus on the role and actions of the Government of India and its implementing partners and are not exhaustive histories of each site or of other countries’ conservation projects.   

Third, descriptions for each entry were added with India’s role and the site’s broad significance in mind.  Budget, implementation, and whether sites have been inscribed on the UNESCO World Heritage List were added as well.  In the case of conflicting information, timelines defer to official sources and then local reporting. 

The data should not be considered exhaustive in view of a few limitations.  Apart from a few cases, there is a strong bias in the evidence toward English-language sources.  There is also a reliance on information available online with minimal input from the involved organizations themselves.  Additionally, there is an inconsistency of publicly available information among online sources.  As a result, whereas External Affairs Minister (EAM) S. Jaishankar noted in 2021 that India had completed 60 conservation projects in 21 countries, and had 52 ongoing or planned projects in 12 countries, this database may come short of reporting all projects since 2014. 

 For the purpose of this database, the author has standardized certain transliterated spellings if they appear differently between different linked texts.  For example, under the Earthquake-Damaged Cultural Heritage entry, some disparate spellings were standardized as “Buddha,” “Mahavihar,” “Ghyang,” and “Chholing.” 

Initiatives List 

Data Sources and Updates: The data used in this database is sourced from publicly available information including government reports, press releases, media reports and other secondary sources. The data collected is up to March 2025. 

Disclaimer: Maps, created using mapchart.net, are for illustrative purposes and do not imply the expression of any opinion on the part of CSEP concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. 

Acknowledgements: The author would like to thank Riya Sinha and Constantino Xavier for their review and the rest of the Foreign Policy & Security team at CSEP for their continued support.  He would also like to thank the Communications team for their contributions, especially Ayesha Manocha and Mukesh Rawat. 

The post India’s Heritage Diplomacy Database: Archaeology and Conservation Initiatives Since 2014 first appeared on CSEP.

Minerals fuels, oils and products of their distillation are the top imports from Australia to India, standing at USD 11,021 billion in 2023-24. According to the Confederation of India Industry (CII), the critical minerals and the mining sector are poised to become key drivers towards enhancing the bilateral economic cooperation between the two countries in the coming years. India is Australia’s sixth largest trading partner and Australia is a key investment destination for India. 

The global trade arena is undergoing a significant transformation. As protectionist policies and geopolitical tensions escalate, supply chains are increasingly vulnerable to disruptions. One of the most consequential developments is the Trump administration’s imposition of reciprocal higher tariffs. Under this policy, imports from India in sectors such smartphones and solar photovoltaic modules, and could face a punitive 27% duty. However, critical minerals and other goods, like certain energy products, pharmaceuticals, and bullion, currently remain exempt from these duties. This patchwork of tariffs is set to intensify trade fragmentation and destabilise established global supply chains and raising alarms over ensuring economic security. 

In this era of economic uncertainty, international cooperation has never been more essential. The partnership between India and Australia stands as a strategic beacon amid this fragmentation as both countries move towards ensuring economic security. Australia, endowed with vast reserves of critical minerals such as lithium, cobalt, graphite, and gallium, is already a global powerhouse in resource production. Meanwhile, India, driven by its clean energy agenda and ambitious industrialisation goals, is rapidly emerging as one of the world’s largest consumers of these essential materials. 

India’s policy framework featuring initiatives like the National Critical Minerals Mission (NCMM), Production-Linked Incentive (PLI) schemes, and strategic auctions for mineral blocks, underscores its determination to secure a steady supply of raw materials for its booming manufacturing and renewable energy sectors. At the same time, Australia’s robust mining sector and forward-thinking policy landscape make it a natural supplier capable of meeting not just domestic demand, but also filling the supply gaps for key trade partners like India. For India, the depth and breadth of the critical minerals cooperation with Australia makes it the most advanced partnerships in this emerging and increasingly important sector. 

As countries reduce reliance on dominant suppliers like China, partnerships such as the one between India and Australia offer an opportunity to build robust and resilient supply chains.

In the wake of geopolitical uncertainties, such as disruptions in supply chains caused by conflicts and economic sanctions, securing access to critical minerals is now a matter of national security for both India and Australia. As countries reduce reliance on dominant suppliers like China, partnerships such as the one between India and Australia offer an opportunity to build robust and resilient supply chains. This article explores the evolution of the India-Australia economic relationship, Australia’s domestic and international policies in the critical minerals sector, the evolution of India and Australia’s critical minerals cooperation, and the pathways for enhancing this partnership. 

India-Australia Geoeconomic Engagement 

The India-Australia relationship has undergone a significant transformation over the past two decades, evolving from a limited engagement into a comprehensive economic and strategic partnership. This shift has been underpinned by shared democratic values, economic complementarities, and a common vision for a free and open Indo-Pacific. As India’s External Affairs Minister, S. Jaishankar stated in November 2023 India has “growing convergences with Australia, and at the heart of it is really, a shared commitment to a free, open, inclusive, prosperous and rules-based Indo-Pacific region, based on UNCLOS, as the constitution of the seas.” The two partners are committed to working together to enhance their bilateral partnership. 

This deep-rooted relationship was significantly formalised in 2020 when the two countries elevated their bilateral ties to a Comprehensive Strategic Partnership (CSP), marking a decisive step toward enhanced cooperation in defence, trade, and technology. The CSP not only recognised their shared commitment to a free and open Indo-Pacific but also set the stage for broad-based collaboration that has since expanded across multiple sectors. 

In 2022, the Economic Cooperation and Trade Agreement (ECTA) further strengthened these bonds by boosting trade and investment flows while reducing tariffs, thus providing a much-needed boost to industries ranging from energy to manufacturing. This agreement exemplifies the practical benefits of their partnership, offering a framework for increased economic interaction and market access that supports mutual growth. Building on the foundations of the ECTA, negotiations for a Comprehensive Economic Cooperation Agreement (CECA) are underway, which will further bolster the bilateral partnership. Moreover, the strategic dialogue within key regional forums—such as the Quad and the Indo-Pacific Economic Framework (IPEF)—has underscored the critical role both nations play in maintaining a balanced and secure regional order.  

…this partnership is one of India’s most developed bilateral partnership in the critical minerals space.

Beyond formal agreements, the partnership has been reinforced by collaborative initiatives in defence and academic research. Joint ventures, technology transfer programs, and academic collaborations have contributed to a shared vision of innovation and resilience. The India-Australia Critical Minerals Research Partnership funds various collaborative research projects such as the Titanium-Vanadium Processing Project which aims to unlock processing technology for both these mineral reserves in the two countries. Showcasing that this partnership is one of India’s most developed bilateral partnership in the critical minerals space. Other programs such as the Maitri Fellowships and Grants under the Centre for Australia-India Relations and Quad Fellowship highlight the keen interest and political will between the two countries to develop closer ties. Such efforts have not only deepened the bilateral relationship but have also positioned India and Australia as key partners capable of shaping regional policies and contributing to a more secure global environment. 

These developments provide a robust framework for deeper cooperation in the critical minerals sector, where Australia’s resource wealth complements India’s manufacturing and technological ambitions. Creating a strong foundation to ensure economic security for both nations. 

Australia’s Critical Minerals Policy Landscape 

Australia has been at the forefront of developing a robust critical minerals strategy, both to strengthen its domestic industry and to position itself as a reliable global supplier. The country has leveraged its mineral-rich geography and strong policy framework to enhance international cooperation, diversify supply chains, and reduce dependence on dominant suppliers like China. Table 1 highlights some of the key domestic and international policy developments undertaken by Australia to position itself as a key supplier for critical minerals.   

Australia’s role as a major producer of lithium, cobalt, and rare earth elements makes it a key player in global supply chains. Through partnerships under frameworks like the Minerals Security Partnership (MSP), IPEF, and Quad, Australia has positioned itself as a stable and responsible supplier of minerals essential for clean energy and advanced technologies. Its collaboration with India, among other nations, is set to deepen as both countries align their strategies to build resilient supply chains. 

Table 1: Australia’s key policies in the critical minerals sector 

Source: International Energy Agency critical minerals policy tracker database and other sources based on author’s compilation. Not exhaustive. 

India-Australia Critical Minerals Cooperation: Key Developments 

Among India’s bilateral initiatives on critical minerals, the cooperation with Australia stands out as the most advanced. At the launch of the Critical Minerals Investment Partnership in March 2023, Minister for Resources and Northern Australia, Madeline King stated:

India’s partnerships with Australia in this sector is the most advanced and well established with tangible developments such as off-take agreements from Australian lithium mines, established joint research and collaboration hubs such as the India-Australia Critical Minerals Research Hub. 

The India-Australia critical minerals partnership is at a defining moment, poised to contribute significantly to global supply chain resilience and clean energy ambitions. With complementary strengths—Australia’s resource wealth and India’s manufacturing and technological capabilities—both nations stand to gain from deeper collaboration in mining, processing, and research.  

There are 24 common minerals between the lists identified by the two countries (see Table 4 under Annex). This reflects a strong alignment with the potential for collaboration between the two nations in securing and developing these essential resources. Table 3 highlights cooperation potential between the two partners on key critical minerals such as lithium, nickel and others. 

In 2022 the signing of the ECTA marked a significant milestone in boosting trade and investment flows by reducing tariffs and facilitating market access; the agreement is expected to substantially increase two-way trade, particularly benefiting sectors like energy, resources, and manufacturing. Both nations further solidified their commitment to supply chain resilience, especially in the realm of critical minerals and emerging technologies, under the Quad’s Critical and Emerging Technologies and Climate Working Groups. The Critical Minerals Dialogue established under the IPEF focuses on minerals security as a crucial area of cooperation. The two also actively participate in the different pillars of the IPEF and in the MSP further bolstering avenues for cooperation in this sector.  

This strategic alignment is complemented by India’s ambitious domestic initiatives, including the National Electric Mobility Mission Plan, PLI schemes, auctions of mineral blocks, and renewable energy targets, all of which align with Australia’s goal of being a reliable and responsible supplier of critical minerals. In 2022, the India-Australia Critical Minerals Investment Partnership was announced, focusing on joint ventures, technology transfer, and co-investment in the exploration and processing of critical minerals. 

Table 2: India-Australia Critical Minerals Cooperation 

Source: Author’s compilation based on various sources. 

India’s partnership with Australia represents its most advanced bilateral cooperation in the critical minerals domain, reflecting a shared commitment to resilient supply chains and clean energy transitions.

Pathways to Enhance Cooperation 

India’s partnership with Australia represents its most advanced bilateral cooperation in the critical minerals domain, reflecting a shared commitment to resilient supply chains and clean energy transitions. As India looks to diversify its sources and secure access to strategic resources, geoeconomic developments underscore the importance of deepening ties not only with established partners like Australia but also other resource-rich regions. Australia’s robust policy ecosystem and mature mining sector complement India’s large market, industrial ambitions, and climate goals, making the two natural partners in this space. Building on this strong foundation, there are several avenues through which the India-Australia critical minerals partnership can be further strengthened. Table 3 delineates some areas of cooperation between the two partners on some specific minerals. 

To strengthen India-Australia critical minerals cooperation, the following areas must be prioritised: 

1. Furthering India’s Critical Minerals Mission: India’s recent policy focus on securing raw materials can be aligned with Australia’s export strategy to ensure long-term supply security. This includes aligning Australia’s abundant mineral resources with India’s manufacturing and clean energy ambitions, particularly in the context of its net-zero goals and the decarbonisation of industries. 

1. Expanding Co-Investment in Mining and Processing: Encouraging Australian firms to partner with Indian stakeholders in mining and refining projects, particularly under the PLI schemes and strategic mineral auctions initiated by the Indian government. Thus, providing a boost for both the public and private sector to invest in the supply chains. Australia’s mining sector is one of the largest and most developed in the world and leveraging and incentivising the private sector. 

1. Developing Recycling and Circular Economy Initiatives: Establishing joint research projects for advanced materials recycling to reduce dependence on virgin resources, ensuring that supply chains are not just robust but also sustainable. 

1. Enhancing Technology Transfer: Promoting joint development of battery-grade materials and value-added products through collaborations between research institutions and industry players in both countries. The Critical Minerals Research Hub is and can further be leveraged to promote this sort of technology transfer and bolster capacity building initiatives. Concerns over Intellectual Property Rights can be covered within the ambit of the MoUs as has been the case in the 2020 MoU between the two countries.  

1. Strengthening Academic and Industry Collaborations: Expanding research partnerships and training programs to build a skilled workforce in mineral processing, fostering innovation in sustainable mining technologies, and leveraging existing partnerships between universities and industry stakeholders. Focusing research agendas on future technologies to cultivate an ecosystem that is more forward-looking and resilient. Setups similar to the Critical Minerals Research Partnership can be undertaken where project funding is provided for joint R&D. 

By leveraging strategic initiatives, technological partnerships, and trade frameworks, India and Australia can solidify their role in the global critical minerals supply chain, ensuring long-term economic and strategic benefits for both nations.  

Table 3: Mineral specific cooperation potential 

Source: Author’s compilation. 

The strategic alignment between India and Australia in the critical minerals space not only addresses immediate supply chain vulnerabilities but also sets the stage for long-term economic resilience and technological innovation.

As the world navigates an increasingly fragmented trade landscape marked by unilateral tariff impositions and shifting geopolitical alliances, the case for international cooperation has never been stronger. The strategic alignment between India and Australia in the critical minerals space not only addresses immediate supply chain vulnerabilities but also sets the stage for long-term economic resilience and technological innovation. Through robust policy coordination, targeted investments, and collaborative research initiatives, these two nations are uniquely positioned to lead the global transition to a secure and sustainable clean energy future. 

Annex: 

Table 4: Critical Minerals on India and Australia’s lists (Updated as of April 2025) 

Mineral	India	Australia	Common
Antimony
Arsenic
Beryllium
Bismuth
Cadmium
Chromium
Cobalt
Copper
Fluorine
Gallium
Germanium
Graphite
Hafnium
High-purity Alumina
Indium
Lithium
Magnesium
Manganese
Molybdenum
Nickel
Niobium
Phosphorous
Platinum-group elements (PGE)
Potash
Rare-earth elements (REE)
Rhenium
Scandium
Selenium
Silicon
Strontium
Tantalum
Tellurium
Tin
Titanium
Tungsten
Vanadium
Zirconium

Source: Critical Minerals at Geoscience Australia, 26 March 2025, https://www.ga.gov.au/scientific-topics/minerals/critical-minerals  

Note: The author would like to thank Dr Constantino Xavier, Senior Fellow, CSEP for his feedback. 

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The inequity in the availability and accessibility of health facilities, especially for urban poor, had prompted the expansion of the National Urban Health Mission (NUHM) with a focus on primary healthcare services to serve the under-served.  However, despite 10 years of the implementation of NUHM, primary healthcare provisioning is not only highly inadequate but also fragmented in urban India.

Improving access to affordable and quality health services has been a major theme in health programmes and policies in India.  The National Rural Health Mission, subsequently subsumed under National Health Mission, has been instrumental in changing the rural health system positively, improving access, availability and affordability of services for rural India.  The inequity in the availability and accessibility of health facilities, especially for urban poor, had prompted the expansion of the National Urban Health Mission or NUHM with a focus on primary health care services to serve the under-served.  However, despite 10 years of the implementation of NUHM, primary health care provisioning is not only highly inadequate but also fragmented in urban India.  There is fragmentation in both financing and governance due to a complex multi-layered administrative structure that govern the running and funding of health systems in urban India.  This is in addition to the sparse funding for health in general and primary care in particular – with less than 2% of health expenditure out of the country’s GDP being spent on health.   

This analysis attempted to piece together the story of urban health by focusing on the extent of inequities in healthcare access and outcomes among the urban poor, drawing data from multiple databases, including the National Sample Survey (NSS), National Family Health Survey (NFHS), Longitudinal Ageing Study in India (LASI), and government health statistics, to compare and validate the results.  Additionally, a literature review was conducted on the availability and accessibility of health care in urban slums, especially for the urban poor.  Finally, the challenges of urban spaces during COVID-19 are explored using literature review method to understand their dynamics and role in determining health and health-seeking behaviour during the pandemic. 

While inequalities in health outcomes across economic categories are high in both rural and urban areas, the inequalities are higher in urban areas relative to rural areas. These inequalities seem to have increased somewhat over the years—the progress made by rural areas has been comparatively better.

The results indicate that while inequalities in health outcomes across economic categories are high in both rural and urban areas, the inequalities are higher in urban areas relative to rural areas. These inequalities seem to have increased somewhat over the years—the progress made by rural areas has been comparatively better. There are gaps that remain in service coverage, access, and health coverage in urban areas for some of the key parameters. Overall, the poor in urban areas are doing worse on all fronts compared to their rural counterparts.  

Inadequate attention has been paid over the years to administrative and governance structures that are required to address urban health.  The challenges have been compounded by the phenomenal growth in urban populations and the emergence of million-plus cities, resulting in the current and static health infrastructure being stretched beyond limits.

Inadequate attention has been paid over the years to administrative and governance structures that are required to address urban health.  The challenges have been compounded by the phenomenal growth in urban populations and the emergence of million-plus cities, resulting in the current and static health infrastructure being stretched beyond limits.  

Urban health requires a focus similar to the NRHM urgently, but accompanied by structural and administrative changes in how health inputs—like infrastructure and personnel—are supplied to different urban areas.  

If the NUHM is the main plank on which urban health planning has to be implemented, a new approach would be required.  All urban health facilities need to be brought under one umbrella, whether in an existing ministry or by creating a separate body for urban health. A unified administration can be responsible for planning, research, coordination, and implementation. The finances can be from a diverse set of sources, but the planning for the finances for urban health needs to be done in an integrated manner.   

Also, the allocations to NUHM have remained too modest to make any difference to the sizeable needs of cities and towns.  The four post-COVID budgets do not indicate any increase in government health spending out of the total spending of the government.  With this level of health financing, it seems unlikely that the situation will change anytime soon unless the state governments take the initiative and plan for urban health in a major way. 

It is hoped that policymakers will take note of the urgent needs of cities, especially of the urban poor.  Unless that happens, health outcomes and inequities can only widen between rural and urban areas and between the poor and the non-poor in the urban areas. 

The post Addressing Widening Health Inequities: Urgent Need to Fix the Urban Healthcare System first appeared on CSEP.

For manufacturing to expand from 13% to 25% of GDP over a decade—while the economy grows at 6.5% annually—the sector itself must achieve an annual growth rate of approximately 13.6%.

Importance of exports for a thriving manufacturing sector

For manufacturing to expand from 13% to 25% of GDP over a decade—while the economy grows at 6.5% annually—the sector itself must achieve an annual growth rate of approximately 13.6%. Achieving this scale of expansion cannot rely solely on domestic demand; a significantly stronger export performance will be essential.

To enhance India’s participation in Global Value Chains (GVCs) and boost its share in global manufacturing exports—currently at just 1.8% (2022), lagging behind even smaller economies like Vietnam (2%)—policy interventions are essential. A key enabler of GVC integration is the import of intermediate goods. However, a comparative analysis with leading Asian competitors reveals that India imposes significantly higher import duties (Table 1), both overall and specifically on intermediate goods, which hampers its competitiveness.

Table 1: Most Favoured Nation (MFN) tariff levels on total and intermediate goods (simple average)

Source: Based on WITS, World Bank

Layers of import protection

An interesting fact is that import protection is not driven solely by customs duties but also by additional duties and cesses, which further increase the overall cost of imports. These include:

• Anti-dumping duties

Dumping occurs when a country exports goods at prices lower than its domestic market cost to capture a larger share of the global market. Dumping causes harm to domestic producers of competing goods. To counter this, anti-dumping duties are imposed on such imports to bridge the gap between their export price and domestic price Article VI of the General Agreement on Tariffs and Trade (GATT) authorizes the imposition of anti-dumping duties to address such unfair trade practices.

• Cesses

The Social Welfare Surcharge (SWS), introduced in 2017-18, is levied at 10% on the aggregate customs duties of imported goods to fund the government’s social welfare schemes. However, certain products, such as gold, silver, platinum, specific medical devices, and essential imports, may be exempted. Additionally, imports under specific Free Trade Agreements (FTAs) may be exempt from SWC if the Basic Customs Duty (BCD) is waived under the agreement.

The Agriculture Infrastructure and Development Cess (AIDC), introduced in 2021, applies to certain imported goods, with the revenue generated being allocated to agricultural infrastructure and related development projects.

Composite Duty Calculation

To understand the impact of additional duties and charges on India’s imports, consider Alloy Steel Chisels/Tools and Hydraulic Rock Breakers—key machinery components. These products fall under the 6-digit HS Code 843149. Below is the key constituting of duties/cesses on these products.

• BCD of 7.5 per cent
• In 2024, India imposed ADD on imports of these products from South Korea and China to counter unfair pricing and protect domestic manufacturers. According to the government notification, the applicant for the anti-dumping investigation claimed that dumped imports from these countries were causing material injury to the domestic industry. As a result, the proposed duty rates range from 4.5% to 131.1% for China and 0% to 52.7% for South Korea (WTO, 2025).
• SWS of 10 per cent of aggregate custom duties

The import value with only Basic Customs Duty (BCD) is approximately 22.2 per cent short of the import value with composite duty, highlighting that the actual protection on Indian imports is higher than BCD alone for products where anti-dumping duties are imposed.

Given the multiple layers of protection, it is essential to compute the composite protection. The following section analyses the total impact of various duties, cesses, and charges for USD 100. Given the wide range for ADD for both the partner countries, we assume a rate of 30 per cent for this calculation.

A = Total custom duty= (BCD + ADD) = 7.5 + 30 = 37.5

B = SWS = 0.10*BCD= 0.10*7.5 = 0.75

C =Composite duty = A + B = 38.25

Import value with composite duty = 100+38.25 = 138.25

Import value with only BCD = 100+7.5 = 107.5

The import value with only Basic Customs Duty (BCD) is approximately 22.2 per cent short of the import value with composite duty, highlighting that the actual protection on Indian imports is higher than BCD alone for products where anti-dumping duties are imposed.

NTMs add to the protection

The number of products under QCOs has surged from 106 in 2014 to 732 as of September 2024

In addition to the various kinds of duties and cesses, imports also face protection in the form of Non-Tariff Measures (NTMs), which are policy measures other than ordinary customs tariffs that can have an economic effect on trade. Technical barriers to trade (TBT) and Sanitary and Phytosanitary (SPS) measures are the two widely used NTMs. TBT includes measures such as labelling, standards on technical specifications and quality requirements, and other measures protecting the environment. SPS measures include restrictions on substances, ensuring food safety, and preventing the dissemination of diseases or pests. India has increasingly implemented Quality Control Orders (QCOs) to enforce product standards. The number of products under QCOs has surged from 106 in 2014 to 732 as of September 2024 (Indian Express, 2024). While these measures aim to ensure product quality and consumer safety, they also act as trade barriers.

High import barriers limit India’s ability to participate in GVCs and reduce its potential to capitalise on the ‘China Plus One’ strategy, where global firms seek to diversify supply chains beyond China.

This protectionist approach presents challenges to India’s integration into Global Value Chains (GVCs), which account for approximately 70% of global trade (ADB, 2018). High import barriers limit India’s ability to participate in GVCs and reduce its potential to capitalise on the ‘China Plus One’ strategy, where global firms seek to diversify supply chains beyond China.

References

Asian Development Bank. (2018). Key indicators for Asia and the Pacific 2018. Retrieved from

https://www.adb.org/sites/default/files/publication/443671/ki2018.pdf

Indian Express. (2024). Quality control orders now cover 732 products helping curb cheap quality imports: Goyal. Retrieved from

https://indianexpress.com/article/business/quality-control-orders-now-cover-732-products-helping-curb-cheap-quality-imports-goyal-9623979/

World Trade Organization. Trade Remedies Data Portal. Retrieved from

https://trade-remedies.wto.org/en/antidumping/measures

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In 2020, news of the discovery of a 1,100-year-old Shiva lingam in Vietnam swept India: the symbol, a representation of the Hindu God, Shiva, was popularly hailed as proving the extent of India’s global influence. As the news broke on social media, External Affairs Minister S. Jaishankar referred to the discovery as “reaffirming a civilisational connect” between India and Southeast Asia. As evidence of India as a civilisational state, the minister further qualified the finding as “a great cultural example of India’s development partnership.” The discovery came during post-2017 restoration work of the surrounding temple complex by the Archaeological Survey of India (ASI), a division of India’s Ministry of Culture (MoC).

The ASI project in Vietnam is part of a growing effort by the Indian government to engage in heritage conservation projects abroad. Besides the ASI, India’s Ministry of External Affairs (MEA) also allocates grant and other economic assistance for similar initiatives through other implementing partners. In 2020, the MEA created a separate division within its Development Partnership Administration (DPA) exclusively tasked with “conservation and restoration of temples in Southeast Asia, mural preservations, museology related works, iconographic survey, excavations and digital documentation of heritage sites.” In a recent example, Prime Minister Narendra Modi and Indonesia’s president Prabowo Subianto made a joint announcement that India will soon support the conservation of the Prambanan Temple complex in southern Java.

This article presents a new survey of India’s recent heritage diplomacy initiatives in the archaeological and conservation domain. We first contextualise the importance of such activities in India against the background of other countries’ efforts to use heritage conservation as a soft power instrument. Based on open-source evidence, we then map Indian initiatives since 2014, whether led by the ASI or the MEA in different countries and sectors. We conclude with a discussion of trends and policy challenges for India’s growing investment in heritage diplomacy.

Restoring a sense of self abroad

India has engaged in this type of archaeology and conservation diplomacy for decades, most famously at Angkor Wat in the 1980s. So far, the projects have primarily focused on Southeast Asian countries with which – Indian officials frequently emphasise – India has a long history of shared religions, languages, and cultures since 200 BCE. Over decades, other projects have targeted other countries with which India has close cultural connections, such as Nepal, Sri Lanka, Maldives, Bangladesh, Mauritius, and Bahrain. In some cases, Indian support has gone as far as Egypt and Angola.

As a rising power, with the world’s largest population and a growing economy, India is expanding its foreign policy interests and finding new ways to project power – from maritime to cyber and space security, as well as the protection of its overseas citizens or attempts to reform the United Nations and other multilateral institutions. Building a historical and cultural narrative of India as a civilisational state is one way by which its government officials have articulated the country’s quest for a more prominent, influential, and visible role in the world order.

Building a historical and cultural narrative of India as a civilisational state is one way by which its government officials have articulated the country’s quest for a more prominent, influential and visible role in the world order.

This is not just an attempt to popularise foreign policy for domestic consumption, feeding into the Indian perception that “our time has come” on the world stage, the euphoria about India’s G20 presidency or the International Yoga Day. Nor is it a mere ideological reflection of what has been termed a “Hindu nationalist” or “muscular” foreign policy. India’s sense of historical, religious and civilisational self has long shaped its foreign policy narratives, from the pre-independence period right up to the choice of national emblems and symbolic language used by its first Prime Minister, Jawaharlal Nehru.

Within the last ten years, archaeology and conservation efforts have played an increasingly prominent role in India’s foreign policy strategy.

However, within the last ten years, archaeology and conservation efforts have played an increasingly prominent role in India’s foreign policy strategy. For External Affairs Minister Jaishankar, these initiatives are driven by the country’s growing “sense of historical and civilisational responsibility.” Politically, the recurring idea of “civilisational linkages” with India’s neighbourhood has been useful for domestic audiences whose national pride and interest in foreign policy was higher than ever in the 2024 election cycle.

Cultural and civilisational linkages, Sanskriti evam Sabhyata, has been one of five pillars of the Modi government’s Panchamrit foreign policy since 2015. Target countries for archaeological diplomacy are also important to India’s Act East and Neighbourhood First policies. Indian officials thus refer regularly to shared history as a distinctive mark of India’s partnership with Southeast Asian countries. In the words of former foreign minister Sushma Swaraj, “ASEAN and India are natural partners that share geographical, historical, and civilisational ties.”

Heritage diplomacy may be another positive and promising element in the Indian toolkit.  According to one study, heritage conservation has already strengthened India’s relations with Southeast Asia by reaffirming shared cultural identities, building stronger diplomatic relationships, and even boosting bilateral trade and investment. These initiatives are intended to help India articulate its civilisational identity while also enriching regional linkages and rising as a global power. The resulting linkages could offer India benefits relating to all five Panchamrit principles: cultural recognition, economic prosperity, added security, dignity and pride in India, and greater engagement abroad.

Surveying Indian projects across three continents

Archaeology and conservation projects are one relatively small type of Indian foreign assistance, which is a program that has grown in importance in recent years. There are two main channels of engagement abroad. First, for projects implemented by the ASI and its local, regional and international partners, the MEA selects each site and allocates funding based on the foreign government’s requests. But the ASI remains the lead organisation for implementation, whether by deputing officials abroad or working in collaboration with its foreign counterpart.

Since 2014, the MEA and ASI have invested resources, time and expertise at fourteen sites across eight countries.

In a second channel, the MEA offers grant assistance directly to host governments or through implementing partners in the host country. This can sometimes also involve local, non-governmental organisations. The following data is drawn from official MEA and MoC sources, with an emphasis on annual reports, as well as online reporting. Given the inconsistency of public information, the survey is thorough but the data is not exhaustive. In the last decade, since 2014, the MEA and ASI have invested resources, time and expertise at fourteen sites across eight countries.

Table 1: Site-specific ASI initiatives for heritage conservation abroad (since 2014)

Table 1 presents the projects of the first channel with ASI involvement. ASI expert teams have implemented conservation and restoration work at ten of the above sites. In Cambodia, ASI teams have been restoring the Ta Prohm temple complex since January 2004, the Ashram Maha Russei at Sambor Prei Kuk since April 2022, the Preah Vihear temple since August 2022 and the Wat Raja Bo pagoda since November 2023. In Myanmar, the ASI completed a conservation project at Ananda temple between May 2012 and 2018 and has been working on the conservation of the pagodas in Bagan since January 2020.

In Lao PDR, the ASI has been working on conservation of the Vat Phou temple complex since June 2009. In Vietnam, ASI has been working at the My Son temple complex since February 2017. The status of other projects is less clear. In Sri Lanka, ASI launched a conservation project at the Thiruketeeshwaram temple in August 2012. It was announced as being close to completion in 2016-2017 but does not appear to have be inaugurated. In the Maldives, ASI began conserving the Friday mosque in March 2021, with work reportedly ongoing as of March 2022.

Since 2014, the ASI has also begun surveys and promised conservation projects at four other sites. In 2015-2016, an ASI technical team visited Pashupatinath temple in Nepal and prepared a detailed conservation plan.  In 2022-2023, the MEA organised an ASI feasibility tour to Uzbekistan for possible excavation and conservation of the Fayaztepa and Karatepa temple complexes in the ancient Termiz heritage site. The ASI also conducted surveys in Vietnam at the Dong Duong monastery in April 2023 and the Nhan tower in January 2024 for potential new conservation projects.

 Table 2: Site-specific MEA Investments in Heritage Conservation (since 2014)

Table 2, for the second channel, lists MEA grant assistance related to heritage conservation in five countries, either as government-to-government aid or through Indian or international implementing partners. For all seven initiatives, the MEA allocated the posted grant amount either to the foreign governments or to implementing partners. Most of these have been in India’s immediate neighbourhood. In Afghanistan, India contributed $4 million in grant assistance, and later an additional $1.7 million, to restore the Stor palace between January 2009 and July 2016. In the Maldives, India contributed MVR 5.24 million (about $340,000) in April 2022 to develop a museum of pre-Islamic heritage at the Maabadhige archaeological site and to the conservation of the Dhiyamigili Ganduvaru palace. Both projects appear to be ongoing.

In Nepal, India contributed NPR 220 million (about $2 million) for the construction of the Nepal-Bharat Maitri Pashupati Dharmashala at Pashupatinath temple from September 2016 to August 2018. The dharmashala, a building related to religious or charitable purposes, houses pilgrims visiting the temple area. India agreed to give an additional NPR 37.23 million (about $300,000) in June 2020 for the construction of sanitary facilities at the site, which appears ongoing. After the 2015 earthquake in Nepal, India allocated $50 million in grant assistance to the reconstruction of 28 cultural heritage sites. For 12 of the 28 projects, MEA appointed the Indian National Trust for Art and Cultural Heritage (INTACH) to provide design and project management consultancy services. For the remaining 16, MEA has funded Nepali government organisations directly. It is unclear whether ASI was consulted in any of the projects under the second channel.

There have also been a few instances of assistance further away, in South America and Africa. In Bolivia, India contributed $31,000 in development assistance for illuminating the Tiwanaku archaeological site, which was completed in June 2017. In Mali, India made a one-time cash donation of $500,000 to the government for the revival of the World Heritage Site at Timbuktu, delivered in March 2017.

Four modes of engagement

Based on our analysis, India’s projects are implemented through four modalities after signing government-to-government agreements. In the first modality, as in the cases listed in Table 1, the MEA deputes the ASI to implement projects, usually in partnership with local governmental organisations. Projects such as the conservation of Ta Prohm temple, where ASI partners with the Authority for the Protection and Management of Angkor and the Region of Siem Reap (APSARA), are funded by India and implemented under the supervision of both governments.

In a second modality, the MEA merely offers economic assistance for conservation projects which are implemented by the host government. For example, the MEA is funding the projects at the Maabadhige archaeological site and the Dhiyamigili Ganduvaru palace through the National Center for Cultural Heritage (NCCH), a department of the Maldivian government.

A third modality includes MEA-funded projects abroad that are managed jointly by the host government and an Indian non-governmental organisation. This may indicate a trend towards growing involvement of Indian NGOs and civil society expertise in MEA-led development cooperation partnerships abroad. For example, the reconstruction of 12 earthquake-damaged cultural heritage sites in Nepal is managed by INTACH, based in New Delhi.

Fourth, there are also MEA-funded archaeology and conservation projects implemented by international NGOs. In Afghanistan, for example, the Indian government funded the restoration of Stor palace with implementation by the Aga Khan Trust for Culture (AKTC), based in Switzerland.

There may be instances of a fifth modality where the MEA funds projects abroad that are implemented by local NGOs based in the host country. From our survey it is unclear to what extent local implementing agencies work alongside local NGOs.

The future of India’s heritage diplomacy

Our survey maps India’s growing footprint in archaeology and conservation efforts across three continents. There are new modalities of engagement, including a growing role for non-governmental organisations and new tie ups between the Indian government and international institutions. The creation of dedicated institutional and financial resources attests to the MEA’s growing interest and investment in being more active in this increasingly competitive dimension of foreign policy. In 2021, the MEA began quoting “aid for cultural and heritage projects” as a separate form of development assistance in its annual budget.

But more will be required to sustain India’s archaeology and conservation efforts abroad in the future. For example, India may face growing demand for such initiatives. On the one hand, within India, citizens are keen to see their country involved in more archaeology and conservation efforts abroad to support the increasingly popular idea of India as a civilisational power. The success of recent books such as William Dalrymple’s The Golden Road (2024) and Sanjeev Sanyal’s The Ocean of Churn (2016) indicate a growing interest in India’s civilisational ties and attempts to study and revive them. On the other hand, there will also be growing demand from abroad; especially in Southeast Asia and across the Global South, countries will likely seek more expertise and financial support from India for their own archaeological and conservation efforts.

To deliver, India will require greater capacity to plan and implement projects in accordance with international standards. India will also have to be able to sustain these projects under difficult political or security conditions in the host country. In the past, India had to pull funds from Afghanistan’s Bala Hissar citadel after the Taliban returned to power and there were significant delays in approval for the ASI to conserve Nepal’s Pashupatinath temple.

The MEA and ASI may also benefit from closer cooperation with Indian NGOs and the private sector. Besides INTACH, organisations like the Tata Trusts Art Conservation Initiative and the Mehrangarh Museum Trust are also active in the conservation of built heritage in India and may be interested in engagements abroad.

India’s archaeology and heritage diplomacy would also benefit from more scholarship. Universities which study this area, including Jawaharlal Nehru University, Delhi University, Banaras Hindu University, South Asian University and Nalanda University, can be further supported and encouraged to develop research partnerships abroad.

The policy discourse remains thin, although recent work by the Vivekananda International Foundation (VIF) has begun analysing India’s record of heritage conservation projects abroad. More research and policy engagement will be necessary to understand the relevance of India’s civilisational identity as it continues to uncover its ancient history and leverage it for international influence and interests.

As India’s technical, economic and diplomatic capabilities increase, the memory of its civilisational and trading past will add character and influence to its modern linkages with the rest of the world

As India’s heritage diplomacy expands, New Delhi should also beware of possible backlash. Based on the experience of other countries, foreign-funded archaeology and conservation initiatives can often be politicised in a negative way. For example, the Turkish Cooperation and Coordination Organisation has conserved heritage sites in the Balkans and Africa related to the Ottoman Empire which have been criticised as a revival of “Neo-Ottoman” ambitions. Similarly, Chinese heritage projects along the Silk Roads have come under scrutiny for their political and strategic objectives as part of the Belt and Road Initiative (BRI).

Despite the importance of heritage conservation for India’s civilisational identity, we find that investments in this area remain small and there are many opportunities to grow and enrich India’s heritage diplomacy in the future. As India’s technical, economic and diplomatic capabilities increase, the memory of its civilisational and trading past will add character and influence to its modern linkages with the rest of the world. India stands to benefit by deepening and accelerating its efforts to preserve the sites where that memory lies today.

The post India’s Heritage Diplomacy: The Case of Archaeology and Conservation first appeared on CSEP.

The National Critical Minerals Mission announced on 29 January, 2025, consists of several key components to ensure a ‘sustainable, resilient, and self-reliant critical minerals value chain in India’.  One of the core elements of this mandate is the acquisition of critical mineral assets abroad. It recognises the need to leverage existing economic and political relations with resource rich countries to enter into Critical Mineral Partnership Agreements.

Focusing on this development, a study by Veda Vaidyanathan, titled ‘India, Africa and Critical Minerals: Towards a Green Energy Partnership,’ explains why, where, and how India can build strategic collaborations with mineral-rich countries in the African continent. It identifies African priorities, highlights Indian interests, and finds synergies, presented as nine policy pathways.

The paper recommends that the South African Development Community (SADC) is a “regional country cluster” that India should deepen its engagement with.

The paper recommends that the South African Development Community (SADC) is a “regional country cluster” that India should deepen its engagement with. This recommendation is in alignment with other studies that position the SADC region as a pivotal hub for critical mineral partnerships. According to the British Geological Survey (2024), in terms of regional distribution, countries in the SADC have produced the most critical minerals between 1970-2022.

Endowed with minerals such as graphite (Mozambique and Tanzania), platinum (South Africa), copper (Zambia), nickel (Botswana and Zimbabwe), cobalt (Democratic Republic of Congo, South Africa), and titanium (Mozambique and Madagascar), the region has received substantial attention from global investors. According to the United Nations Economic Commission for Africa (UNECA), “despite the low levels of geological exploration and mapping across the region, Southern Africa hosts an estimated 25 percent of the world’s critical energy transition minerals and mining is underway for these minerals at both small scale and large scale.”

This blog maps India’s political and economic engagements with ten SADC countries over the past decade – South Africa, Tanzania, Malawi, Namibia, Botswana, Zambia, Zimbabwe, Mozambique, Madagascar and the Democratic Republic of Congo (referred to as DRC in this blog) – and evaluates their sufficiency in establishing resilient critical mineral partnerships.

The timeline of 2014-2024 was chosen because India-Africa relations have significantly strengthened during this period, marked by deliberate efforts to build stronger ties across Africa. In 2015, India hosted the third iteration of the India-Africa Forum Summit (IAFS III) with participation from all 54 African countries. In 2018, the Indian Prime Minister outlined ten principles that would guide India’s engagement with countries in the continent during his address to the Parliament in Kampala, Uganda, stating that “Africa will be at the top of our priorities”.  Since then, India has increased its diplomatic footprint across Africa by opening up 18 new Embassies and High Commissions in the last decade, and accelerating the number of incoming and outgoing high level visits.

As the global demand for critical minerals intensifies, major powers such as the United States, Japan, the European Union, among others, are diversifying their supply chains to include the SADC, driven in large part by the region’s mineral wealth, but also as an attempt to mitigate supply risks.

As the global demand for critical minerals intensifies, major powers such as the United States, Japan, the European Union, among others, are diversifying their supply chains to include the SADC, driven in large part by the region’s mineral wealth, but also as an attempt to mitigate supply risks.

For context, during the 2023 G20 Summit in New Delhi, the EU and the US announced a partnership to develop the Lobito Corridor, which provides the Southern regions of the Democratic Republic of the Congo (DRC), northwestern Zambia and Angola greater access to regional and global markets through Lobito port. This is the first strategic economic corridor launched under the Partnership for Global Infrastructure and Investment (PGII). The US also recently signed Memorandums of Understanding (MoU) with officials from the DRC and Zambia, two major producers of cobalt. The EU signed an agreement with Namibia in 2022 and MoUs with DRC and Zambia for a partnership on critical and strategic raw materials value chains in 2023. The UK has bilateral partnerships on critical minerals with South Africa and Zambia as well. In 2023, the Japan Organization for Metals and Energy Security (JOGMEC) signed an MoU with Zambia, and a Scope of Work (SW) with Namibia and DRC to secure critical minerals. Major actors from the Gulf too are in a quest for the region’s mineral wealth. The UAE signed a $1.9 billion USD deal with DRC’s state owned mining company, Sakima, to develop at least four mines. Saudi Arabia has also signed MoUs with DRC and Zimbabwe in the last two years.

China’s role in the African critical mineral ecosystem continues to grow. It processes and refines around two thirds of the world’s critical minerals, and its recent export bans on minerals including gallium, germanium and antimony as the tech trade war with the US escalates, raises concerns for major powers. Since 2019, China’s mine ownership in Africa has increased by 21.3%, while there was a drop in the number of mines controlled by the US, Canada and Australia. A large percentage of its outward foreign direct investment in Africa is already targeted at SADC countries and it has also stepped-up acquisitions of mines in the region. In 2018, Chinese controlled mines were mainly concentrated in South Africa, DRC and Zambia, but since 2020, China has been investing heavily in Zimbabwe’s lithium mines. Similarly, between 2005 and 2020, South African mines received $3.85 billion USD in Chinese FDI through both state-owned and private enterprises.

In this complex geopolitical landscape, India should develop targeted strategies for specific countries and minerals in Africa. This blog presents an examination of existing political and economic ties to guide Indian decision makers in prioritizing countries, deploying effective tools, scaling up engagement and crafting a roadmap for enhanced collaboration.

This examination of existing political and economic ties will guide Indian decision makers in prioritizing countries, deploying effective tools, scaling up engagement and crafting a roadmap for enhanced collaboration.

A first step towards this effort, the authors have chosen two indicators and analysed them over a period of ten years from 2014-2024. This analysis of existing relationships underscores the multifaceted nature of India’s current engagement and points to areas where strengthening ties is essential.

1. Political Relations: Mapping high level visits – made by the President, Vice President, Prime Minister, and the External Affairs Minister of India, including both state visits and other outgoing visits – coupled with India’s diplomatic footprint in these countries, its development partnerships as well as the size of the Indian diaspora, serve as strong indicators of the political and strategic attention that New Delhi has placed on countries.
2. Economic Relations: Analysing bilateral trade and Outward Foreign Direct Investment (OFDI) from India indicates the depth of economic engagement. A particular focus on existing mineral partnerships in the form of MoU’s, are indicative of the existing frameworks of cooperation that could possibly be strengthened.

Political and Developmental Partnerships

When it comes to political relations, South Africa, which houses the largest Indian diaspora in the region, stands out as the country with the most frequent high-level visits from Indian leaders. India also has the most number of diplomatic missions in the country.

Table 1: A snapshot of the political relations and diplomatic presence from 2014-2024

Source: Compiled by the authors (MEA outgoing visits; MEA Indian Missions Abroad; MEA Bilateral Briefs)

However, these indicators of political connections fail to convey the entire picture. In the absence of overt diplomatic engagement, in the form of high level visits to most of the countries barring South Africa, the Government of India (GoI) has deployed developmental partnership instruments, including Lines of Credit (LoC), Capacity Building and Technical Assistance, Grants-in-aid and Humanitarian Assistance and Disaster Relief, to sustain relations.

Take DRC, for example. There has been no high-level visit to the country. The First Foreign Office Consultations between India DRC was held on 10 April 2024 in New Delhi,  but it is the second largest recipient of LoC’s extended by the GoI, routed through the Export-Import Bank of India, among the ten countries. This credit is estimated to amount to more than $406 million USD in the last decade. These LoCs are provided on concessional credit terms, and are aimed at supporting a wide range of development projects in, including the installation of three Solar Photovoltaic Power Projects in Karawa, Mbandaka and Lusambo provinces, hydroelectric power plants, power transmission and distribution projects, among others.

Figure 1: India’s Line of Credits to Select countries in the SADC from 2014-2024

Line of credit figure by Anika Vijapur

*All figures are in USD Million
Source: Compiled by the authors (EXIM Bank Government of India Line of Credit Statistics)

As Figure 1 points out, the largest recipient of India’s LoCs among the ten countries is Tanzania ($860.53 million USD), followed by DRC ($406.44 million USD), Mozambique ($383 million USD), Malawi ($239.18 million USD), Zimbabwe ($19.5 million USD) and Zambia ($18 million USD) in the last decade, from 2014-2024.

Beyond LoCs, and perhaps making up for the lack of political attention, are other forms of New Delhi’s development diplomacy in the region. Through the Indian Technical and Economic Cooperation Program (ITEC), a capacity building platform of the Ministry of External Affairs, many professionals from these SADC countries have received training. For example, in 2023, over 1,700 Namibian professionals and scholars, including more than 1,400 ITEC trainees, had benefited from the capacity building assistance from India. India has also provided considerable Disaster Relief to these states, prominently during the COVID-19 pandemic. An illustration of this is the donation of 100,000 doses and the supply of 1 million doses of Covishield under the COVAX programme, to Mozambique in March 2021.

Economic Relations as an indicator of engagement

True of Indian engagement across Africa, economic factors have shaped and propelled relations, even in the face of political passivity. India and the SADC first signed a MoU on Economic Cooperation in 1997. The broad areas of cooperation included the promotion of small and medium scale industries, non-conventional energy sources, diplomacy, and enterprises development through private sector involvement. A new MoU was signed in July 2024 reinforcing many of the areas of cooperation mentioned in the first MoU, including promoting trade and investment facilitation, private sector development, and a mutual interest in green growth.

Economic relations are measured through two primary indicators in this blog: bilateral trade and Outward Foreign Direct Investment (OFDI) from India. In terms of trade volume, South Africa has the highest bilateral trade with India, followed by Tanzania and Mozambique, with significantly higher figures compared to other countries. India’s key export items to the SADC are dominated by mineral fuels and pharmaceutical products, whereas major imports from the SADC include pearls, precious stones, and metals, followed by mineral fuels, oils, and its products.

Figure 2: India’s bilateral trade with select countries from the SADC from 2014-2024

Bilateral trade figure by Anika Vijapur

*All figures are in USD Million
Source: Compiled by the authors (MEA Dashboard; Ministry of Commerce and Industry Export-Import Database)

With respect to investments, or approved OFDI by the RBI, Mozambique emerges as the top destination for Indian FDI, followed by South Africa. Conversely, Namibia and Madagascar have seen the least inflow of Indian investments. The investment flows into Mozambique are largely driven by the strategic interests of Indian companies in its coal and natural gas sectors. For example, ONGC Videsh and Oil India Ltd. jointly acquired a 20% stake in Area 1 of the Rovuma gas block for over US$5 billion. FDI is a good indicator of relations between countries because it is not only a source of financing for the receiving country, but also helps transfer knowledge and build capacity.

Figure 3: India’s Approved Overseas Direct Investment to select SADC countries from 2014 – 2024

OFDI Figure by Anika Vijapur

*All figures in USD Million
Source: Compiled by authors (EXIM Bank; RBI ODI Statistics)

Within the SADC region, Indian companies have made major investments in manufacturing, mining, construction, and energy. From April 2010 to August 2022, 14.2% of India’s investments in the SADC region were in the agriculture and mining sector. For oil and energy companies, the quest for diversifying sources of supply has driven the intensity of these investments.

Within the broad spectrum of energy partnerships, the Ministry of Mines, Government of India, has signed MoUs on cooperation on mineral resources with five out of the ten countries, namely, Zimbabwe, Zambia, Mozambique, Namibia and Malawi. The common areas of cooperation highlighted in the documents include exchange of knowledge and technology, training and capacity building, promotion of private investment and business opportunities, and developing cooperative projects pertaining to exploration and extraction of mineral resources.

The Way Forward

As India begins to strengthen its supply chains overseas, it will be important to craft country and mineral specific strategies.

While India enjoys a multidimensional relationship with countries in the SADC, this preliminary analysis finds that current political and economic engagements are insufficient for establishing resilient critical mineral partnerships. The existing foundation of development projects, a significant diaspora, increased diplomatic presence, and economic ties must be harnessed more effectively to meet India’s growing demand for these resources.

Juxtaposing India’s relative disadvantages against a geopolitically charged landscape dominated by China, requires identifying nimble policy manoeuvres to remain competitive. A reimagination of how India’s political and economic instruments can be creatively utilised, including learning from the strategies adopted by other powers already active in the SADC region, would inform India’s National Critical Mineral mission and its ambition of building international partnerships with resource rich countries.

The disconnect between India’s strategic action and commercial activity also warrants attention. Crucial geographies, such as the DRC which produces over 80% of the world’s cobalt, presents a significant opportunity for India. However, this is not being fully realized, as evidenced by the slow progress of mineral cooperation agreements, absence of high-level visits, despite growing bilateral trade, and Indian investment. The mining related conflicts and the growing influence of armed groups in the region only complicates this further.

As India begins to strengthen its supply chains overseas, it will be important to craft country and mineral specific strategies. In this initial assessment, South Africa and Mozambique emerge as the strongest partners for India across most dimensions of engagement. Tanzania holds a high position as a trade partner and a recipient of India’s development assistance, while Zambia is one of the top three recipients of Indian outward FDI. Towards that end, future directions of inquiry for this research will include mapping the critical mineral landscape in these countries, including an overview of existing governance, regulatory frameworks and local content policies, and exploring the potential for bilateral, trilateral, and multilateral partnerships.

Juxtaposing India’s relative disadvantages against a geopolitically charged landscape dominated by China, requires identifying nimble policy manoeuvres to remain competitive. A reimagination of how India’s political and economic instruments can be creatively utilised, including learning from the strategies adopted by other powers already active in the SADC region, would inform India’s National Critical Mineral mission and its ambition of building international partnerships with resource rich countries.

The post India and Southern Africa: Strengthening Partnerships for Critical Minerals first appeared on CSEP.

The Union Budget 2025-26 has emphasised reforms in the mining sector. To ensure requisite availabilities of critical minerals, customs duty rates on 12 critical minerals have been brought down to zero along with cobalt powder, waste and scraps of lithium, lead and zinc.

India, as part of its climate action strategy, has committed to meet net zero emissions by 2070 and aims to achieve 50% cumulative electric power installed capacity from clean energy sources by 2030. Such clean energy transition is fuelled by the use of select minerals, including copper, cobalt, graphite, lithium, nickel, neodymium and silicon, referred to as energy transition critical minerals. Apart from green technologies, critical minerals also play an important role in national defence, informational technology, aviation, and space research.While extraction of critical minerals has a high concentration in a few countries, processing concentration is even higher. In this piece, we analyse the recent developments in government policies that focus on improving the mining sector and the challenges that require further consideration. India must consider all its options and prepare its future path to ensure that it meets its promises on green transition. 

While extraction of critical minerals has a high concentration in a few countries, processing concentration is even higher. India must consider all its options and prepare its future path to ensure that it meets its promises on green transition. 

The Union Budget 2025-26 has emphasised reforms in the mining sector, including those for minor minerals. A policy design for the recovery of critical minerals from tailings has also been envisaged. India lacks in extraction and processing of such minerals. To ensure requisite availabilities of critical minerals, customs duty rates on 12 critical minerals have been brought down to zero along with cobalt powder, waste and scraps of lithium, lead and zinc. 

Critical minerals have been an important policy focus of the central government in recent years. In the earlier Union Budget, 2024-25, the government declared the intention of setting up a Critical Mineral Mission for boosting domestic production, recycling of critical minerals, and acquisition of critical mineral assets abroad with a mandate to include technology development, a skilled workforce, and suitable financing mechanisms. It was announced that the government would commence the auction of offshore blocks for mining. The customs duty on 25 critical minerals was reduced to zero. These minerals include, among others, copper, cobalt, lithium, nickel and rare earth elements. In addition, the basic customs duty rates on two more minerals, graphite and silicon, were reduced. 

In January 2025, the Union Cabinet approved the launch of the National Critical Mineral Mission (NCMM) to establish an effective framework for India’s self-reliance in the critical mineral sector with an allocation of Rs.16,300 crore. The PSUs are expected to contribute investment worth Rs.18,000 crore. The Mission will encompass all stages of the value chain, including mineral exploration, mining, beneficiation, processing, and recovery from end-of-life products. The aim is to intensify exploration, create fast-track post-lease regulatory approvals and offer financial incentives promoting the recovery of these minerals from overburden and tailings. The dual objectives of the NCMM align with CSEP’s work on India’s critical mineral supply chains: 

1. To secure India’s critical mineral supply chains by ensuring mineral availability from domestic and foreign sources. 
2. Strengthening the value chains by enhancing technological, regulatory, and financial ecosystems to foster innovation, skill development, and global competitiveness in mineral exploration, mining, beneficiation, processing and recycling. 

In the absence of abundant domestic production of these minerals, India has to rely on global supply chains. The primary challenges in accessing minerals are the concentration extraction and processing in a few countries at different stages of the supply chain. CSEP’s work on assessing the criticality of minerals identified 23 minerals critical for green technology transition in April 2023. Subsequently, the Ministry of Mines came out with India’s first list of 30 critical minerals in June 2023.  

Domestically, the auction regime has not encouraged investments in critical mineral extraction. Four tranches of critical mineral auctions during 2023-24, where 48 blocks were announced and only 24 of them were successfully auctioned.

A recent CSEP study on critical mineral supply chains highlights the challenges faced, both globally and locally, by policymakers in building resilient mineral supply chains for India. Domestically, the auction regime has not encouraged investments in critical mineral extraction. Four tranches of critical mineral auctions during 2023-24, where 48 blocks were announced and only 24 of them were successfully auctioned. The fifth tranche of critical mineral auctions was announced in January 2025 for 15 blocks. The recent auctions have been criticised due to irrationally high bids and a lack of interest in mining key critical minerals like lithium, nickel, cobalt and REE. With regard to the offshore minerals, the first tranche was announced in December 2024 for 13 blocks off the coast of Kerala, Gujarat and the Great Nicobar Islands. Conservation of marine environment in offshore mining areas cannot be overlooked and the government must implement strict regulatory norms in the region. 

The critical minerals mission must focus on reducing India’s dependence on the global supply chains as these are vulnerable to geopolitical risks, price fluctuations and the dominance of a few players, resulting in various bottlenecks. 

The critical minerals mission must focus on reducing India’s dependence on the global supply chains as these are vulnerable to geopolitical risks, price fluctuations and the dominance of a few players, resulting in various bottlenecks. Lowering custom duties on mineral concentrates, mid-stream products, and scraps can be beneficial for the sector, provided there are enough incentives for manufacturers to procure the raw materials domestically. Currently, there are no companies processing minerals at a large scale for clean energy technologies in India and hence, the manufacturers rely on imports. 

A recent report on Critical Energy Transition Minerals for India, a joint research project of CEEW, CSEP, ICRIER, IISD and SSEF, carries forward the message of the important role of Critical Energy Transition Minerals (CETMs) being essential for ensuring the availability of clean energy technologies, encompassing wind turbines, solar panels, batteries, EVs and the grid. The report further establishes that requisite supply chains must be resilient and sustainable so that the private actors and the government can meet the ambitious climate targets.  

India’s strategic actions can help mitigate risks and position the country as a leader in clean energy technology. Concerted efforts are required in domestic exploration, mining, processing, international cooperation, and the promotion of sustainable mining practices. India can thus secure its mineral future and support its broader energy transition goals while promoting environmental conservation and economic growth. 

The post Union Budget 2025-26: Long Road Ahead for India’s Critical Minerals first appeared on CSEP.

While Odisha’s first attempt failed, Delhi has demonstrated significant improvements in operational efficiency and supply quality. …However, the financial health of Delhi’s distribution sector continues to be a cause of concern.

So far, only Odisha and Delhi have opted for distribution privatisation as a reform measure to improve the discom’s financial health. While Odisha’s first attempt failed[1], Delhi has demonstrated significant improvements in operational efficiency and supply quality. For example, the aggregate technical and commercial (AT&C) losses in Delhi today are less than 6.5%, down from over 45%-60% at the time of privatisation. This is a remarkable achievement, considering that all-India average AT&C losses are still at 15%. The Delhi government’s power department website claims that the reform exercise has been a ‘great success’ and is a ‘showcase model’ for other states to follow. However, the financial health of Delhi’s distribution sector continues to be a cause of concern. Given this background, we examine the financial situation of Delhi’s discoms and draw lessons about the role of the regulatory commission in shaping these outcomes.

1.     A brief overview of Delhi’s distribution sector

In 2002, the Delhi Vidyut Board (DVB), a vertically integrated state-owned electricity supply agency, was unbundled into separate companies dealing with generation, transmission, and distribution. The distribution business was privatised, and three new discoms, i.e. BSES Rajdhani Power Limited (BRPL), BSES Yamuna Power Limited (BYPL), and Tata Power Delhi Distribution Limited (TPDDL, earlier NDPL), were formed.[2] The Government of the National Capital Territory of Delhi (GNCTD) holds 49% equity in the three discoms, with the respective private owners holding 51%. This blog only focuses on the three private discoms (BRPL, BYPL, and TPDDL) since they constitute the bulk of Delhi’s distribution sector (around 93%) and are of interest from a structural reform point of view.

As seen from Table 1, the Reliance group-owned discoms (BRPL and BYPL) cater to roughly 70% of the total consumers and 65% of the total sales. The New Delhi Municipal Council (NDMC) also manages distribution business in some areas. The Delhi Electricity Regulatory Commission (DERC) is the state regulator that oversees these entities, regulates all their operations and finances, and sets consumer tariffs. Delhi is a highly urbanised metropolitan area; most sales are to residential and commercial consumer categories. Figure 1 shows the sales mix of each discom. Barring the exception of TPDDL, sales to industrial consumers are 5% or less. As such, there isn’t much scope for cross-subsidisation. The average cost of power purchase is also high.[3] The retail tariff is the same across Delhi.

Table 1: A brief overview of the distribution companies in Delhi FY 2021-22

 Source: (DERC, 2024a), (DERC, 2024b), (DERC, 2024c).

Figure 1: Category-wise energy sales (Actual) for FY 2022-23

Source: (BRPL, 2024), (BYPL, 2024) and (TPDDL, 2024).

2.     Tariff setting and creation of regulatory assets

Under the Electricity Act 2003 (EAct 2003), state Electricity Regulatory Commissions (ERCs) review discom expenditures, approving only prudent costs for recovery through consumer tariffs. While this aims to promote efficient spending, information asymmetries complicate prudence assessments. Moreover, the “cost-plus” regulation model can incentivise inflated capital expenditures, as discoms earn a fixed return (16% post-tax) on equity investments. ERCs must, therefore, balance efficiency with investment needs, as excessive cost disallowances can hurt discom performance. While ERCs hold significant powers, they are also accountable for their decisions. They must undertake a public process for crucial issues such as tariff determination, regulation formulation and license issuance. All regulatory orders must be reasoned and are open to challenge before  Appellate Tribunal for Electricity (APTEL) and the Supreme Court.

When approved costs require significant tariff hikes (e.g., over 12%-15%), ERCs may partially defer cost recovery by creating ‘regulatory assets’. This eases the immediate burden on consumers but shifts it to future consumers. This practice often triggers a cycle of rising losses and debt, delayed generator payments, increased borrowing, and reduced investments in network upgrades. While the creation of regulatory assets is strongly discouraged through policy guidelines (MoP, 2016) (MoP, 2023), the practice continues with reported regulatory assets for all discoms in the country standing at INR 97,000 crores in FY 2023 (PFC, 2024). The figure is likely to be an underestimate due to true-up delays and pending litigation.

In addition to the general problems with regulatory assets, Delhi’s case has a unique feature. Here, the DERC and the discoms disagree on the quantum of the regulatory assets.

In addition to the general problems with regulatory assets, Delhi’s case has a unique feature. Here, the DERC and the discoms disagree on the quantum of the regulatory assets. The discoms refer to such amounts, which, in their opinion, are legitimate but yet to be acknowledged by the DERC as ‘unrecognised regulatory assets’. Figure 2 shows the regulatory assets approved by the DERC till FY 2021-22 and the unrecognised regulatory assets projected discoms till FY 2023. DERC has approved INR 27,200 crore as regulatory assets for the three discoms, but including the unrecognised assets (INR 64,316 crore) brings the total to INR 91,516 crore—indicating that only a third of the claimed assets are recognised by DERC.

Figure 2: Recognised and Unrecognised regulatory assets of Delhi Discoms

Source: (BRPL, 2024) (BYPL, 2024) (TPDDL, 2024)

3.     Where do the unrecognised regulatory assets come from?

Like most Indian states, Delhi, too, has seen cycles of steep tariff increases followed by almost no tariff revision for a few years. Over time, the gap between the Annual Revenue Requirement (ARR) sought by the discoms and approved by the DERC started increasing. Between FY 2009-10 and FY 2021-22, DERC, on average, disallowed 15%-18% of the ARR projected by the discoms. Most disallowances were related to capex, power purchase and operational costs. In some years, the disallowances for the BSES discoms were as high as 30%-40% of the proposed ARR.

…almost all the tariff orders since 2008 have been challenged in one or more fora. Barring a few exceptions, most are yet to achieve finality. …DERC has also challenged some of the APTEL judgements that overruled its decisions and delayed their implementation until there was a Supreme Court ruling. As a result of this litigation, establishing the “final” approved ARR for any given financial year has become incredibly difficult. 

Disallowed costs are ineligible for recovery through tariff. If the discoms have incurred the claimed costs, disallowance can adversely affect their balance sheets, profitability and ability to leverage funds. Unsurprisingly, they contest such regulatory decisions through appeals before the APTEL and the Supreme Court[4].  Table 2 shows that almost all the tariff orders since 2008 have been challenged in one or more fora. Barring a few exceptions, most are yet to achieve finality.

Table 2: Implementation status of DERC’s tariff orders

Source: (BRPL, 2024) (BYPL, 2024) (TPDDL, 2024).

Further, it’s not just the discoms that challenge the DERC orders. DERC has also challenged some of the APTEL judgements that overruled its decisions and delayed their implementation until there was a Supreme Court ruling. As a result of this litigation, establishing the “final” approved ARR for any given financial year has become incredibly difficult. Both discoms and the DERC assume that their contentions will be upheld until the highest authority strikes them down. This legal uncertainty is at the root of Delhi’s unrecognised regulatory assets.

4.     Cost of disputes and implementation delays

…out of the total unrecognised regulatory assets of INR 64,316 crore the principal is INR 22,247 crore or only 35%. The carrying cost is the remaining 65% or INR 42,069 crore. …Further delays will likely lead to more carrying costs. When the litigation eventually ends, the consumer will have to pay all the allowed costs with interest. 

Figure 3 shows that out of the total unrecognised regulatory assets of INR 64,316 crore the principal is INR 22,247 crore or only 35%. The carrying cost is the remaining 65% or INR 42,069 crore. This is a shocking waste of public money. To put the carrying cost amount in perspective, it is around 66% of Delhi’s total budget expenditure in FY 2023 (GNCTD, 2024). Note that this is the status as of FY 2024. Further delays will likely lead to more carrying costs. When the litigation eventually ends, the consumer will have to pay all the allowed costs with interest. Unfortunately, they have little or no say in these matters.

DERC is perhaps the only ERC that has undertaken physical verification of assets created by the discoms through third-party independent audits. While the intent is commendable, the long delay in completing the exercise defeats the purpose.

DERC is perhaps the only ERC that has undertaken physical verification of assets created by the discoms through third-party independent audits. While the intent is commendable, the long delay in completing the exercise defeats the purpose. In May 2024, DERC issued orders to allow provisional relief to the discoms for capital expenditure undertaken from FY 2004-05 to FY 2015-16 (DERC, 2024). This implies a delay of around 8-18 years in approving the capex. Such a delay is hard to justify, especially given the cost it imposes on consumers.

Figure 3: Breakdown of the (Unrecognised) Regulatory assets projected by Discoms till FY 2022-23

Source: Compilation from the latest tariff and true-up petitions (BRPL, 2024) (BYPL, 2024) (TPDDL, 2024).

5.     Disagreement on the rules of the game

Another worrisome aspect is the extent of the disagreements between DERC and the discoms. They disagree not only on the cost claims but also on the regulations for tariff-setting including those for developing business plans.

Another worrisome aspect is the extent of the disagreements between DERC and the discoms. They disagree not only on the cost claims but also on the regulations for tariff-setting including those for developing business plans. Table 3 gives the details of the writs filed by TPDDL in this regard.  If the regulator and the utilities disagree on even the regulatory framework, it is no surprise that they are at loggerheads on cost approvals. Such an adversarial environment goes against the spirit of the adjudicatory process envisaged under the EAct 2003 and erodes institutional credibility.

Table 3: Details of Writs filed by TPDDL challenging DERC’s regulations.

Source: (TPDDL, 2024, p. 13)

6.     Lessons and the way forward

Delhi’s experience shows that deep discord between the regulator and the utilities will ultimately hurt consumers the most. Plus, such endless litigation defeats the purpose of establishing a quasi-judicial regulatory institution tasked with speedily resolving matters transparently, using sound techno-economic reasoning and participatory processes. Remedial steps to limit the financial impacts on consumers of this apparent breakdown of the regulatory process are lacking.

Delhi’s fraught regulatory process and endless litigation should remind us that bringing in the private sector can improve efficiency but maintaining the financial health of the discom remains a challenge. Establishing a transparent and participatory regulatory process with regulators who are responsive to all stakeholders and sensitive to the sector’s needs remains a necessary condition for transforming discoms’ financial health. …Other states such as Uttar Pradesh that are about to undertake structural reforms should heed this crucial lesson from the experience in Delhi.

Additionally, the licenses of the three discoms will expire in March 2029, just four years from now (DERC, 2004). The massive quantum of regulatory assets can pose challenges in designing new frameworks for the next license period. The government and DERC must recognise this and act urgently.

More broadly, given the multitude of challenges faced by Indian state discoms, analysts and policymakers often advocate for privatisation as a solution. In Delhi’s case, it has indeed resulted in an unprecedented improvement in operational efficiency and supply and service quality. However, despite these significant benefits, the problems of under-recoveries of revenue and regulatory assets remain.

Delhi’s fraught regulatory process and endless litigation should remind us that bringing in the private sector can improve efficiency but maintaining the financial health of the discom remains a challenge. Establishing a transparent and participatory regulatory process with regulators who are responsive to all stakeholders and sensitive to the sector’s needs remains a necessary condition for transforming discoms’ financial health. Without this hard work of building and sustaining a robust and credible regulatory institution, just a change in ownership will be insufficient to bring about a financial turnaround. Other states such as Uttar Pradesh that are about to undertake structural reforms should heed this crucial lesson from the experience in Delhi.

References

BRPL. (2024, Nov). BRPL Petition for Truing-up upto FY 2022-23 & ARR for FY 2024-25. Retrieved from https://www.derc.gov.in/sites/default/files/BRPL%20Petition%20for%20True-up%20of%20FY%202022-23%20and%20ARR%20for%20FY%202024-25.zip

BYPL. (2024, Nov). BYPL Petition for Truing-up upto FY 2022-23 & ARR for FY 2024-25. Retrieved from https://www.derc.gov.in/sites/default/files/BYPL%20Petition%20for%20True-up%20of%20FY%202022-23%20and%20ARR%20for%20FY%202024-25.zip

Delhi Government. (n.d.). About Us page. Retrieved from Power Department, Government of NCT of Delhi: https://power.delhi.gov.in/power/about-us

Delhi SLDC. (2024). State Load Despatch Centre, Delhi . Retrieved from Annual report 2023-24: https://www.delhisldc.org/Resources/ANNUAL%20REPORT%202023-24.pdf

DERC. (2004). License issued to utilities BRPL, BYPL and TPDDL. Retrieved from https://www.derc.gov.in/license-issued-to-utilities

DERC. (2024, May). Review of Capitalization and Physical Verification of assets of BSES Yamuna Power Ltd. for the Financial Year 2004-2005 to 2015-16 . Retrieved from https://www.derc.gov.in/sites/default/files/O%20in%20PV_BYPL%20-%2003.0rder5.2024.pdf

DERC. (2024a, July). True Up Order FY 2020-21 for BSES Yamuna Power Limited. Retrieved from https://www.derc.gov.in/sites/default/files/True-up%20of%20FY%202020-21_BYPL.pdf

DERC. (2024b, July). True Up Order FY 2020-21 for BSES Rajdhani Power Limited. . Retrieved from https://www.derc.gov.in/sites/default/files/True-up%20of%20FY%202020-21_BRPL.pdf

DERC. (2024c, July). True Up Order FY 2020-21 for Tata Power Delhi Distribution Limited. Retrieved from https://www.derc.gov.in/sites/default/files/True-up%20of%20FY%202020-21_TPDDL.pdf

GNCTD. (2024, Mar). Government of the National Capital Territory of Delhi (GNCTD) . Retrieved from Budget at a Glance: https://finance.delhi.gov.in/sites/default/files/Finance/generic_multiple_files/budget_at_a_glance_2024-25.pdf

MoP. (2016). National Tariff Policy 2016. Retrieved from http://powermin.gov.in/sites/default/files/webform/notices/Tariff_Policy-Resolution_Dated_28012016.pdf

MoP. (2023, Jul). The Electricity (Third Amendment) Rules, 2023. Retrieved from https://powermin.gov.in/sites/default/files/Electricity_third_Amendment_Rules_alongwith_relevent_previous_amendments.pdf

NDMC. (2022, Nov). True-up Petition for FY 2021-22. Retrieved from https://www.ndmc.gov.in/departments/Departments/Commercial/TrueupPetition2021-22.pdf

NDMC. (2024, Dec). NDMC Electricity II. Retrieved from https://www.ndmc.gov.in/departments/electricity_ii.aspx

PFC. (2024, Apr). Report on Performance of Power Utilities 2022-23 (updated up to April 2024). Retrieved from https://www.pfcindia.com/ensite/DocumentRepository/ckfinder/files/Operations/Performance_Reports_of_State_Power_Utilities/Report%20Database%202022-23%20-%20updated%20up%20to%20April%202024EntityApr.pdf

TPDDL. (2024, Nov). TPDDL Petition for Truing-up upto FY 2022-23 & ARR for FY 2024-25. Retrieved from https://www.derc.gov.in/arr-true-up-myt-petitions

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India’s foray into railway connectivity over the past decade has been steered by geostrategic compulsions rather than economic dividends.

India’s foray into railway connectivity over the past decade has been steered by geostrategic compulsions rather than economic dividends.  In Eastern South Asia, six out of seven railway lines with Bangladesh have been revived. New railway lines connecting India and Nepal have been completed. In the Northeast Region (NER), railways are being constructed for the first time and extended to the border with Myanmar. Plans are also underway to develop five railway lines with Bhutan, including one to the Gelephu Mindfulness City. While these developments mark important milestones, the failure to address persistent ground level issues has rendered cross-border freight movement via railways limited at less than 4%.

Cross-Border Railway Connectivity Matters

A recent study by the Centre for Social and Economic Progress, Express Routes: India’s Railway Connectivity With South Asia, highlights the drivers behind India’s investment in cross-border railways. Economically, railways offer an opportunity to tap into the region’s burgeoning growth and enhance trade competitiveness. Politically, it aligns with India’s ‘Neighbourhood First’ and ‘Act East’ policies, fostering regional cooperation.

At the geostrategic level, railway connectivity provides New Delhi a counterbalance to China’s growing influence through infrastructure projects in South Asia under the Belt and Road Initiative. India’s expertise in railway development, particularly tunnelling in hilly areas, provides it with a competitive strategy to strengthen ties with its neighbours and project soft power in the region. While India has advanced railway links with Nepal such as the Jayanagar – Bijalpura link, comparatively, China’s rail project, including the Kerung (Tibet) – Kathmandu railway line, still at the feasibility stage. For India and its neighbouring countries, improving railway connectivity is not merely a logistical or environmental effort. It is also a testament to the evolving geopolitical landscape, strategic ambitions, and developmental imperatives of the region.

For India and its neighbouring countries, improving railway connectivity is not merely a logistical or environmental effort. It is also a testament to the evolving geopolitical landscape, strategic ambitions, and developmental imperatives of the region.

For years, studies by several multilateral, regional and national institutions have highlighted the potential of cross-border railways, including through UNESCAP’s ambitious Trans Asian Railway Network, adopted by countries including Bangladesh, India, Myanmar, Nepal, Pakistan, Sri Lanka, and Thailand in 2006. New Delhi’s own 2014 India Transport Report underscored the promise of leveraging railways to strengthen regional connectivity.

However, to fully utilise the potential of cross-border railway connectivity, several challenges need to be addressed. First, inadequate infrastructure remains a key problem. Existing railway infrastructure in many parts of South Asia is outdated and ill-equipped to handle modern cargo needs. Poor maintenance and limited investment in border facilities exacerbate inefficiencies. Second, the lack of harmonised Standard Operating Procedures (SOPs) for cross-border rail operations creates delays and inefficiencies in trade flows. Standardisation is essential for seamless operations and cargo movement. Third, cross-border railway projects often face hurdles due to concerns about smuggling, terrorism, and other security risks. These concerns hinder trust and cooperation between countries. Finally, the private sector’s involvement in cross-border railway development and operations remains minimal, further restricting innovation and efficiency.

Enablers for Change

To unlock the potential of cross-border railways, India and its neighbours must focus on a range of enablers, both at the policy and ground-levels.

First, enhanced coordination between governments, railway authorities, and the security establishment is crucial to address policy bottlenecks, infrastructure development and streamline cross-border operations. In the security-sensitive border areas, joint patrolling and shared security protocols, for example, can foster trust and cooperation.

India’s strategic advantage in its neighbourhood lies in its capacity to undertake and execute infrastructure projects through robust development cooperation mechanisms, backed by financial tools such as grants and LoCs.

Second, New Delhi must leverage its development cooperation. India’s strategic advantage in its neighbourhood lies in its capacity to undertake and execute infrastructure projects through robust development cooperation mechanisms, backed by financial tools such as grants and LoCs. This should also extend beyond financial assistance to include transferring expertise, technology, and best practices in railway management and operations, and training programmes for railway staff and drivers, covering technical qualifications and language skills.

Finally, encouraging private sector investment through public-private partnerships and incentives can spur innovation and improve service delivery. Leveraging private sector expertise and funding would enable countries like Nepal and Bangladesh to reduce its reliance on geopolitical powers and create a more resilient and efficient railway network, which would, in turn, foster stronger regional connectivity and economic growth.

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A recent conference, co-hosted by the Centre for Social and Economic Progress (CSEP) and the World Bank, explored policies that could help raise female labor force participation in South Asia.

Read the entire blog here

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Critical minerals are a crucial part of the India-United States (US) bilateral partnership with developments such as the Initiative on Critical and Emerging Technologies (iCET) and the signing of the recent (October 2024) Memorandum of Understanding (MoU) on critical minerals supply chains. The MoU, which is one of few examples of India’s bilateral cooperation on critical minerals. It aims to leverage ‘the two countries’ complementary strengths to ensure greater resilience in the critical minerals sector’.

The India-US partnership is increasingly focused on developing closer ties through technology and clean energy cooperation in the critical minerals sector. Some priority areas of the MoU therefore include ‘identifying equipment, services, policies, and best practices to facilitate the mutually beneficial commercial development of US and Indian critical minerals’ along the global supply chains.

Growing demand for a clean energy transition is driving more countries to look for diversified supply sources for critical minerals. In the race to power a green economic future, critical minerals like lithium, cobalt, and rare earth elements are essential resources driving the global shift to clean energy, advanced technology, and defence innovation. Yet, the world faces a stark reality: China controls 60% of global rare earth mining and a staggering 80% of its processing capacity, creating an overdependence on a single nation. Recently, trade war tensions escalated between China and the US with the Biden administration’s crackdown on China’s semiconductor industry. In retaliation, Beijing banned exports of key critical minerals to the US, citing ‘dual-use’ concerns. This highlights the need to diversify supply chains to reduce reliance on a single dominant supplier.

As the second and third highest emitters global CO₂, both the United States (13%) and India (8%) are rapidly moving towards ensuring a green energy transition. For India, with its ambitious target of achieving 500 GW of renewable energy capacity by 2030 and electrifying 30% of its vehicles, the stakes couldn’t be higher. Meanwhile, the US, with over $17 million in investments to secure critical mineral supply chains, is ramping up efforts to counter China’s quasi-monopoly.

This is where an India-US partnership becomes not merely beneficial but a strategic imperative. The two nations can build a resilient and diversified supply chain for critical minerals. India’s ambition to become a global manufacturing hub is advancing rapidly, driven by its renewable energy goals. Meanwhile, the U.S. brings technological expertise and significant financial resources to the table. These strengths create the foundation for a strong and mutually beneficial partnership. Together, they can secure their energy transitions, boost bilateral trade (already at a record $191 billion in 2022), and create a powerful counterweight to China.

Together, they can secure their energy transitions, boost bilateral trade (already at a record $191 billion in 2022), and create a powerful counterweight to China.

The question, therefore, is less about why India and the US should partner on critical minerals—and more about finding ways of how they can turn this opportunity into a transformative partnership. After outlining the history of the India-US partnership, this article goes into laying out why the two should collaborate in the critical minerals sector, highlighting the 80% overlap between the lists of minerals for both countries. It discusses how critical minerals cooperation is and can be further embedded into the climate and energy partnership. It also gives some policy options to enhance collaboration in the sector.

Growing role of energy, tech and trade nexus in the India-US partnership

Critical minerals have emerged as a cornerstone of the growing India-US partnership, strengthening their energy, technology, and trade linkages. As India’s External Affairs Minister highlighted, both countries “value the strides we are making in our tech collaboration and economic partnership”.  This bilateral relationship is founded on shared interests, democratic values, strategic alignment, and economic potential, evolving into a robust partnership over three decades. Chietigj Bajpaee identifies three pillars: shared democratic values, countering China, and India’s economic growth.

India’s growing economy, projected to be the third largest by 2030, aligns with US ‘friendshoring’ strategies to reduce reliance on China. Shared goals include building resilient supply chains, expanding collaboration in emerging technologies like clean energy, semiconductors, and critical minerals, and tapping into India’s digital and information technology (IT) strengths. Despite challenges like infrastructure and protectionism, India’s aspirations as a manufacturing hub complement US interests, further strengthening this vital partnership. India’s growing influence in critical and emerging technologies also creates opportunities for collaboration with the US, particularly in high-value sectors like clean energy, semiconductors, and critical minerals.

India’s growing influence in critical and emerging technologies also creates opportunities for collaboration with the US, particularly in high-value sectors like clean energy, semiconductors, and critical minerals.

India and the US have witnessed a rapid evolution in their collaboration on energy, climate, and technology, driven by a convergence of strategic interests and shared global challenges. Key initiatives such as the U.S.-India Climate and Clean Energy Agenda 2030 Partnership and the Strategic Clean Energy Partnership (SCEP) reflect the growing alignment between the two nations on energy security and climate resilience. These frameworks emphasise joint efforts in clean energy innovation, decarbonisation technologies, and sustainable infrastructure, positioning the partnership as a critical pillar of bilateral cooperation. As both countries seek to mitigate supply chain vulnerabilities and reduce dependency on China for critical resources, this collaboration underscores the geopolitical importance of resilient, diversified supply chains in an increasingly multipolar world order.

A significant development reinforcing this trajectory is the Initiative on Critical and Emerging Technologies (iCET), launched in 2023. Designed to deepen bilateral ties in semiconductors, artificial intelligence, quantum computing, and critical minerals, iCET illustrates how technology-driven collaboration is central to ensuring economic security and strategic autonomy. By focusing on critical minerals, the initiative plays a vital role in enhancing supply chain resilience and fostering joint research and development efforts.

As the geopolitical landscape continues to shift, India and the US are well-positioned to leverage these growing areas of cooperation to enhance their influence in critical sectors shaping the 21st-century global economy. By aligning their priorities in critical mineral development, both nations are strengthening the foundation of their partnership and advancing shared goals in energy security, technological innovation, and economic growth.

Expanding India-US Collaboration on Critical Minerals

The partnership between India and the United States on critical minerals has evolved significantly, underscoring the importance of international cooperation in securing resilient supply chains. Despite shared ambitions for self-reliance, both countries have recognised that collaboration, not isolation, offers the best path to meeting the rising global demand for these strategic resources.

There are four factors driving India-US cooperation on critical minerals: (1) America’s deepening international partnerships in this sector, (2) the 80% overlap between the critical minerals identified by India and the US, (3) the shared history of India-US clean energy partnerships, and (4) the developing national security and technology collaborations between the two partners.

American policy thinking on critical minerals can be seen to develop after the 2010 Chinese export ban on Japan of crucial minerals needed for semiconductors and automobiles over maritime disputes. The 2010 incident can be considered the lynchpin that set off the strategic thinking and highlighted the policy need for ensuring reliable and secure access to critical minerals.

Policy development picked up more wind as the need for critical minerals became more apparent as did concerns over Chinese monopoly of supply chains. America has significantly focused on developing its domestic capacity on mineral mapping, mining, and processing. While much of the developments have focused on ensuring domestic capacity and stockpiling of critical minerals, at the same time, the US has also been on the front foot in recognising the significance of international cooperation for critical minerals (see Table 2). Not only has it inked various bilateral partnerships (e.g. Canada, Australia, Japan, South Korea, and India), the US has also been the shaping international cooperation frameworks such as the Minerals Security Partnership.

Out of the 50 critical minerals identified by the US in its list of critical minerals (2022), 40 of them overlap (see Figure 1) with India’s list of critical minerals (2023). There is an 80% overlap between minerals identified by both countries showcasing potential for cooperation, especially in third geographies such as Africa. This is because many of the minerals identified are Platinum Group Metals or Rare Earth Elements (REEs), which are geographically located in Africa. India also has deposits of various REEs such as thorium and light REEs such as neodymium, praseodymium, dysprosium, and terbium. International collaborations, such as the one between Indian Rare Earth Limited (IREL) and Toyotsu Rare Earth India Limited (subsidiary of Toyoto Tsusho Corporation, Japan), has significant potential for India and the US to further strengthen collaboration for mutual benefit.

Figure 1: Common minerals between India and US list of critical minerals
(also see Table 3 in Annex)

Source: Authors compilation based on Final list of critical minerals 2022, US Geological Survey, Department of Interior and India’s list of critical minerals 2023.

*Iridium, Palladium, Platinum and Ruthenium are listed under Platinum Group Metals in India’s 2023 list of critical minerals

** Cerium, Dysprosium, Erbium, Europium, Gadolinium, Holmium, Lanthanum, Lutetium, Neodymium, Praseodymium, Samarium, Scandium, Terbium, Thulium, Ytterbium, Yttrium are listed under Rare Earth Elements in India’s 2023 list of critical minerals

The US and India have a long history of collaboration on clean energy and climate projects, built on shared goals of energy security, sustainable development, and combating climate change (see Table 1). This established synergy in clean energy provides a strong foundation for deeper collaboration on critical minerals. As the building blocks for clean technologies like solar panels, electric vehicles, and semiconductors, critical minerals are essential to achieving net-zero targets.

This is reflected in the India-U.S. MoU on Critical Minerals Supply Chains (2024) and the India-US Initiative on Critical and Emerging Technologies (iCET). As well as through joint initiatives under the Minerals Security Partnership (MSP) such as the MSP Finance Network and Quad Principles on Clean Energy Supply Chains. With their shared experience in clean energy cooperation, strong bilateral frameworks, and complementary capabilities, the US and India are well-positioned to become strategic partners in ensuring global critical mineral security.

With their shared experience in clean energy cooperation, strong bilateral frameworks, and complementary capabilities, the US and India are well-positioned to become strategic partners in ensuring global critical mineral security.

Expanding cooperation in sectors like emerging technologies and artificial intelligence (AI) also underscores the involving cooperation on critical minerals. The iCET, which has been identified as a crucial policy development in furthering the India-US strategic partnership, is chaired by the key players in the national security establishment in the two countries. Showcasing that strategic thinking on critical minerals spills over into sectors beyond clean energy. Exemplifying this, India’s National Security Advisor, Ajit Doval has stated that there is “immense potential that is yet to be explored and harnessed in terms of deeper technology cooperation” between India and the US.

Table 1: Timeline of key India-US collaborations on climate change and clean energy

Source: Authors compilation based on various sources. Not exhaustive.

Ways Forward: Navigating Challenges

India-US cooperation on critical minerals is one of the most advanced bilateral policy frameworks India has in the critical minerals space. Despite the promising trajectory of India-US collaboration on critical minerals, several challenges could complicate their efforts. One key obstacle is their differing approaches, while the US prioritises extraction and mining (see Table 2), India focuses on research, recycling, and sustainable alternatives due to its limited domestic reserves (interviews with officials). These differences could require careful coordination to ensure mutually beneficial outcomes.

China’s dominance in the global critical minerals market poses a shared challenge, but diversifying supply chains will demand significant investments in infrastructure and technology. India’s evolving policy framework and potential US domestic resistance to prioritising foreign collaborations could hinder progress without clear funding and technology-sharing agreements.

Regulatory and environmental concerns also present hurdles. The US has stringent environmental laws that can slow down mining and processing projects, while India must balance industrial expansion with its climate commitments and domestic socio-environmental concerns.

To further build on the existing policy frameworks and address some of these challenges, the following steps can be considered.

• Diversification of sources: Identify and jointly invest in resource-rich third countries such as Australia, Canada, and South Africa, which are politically stable and resource-abundant. Initiatives like the Minerals Security Partnership (MSP) can be leveraged to co-develop mines and processing facilities in these regions. India’s experience with Khanij Bidesh India Limited (KABIL) in securing resources in Latin America and its expanding footprint in Africa can be complemented by US technical expertise and financial backing for joint exploration and production.
• Strengthening domestic capabilities: Developing local mining and processing capabilities in both countries by exchanging knowledge on advanced extraction and processing technologies, while focusing on reducing environmental impact. Joint research and development projects can be established under frameworks like the Strategic Clean Energy Partnership (SCEP) to explore new technologies for mineral recycling, substitutes, and processing efficiency. The US’s expertise in lithium extraction can be modelled in India to develop better resource processing for its own reserves.
• Building secure and transparent supply chains: Collaborate to develop systems to track the origin, transit, and processing of critical minerals, ensuring ethical and conflict-free sourcing. India and the US can replicate the EU-US Trade and Technology Council’s work on supply chain transparency. This work could be undertaken under the iCET.
• Harmonising standards and establishing norms: Important to reduce trade barriers though bilateral discussion and other cooperation frameworks. Multilateral forums like the Quad and the MSP, among others, can be utilised to harmonise sustainable mining practices, customs procedures, data-sharing, and logistics networks for critical minerals. The US-India MoU (2024) could evolve into or push for the development of a comprehensive trade framework that addresses export-import policies for critical minerals.
• Promoting trilateral cooperation: Collaborate on infrastructure development and capacity-building projects in resource-rich countries in Africa and Latin America, ensuring fair revenue-sharing and ethical practices. The India, US and Tanzania are already working to accelerate renewable energy development in Tanzania. The US-India Roadmap to Build Safe and Secure Global Clean Energy Supply Chains can be leveraged to create joint mining infrastructure in Zambia or Chile, where India’s diplomacy and US financing can complement each other.
• Establishing shared innovation platforms: Joint innovation platforms focused on emerging technologies such as AI-based resource mapping, geothermal brine extraction, and direct lithium extraction can be developed and promoted. Under the Renewable Energy Technology Action Platform (RETAP), lab-to-lab collaborations are already established and these networks can be further leveraged to co-develop innovative solutions for the clean energy and critical minerals space. India’s growing start-up ecosystem could collaborate with Silicon Valley firms on mining tech solutions.
• Promoting circular economy: Focus on investing  in recycling and repurposing technologies to recover critical minerals from electronic waste (e-waste) and industrial by-products. Can consider establishing joint research hubs under programs like the iCET to develop cutting-edge recycling systems and make supply chains less reliant on primary mining. The US can share its expertise in e-waste management, while India can scale up recycling facilities using its cost-effective manufacturing ecosystem.

Annex:

Table 2: US Policies on critical minerals

Source: International Energy Agency critical minerals policy tracker database and other sources based on author’s compilation. Not exhaustive.

Table 3: India and US list of critical minerals – identifying common minerals                     

Source: Authors compilation based on Final list of critical minerals 2022, US Geological Survey, Department of Interior and India’s list of critical minerals 2023.

Note: The author would like to thank Dr Constantino Xavier, Senior Fellow, CSEP for his insightful feedback and comments.

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Ethanol is blended with petrol which reduces the consumption of petrol and thus consumption and imports of crude oil. It has played a key role in reducing crude oil imports, saving foreign exchange, and generating domestic revenues.

The Ethanol Blending Petrol Programme–Progress, Achievements and Challenges

The ethanol blending with petrol in India has increased from a mere 1.5% in the Ethanol Supply Year (ESY)[2] 2013-14 to 13% in the ESY 2023-24 (Table 1), indicating a significant increase in ethanol blending capacity. As per PIB (2024), this growth has helped reap several benefits including a reduction in crude imports by 181 lakh metric tons between 2014 and August 2024, which saved approximately ₹1,06,072 crore in foreign exchange. Although the resultant reduction in crude oil imports due to EBP accounts for just 0.80% of India’s total crude oil imports during this period, the increased blending capacity in recent years holds the potential for a significant reduction in crude oil imports in the future. Farmers reportedly have also earned ₹87,558 crore because of increased demand for feedstocks like sugarcane and grains, while distilleries generated around ₹1,45,930 crore in revenues during this period, indicating its role in boosting domestic manufacturing and employment. EBP programme is believed to have also reduced CO₂ emissions by 544 lakh metric tons since 2014, demonstrating its environmental benefits (PIB, 2024). These benefits are expected to increase with the ambitious target of achieving 20% ethanol blending by ESY 2025-26.

Table 1: Ethanol Blending Rate and Foreign Exchange Savings in India

*India’s cumulative foreign exchange savings for the period ESY 2013-2014 to ESY 2021-2022.

Source: MoPNG (2023), PIB (2024)

EBP has raised challenges, such as its impact on food security and inflationary pressures on sugar and maize markets. Additionally, it may affect vehicle fuel efficiency, potentially imposing an additional burden on consumers.

But with increased blending also comes the challenges associated with higher ethanol production. The National Biofuel Policy 2018 facilitated the use of diverse feedstocks such as B-heavy molasses, sugarcane juice, and surplus or damaged grains for ethanol production (MoPNG, 2018). While these measures aim to boost ethanol production, they have raised concerns about their impact on food markets. To address the over-diversion of sugar usage for ethanol production, which is most significant when produced from sugarcane juice or syrup and least in C-heavy molasses, ethanol production from C-heavy molasses and maize has been incentivized (Mukherjee, 2023). This shift, however, has introduced challenges for the maize industry. The increased demand of maize for ethanol production along with the incentives has driven up its prices and reduced availability for other consumers (Saini, 2024). The All-India Poultry Breeders Association even reported domestic maize shortage of 5 million tonne in 2023 because of ethanol blending. In current year, India is set to become a net-importer of maize than being the net-exporter (Reuters, 2024). In addition, EBP may also impact vehicle fuel efficiency, as usage of E20 fuel in 4-wheelers (or 2-wheelers) which were designed for E0 and has been re-calibrated for E10 may drop the fuel efficiency by around 6-7% (3-4% in case of 2-wheelers). Flex Fuel Vehicles (FFVs) offers a solution to this issue, albeit at a cost. The engines of these vehicles are compatible to run on up to 84% ethanol blended petrol, but according to the Society of Indian Automobile Manufacturers (SIAM) FFVs are more expensive than the normal petrol vehicles, which may impose an additional burden on consumers (Sarwal et al., 2021).

Petrol Pricing in India and how Ethanol may shape them

In India, retail petrol prices are primarily influenced by two factors: international crude oil prices and the prevailing union (excise duty) and states’ levies (Value Added Tax) . The heavy dependence on imported crude oil implies that fluctuations in global crude oil prices will directly affect the petrol prices in India. Another major component of petrol price is the imposition of taxes, excise duty by the Union and Value Added Tax (VAT) by the respective State government. Trends in daily petrol prices in four metropolitan cities i.e. Delhi, Mumbai, Chennai, and Kolkata reveal that the latest major alteration to the petrol prices in India was on 14th March 2024 when petrol prices were reduced owing to lower international crude oil prices and also due to the union elections which began from April 19. Before that, other major price cuts were primarily driven by the Union lowering excise duty (May 2022 and November 2021) and VAT reductions (like Delhi’s VAT cut in December 2021). While the impact of changes in these two components on petrol prices has been evident, there has been no prominent impact of ethanol blending on petrol prices.

Ethanol blending with petrol in theory may lower the prices of petrol. This is because, ethanol in India presently costs significantly lower than petrol. One major reason behind this is the tax levied on ethanol compared to the tax on petrol. In the case of petrol, while taxes (excise duty and VAT) contribute to around 50% of the retail selling price, the only tax on ethanol is the GST equivalent to 5%. (Sarwal et al., 2021) also stated that since the excise on petrol is higher than GST on ethanol, it is keeping ethanol price lower than petrol’s. The cost at which the Oil Marketing Companies (OMCs) buy ethanol from the mills includes ex-mill ethanol price, GST and transportation charges (MoPNG, n.d.). Given that different feedstocks are used to produce ethanol which have varying prices, as per our computations the weighted average ex-mill price of ethanol is around Rs. 65.35/litre during ESY 2023-24 (Table 2). On top of it, the average GST depending on the feedstock used for ethanol production would be around Rs. 3.27/litre. Transportation charges on the ethanol supply during ESY 2023-24 range from as low as Rs. 0.273/litre for up to 75 km to Rs. 4.133/litre if the distance is 1100-1200 km. Assuming a higher transportation charge of Rs. 4.133/litre, the average cost of ethanol to OMCs would be around Rs. 72.75/litre (65.35+3.27+4.13), which is substantially lower than petrol.

Table 2: Average Cost of Ethanol to OMCs

Source: DoFPD (n.d.), Damodaran (2024)

In July 2024, India achieved a blending rate of 15.83% which could translate into a potential to reduce the petrol price by around Rs. 3.5 to Rs. 5.1/litre provided there are no other prominent unit costs for OMCs to blend the refined petroleum with ethanol.

In July 2024, India achieved a blending rate of 15.83% which could translate into a potential to reduce the petrol price by around Rs. 3.5 to Rs. 5.1/litre provided there are no other prominent unit costs for OMCs to blend the refined petroleum with ethanol (Table 3). Studies also indicate that EBP may help reduce the price of petrol, as a 10% ethanol blending with petrol can lower petrol prices by approximately Rs 3/litre (Mishra, 2021), while 20% blending could result in a Rs 8/litre reduction (CNBC TV18, 2021). However, retail petrol prices are yet to reflect these potential savings.

Table 3: Estimated Reduction in Petrol Prices for Around 15% Ethanol Blending

Note: 1. The Fuel Price of Ethanol is the average cost of Ethanol to OMCs, assuming no significant additional unit costs are incurred for blending petrol with ethanol.

2. Petrol Price in four cities is the Retail Selling Price of Petrol as of October 1, 2024, sourced from PPAC.
3. Estimated Cost of EBP is the combined contribution of ethanol and petrol to the price build-up of EBP.
4. Price Cut Potential is calculated by subtracting the Estimated Cost of EBP from prevailing Petrol Prices.

Source: Authors’ computations

The evidences show that ethanol-blending program has played a key role in reducing crude oil imports, saving foreign exchange and generating domestic revenues. EBP has also emerged as a sustainable alternative to conventional fossil fuels. These benefits are expected to increase in the near future as India is set to achieve the target of a 20% blending rate in ESY 2025-2026. However, this will be coupled with the challenges like impact on food security, inflationary pressures on sugar and maize markets, etc., which must be addressed as well. The aforementioned computations show that while EBP has led to a cost-effective transition, its potential to reduce petrol prices remains untapped. With ethanol-blended petrol becoming more prevalent across India as 20% of PSU OMC outlets are already offering E20 petrol, the petrol prices in the country should reflect the impact of ethanol blending. This becomes even more important as consumers might be facing an implicit cost because of a drop in vehicular fuel efficiency. By addressing this pricing gap, and mitigating the challenges associated with increased ethanol blending, EBP can become a win-win for the economy, environment and consumers.

References

CNBC TV18. (2021, September 10). Here’s how ethanol-blended petrol could be answer to spiralling fuel prices. CNBC TV18. https://www.cnbctv18.com/energy/heres-how-ethanol-blended-petrol-could-be-the-answer-to-spiralling-fuel-prices-10688181.htm

Damodaran, H. (2024, July 29). Ethanol used in petrol now more from maize, damaged foodgrains than sugar. Indian Express. https://indianexpress.com/article/india/ethanol-used-in-petrol-now-more-from-maize-damaged-foodgrains-than-sugar-9481641/

Department of Food and Public Distribution. (n.d.). Sugar Policy. Ministry of Consumer Affairs, Food and Public Distribution. Retrieved December 13, 2024, from https://dfpd.gov.in/Home/ContentManagement?Url=sugar_policy.html&ManuId=3&language=1

Long Term Ethanol Procurement Policy under Ethanol Blended Petrol (EBP) Programme 2019-2024. Retrieved December 9, 2024, from https://mopng.gov.in/files/uploads/Final_Ethanol_Procurement_Policy.pdf

Mishra, T. (2021, December 6). 10% ethanol blending with petrol can lower fuel price by ₹3/litre: Experts. The Hindu Businessline. https://www.thehindubusinessline.com/economy/10-ethanol-blending-with-petrol-can-lower-fuel-price-by-3litre-experts/article25208320.ece

MoPNG. (2021). Ethanol Growth Story- Fulfilling Aatmanirbhar Bharat Dream. https://mopng.gov.in/files/uploads/Ethanol_Booklet_english.pdf

MoPNG. (2023). Ethanol Growth Story- The Journey from Farm to Fuel (As on November 2023). https://mopng.gov.in/files/uploads/BPCL_Ethanol_Booklet_2023.pdf

Mukherjee, S. (2023, December 30). OMCs hike procurement price of ethanol produced from C-heavy molasses. Business Standard. https://www.business-standard.com/industry/agriculture/omcs-hike-procurement-price-of-ethanol-produced-from-c-heavy-molasses-123122900472_1.html

NATIONAL_POLICY_ON_BIOFUELS-2018, MoPNG (2018). https://mopng.gov.in/files/uploads/NATIONAL_POLICY_ON_BIOFUELS-2018.pdf

PIB. (2024, October 24). India’s Ethanol Push: A Path to Energy Security-Achieving 15% ethanol blending in 2024, India targets 20% by 2025. PIB. https://pib.gov.in/PressNoteDetails.aspx?NoteId=153363&ModuleId=3&reg=3&lang=1

Reuters. (2024, September 4). Ethanol push turns India into corn importer, shaking up global mkt. Business Standard. https://www.business-standard.com/economy/news/ethanol-push-turns-india-into-corn-importer-shaking-up-global-mkt-124090400327_1.html

Saini, S. (2024, September 12). For India, is there light at the end of this maize? Deccan Herald. https://www.deccanherald.com/opinion/for-india-is-there-light-at-the-end-of-this-maize-3187433

Sarwal, R., Kumar, S., Mehta, A., Varadan, A., Singh, S. K., Ramakumar, S. S. V., & Mathai, R. (2021). Roadmap for Ethanol Blending in India 2020-25. https://www.niti.gov.in/sites/default/files/2021-06/EthanolBlendingInIndia_compressed.pdf

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Sustainability has become an integral part of economic policy decisions across the globe, reflected in gradual changes in production and consumption patterns, like the transition from Internal Combustion Engine (ICE) to electric vehicles.  Global integration, in the form of Foreign Direct Investment (FDI) and trade flows, is also being driven by these sustainability choices. Analysis by GlobalData shows that between 2020 and 2023, renewable energy was the best-performing FDI category worldwide, attracting capital expenditure of USD 1.5 trillion between 2020 and 2023. On the trade front, solar PV-related products account for 0.6 per cent of total exported items, assessed at an 8-digit level, for 2023.  The trend implies that this segment is likely to be a key driver of global trade flows in the coming years.

The emerging green energy space offers India an opportunity to reposition itself as a global export leader and integrate into green Global Value Chains (GVCs).

While trade is an important engine for growth and job creation, India has not been able to leverage this opportunity and overall has a low share in trade, accounting for 2 per cent of global exports.  In this regard, this emerging green energy space offers an opportunity for India to reposition itself as a global export leader and integrate into green Global Value Chains (GVCs).

India’s solar Photo Voltaic (PV) segment is gaining strength, for instance, solar module exports increased 3 times within one year and went from USD 0.6 billion in 2022 to USD 1.8 billion in 2023, accounting for 3.3 per cent of its global exports. An assessment of India’s customs data reveals that top export firms in the electronics sector (HS code 85) consist of smartphone manufacturing firms occupying the topmost spots, followed by solar and wind energy companies. In the solar energy segment, it is possible that Production Linked Incentive (PLI) scheme for high-efficiency solar PV modules has made an impact in terms of its production and exports. At the global level, US tariff led trade diversion away from China has possibly added to this growth in India’s solar PV exports.

However, in terms of relative weight in India’s electronics export basket, the smartphone manufacturing segment takes the major pie. Out of the top 8 export firms in the electronics sector, the top 4 are smartphone manufacturers accounting for about 39 per cent of India’s exports from September 2023 to August 2024. On the other hand, Renewable Energy (RE)companies occupy the next 4 spots but account for only 5.3 per cent of electronics exports in the same period. This also gets translated in relatively low shares of India’s exports (in global exports) in the solar PV segment, as compared to key Asian economies. For instance, Malaysia, Thailand (in 2023) and Vietnam (in 2022) accounted for 5.4, 5.5, and 10 per cent, whereas India accounted for 3.3 per cent (in 2023) of global solar module exports.  It is important to identify the key steps to trigger India’s Solar PV manufacturing and exports.

The low export is driven by higher prices for solar modules made in India. For instance, in August 2024, the 540-watt mono solar modules were exported from India at a unit price of USD 117 while it was imported from other countries at a much lower price. This included China at USD 64.3 and Malaysia at USD 76. This is also reflected in the difference in the scale of exports from China and India. China’s export of solar modules (USD 73.5 billion) was around 22 times more than India’s export in 2023. How can Indian exports attain lower prices and better scale to lead the global export market for solar modules?

To enhance the competitiveness of India’s solar modules in the global market, it is imperative to lower the customs duties on solar cells, from the existing high levels.

It is important to ensure low input prices, which are way higher in India due to high import tariffs on key inputs for solar modules, like solar cells that carry a basic customs duty of 25 per cent. One of the important policy decisions that facilitated smartphone manufacturing in India was tariff reduction on key parts and components, with the recent announcement in January 2024, to reduce the duties from 15 per cent to 10 per cent.  To enhance the competitiveness of India’s solar modules in the global market, it is imperative to lower the customs duties on solar cells, from the existing high levels. While government of India offers duty drawback on the imported inputs used for exports, the rate for solar cells is just 1 per cent which is clearly insufficient to compensate for the high import bill for the PV module producers. Also, high import restrictions negate the export incentivising impact of schemes like PLI as it increases the overall domestic prices thereby pushing up the export prices as well, creating an anti-export bias.

It is difficult to compete with Chinese solar cell production due to their extremely low cost, and the Indian industry should focus on the higher end of the supply chain like solar modules and panels.

According to an industry expert, it is difficult to compete with Chinese solar cell production due to their extremely low cost, and Indian industry should focus on higher end of the supply chain like solar modules and panels. In this regard, lowering import tariffs on solar cells would help the entire supply chain. Even after obtaining cells at cheap price, attaining scale in module production is a challenge in India, due to the high energy and land cost. This needs to be resolved to attract foreign investments in the country. Additionally, as China has already championed silicon cell production, India needs to invest in innovation and R&D for alternate chemistry cells, to capture the global market, instead of putting its resources in incentivising cell production which is not going to provide competitive outcomes.

While this blog touched upon the solar PV sector, green manufacturing is a wide spectrum that includes eco-friendly packaging, sustainable textiles, electric vehicles, and so on, and according to the latest World Bank report on India’s trade opportunities, greening trade can speed up export diversification and growth for India.

The post Boosting Export Competitiveness of India’s Solar Photo Voltaic Sector first appeared on CSEP.

As the global development narrative shifts towards the pressing need for economic development that is climate-centric, the need for lithium, cobalt, nickel, graphite and other minerals becomes fundamental. These are referred to as critical minerals, are essential components for a wide range of industries such as clean energy, modern technology, defence, and agriculture.

There is close to a 60% overlap between the critical minerals identified by both partners.

This article discusses the potential for India and the EU to cooperate towards resilient supply chains for critical minerals given their shared interests and broader economic and geopolitical convergence. There is close to a 60% overlap between the critical minerals identified by both partners. The EU and India are members of the Minerals Security Partnership (MSP). The establishment of the India-EU Trade and Technology Council (TTC) signals a growing interest in geoeconomic cooperation. And both partners have identified supply chain disruptions as threats given the emerging economic competition and geopolitical rivalries, most importantly with China.

Part of a series of publications on India’s international partnerships on critical minerals, this article a) discusses the growing scope of the India-EU bilateral relationship; b) surveys the EU’s critical minerals policies; and c) discusses the collaborative frameworks the EU has with India on climate and energy, arguing that it offers the foundation for a partnership on critical minerals. It concludes by identifying specific cooperation pathways for the two partners, including public private partnerships, trilateral partnerships and enhancing trade and investment ties.

Strategic convergence between India and the EU

India and the EU are increasingly viewed as natural partners in a shifting geopolitical landscape, where their shared democratic values and commitment to a rules-based international order provide a strong foundation for cooperation. As the economic and security interests of the two partners converge given the rising geopolitical tensions, supply chain disruptions, and growing competition between global powers, especially in the Indo-Pacific region, the scope of the partnership has been expanding in recent years.  Making the case for congruence between Brussels’ and New Delhi’s global agendas, India’s external affairs minister, S. Jaishankar emphasised that “India and the EU believe in a multi-polar global order, share a commitment to promoting effective multilateralism and are increasingly considerate to each other’s geopolitical, economic, strategic and security concerns.”

India and the EU are increasingly viewed as natural partners in a shifting geopolitical landscape, where their shared democratic values and commitment to a rules-based international order provide a strong foundation for cooperation.

India and the EU have a long-standing history of bilateral engagement, which has paved the way for deeper, more strategic collaborations. Since the early 1960s, both India and the European Union have nurtured a relationship that has steadily grown through trust and mutual benefit, culminating in the India-EU Strategic Partnership in 2004. This history of bilateral cooperation is now assuming a more expansive nature, with collaborations across sectors such as security, trade, climate action, and technology. This provides a strong foundation for expanding into new areas of cooperation, such as critical minerals supply chains.

India and the EU share similar outlooks on key areas such as building resilient supply chains to mitigate vulnerabilities and enhancing technological cooperation. Their strategic partnership also encompasses a growing global dimension, for example on sustainable development and climate action in third regions such as Africa. This convergence, coupled with their mutual interest in maintaining global stability and addressing challenges posed by China’s rise, positions India and the EU as important strategic partners in the evolving global order.

There are important motivations for both sides to deepen cooperation on critical minerals. For the EU, it is essential to realise that the future of its energy security in a decarbonised world depends on its capacity to expand and deepen its strategic partnerships with India and other countries. This involves mitigating risks in supply chains and co-developing policies for economic, climate, and ecological transitions. The EU must, therefore, frame its approach within the broader context of climate and environmental security to succeed in these efforts.

For India, in turn, it is essential to align its ambitious climate targets with EU policy frameworks such as the Green Deal and the Carbon Border Adjustment Mechanism (CBAM). Collaborative efforts can focus on technology transfer, green finance, and joint projects in the renewable energy, electric mobility, and sustainable agriculture sectors. Additionally, India may benefit from participating in EU-led initiatives like the Global Gateway to secure critical minerals essential for clean energy transitions.

As both India and the EU strive to meet ambitious decarbonisation targets, their established partnership can play a pivotal role in diversifying supply chains and mitigating geopolitical risks posed by the monopolisation of critical minerals by a limited cluster of resource-rich countries and processing giants like China.

EU’s Emerging Policy Frameworks on Critical Minerals

The EU has implemented a series of policies to secure a resilient supply chain and mitigate the risks associated with their scarcity. Its policies are more advanced than India given that the EU’s engagement with critical minerals can be traced back to its Raw Materials Initiative, launched in 2008. Therefore, for an India-EU partnership to succeed, it is important to assess the positives and negatives of the EU’s experiences and its policies. This will help New Delhi identify the right entry points to engage with Brussels.

The EU’s Raw Materials Initiative (2008) aims to ensure a sustainable and undisturbed supply of raw materials, including critical minerals. One of the primary pillars of the initiative is the identification of critical raw materials, periodically updated to reflect the dynamic nature of global markets and emerging technologies. The identification of criticality is driven by outlining those resources that are of high economic importance and face a high supply risk. The fifth list of critical minerals was released in 2023 and has identified 34 minerals as being critical for the EU.

Table 2 lists some of the key policies undertaken by the EU that have shaped its approach towards this issue in light of the various geopolitical drivers. While the 2008 Raw Materials Initiative and the 2020 Action Plan on critical minerals provide frameworks for identification, supply diversification, innovation and domestic critical minerals production capacity in the EU, they have been unable to ensure supply security of critical minerals for the EU. Given this, the 2023 Critical Raw Materials Act provides a regulatory framework for the EU to strengthen and diversify its supply chains, monitor and mitigate current and future risks while ensuring sustainability and circularity, and leveraging the strengths and opportunities of the Single Market. The Act was adopted by the EU council in March 2024.

Regulatory frameworks have also been established to ensure responsible sourcing and sustainable extraction of critical minerals. The EU’s Conflict Minerals Regulation, implemented in 2021, aims to prevent the financing of armed groups through the trade of minerals, emphasising transparency and due diligence in supply chains. This regulation not only addresses ethical concerns but also contributes to the EU’s broader objective of fostering sustainable practices in the extraction and processing of critical minerals.

In addition to regulatory measures, the EU recognises the need for investment and innovation to enhance the resilience of its critical mineral supply chains. The EBA, launched in 2017, exemplifies this commitment by fostering collaboration between public and private stakeholders to develop a competitive and sustainable battery industry.

Table 1: Timeline of key EU policies on critical minerals

Source: Authors compilation based on various sources; not exhaustive.

Building on the foundation of climate and energy cooperation

In 2024, the European Commission adopted the Critical Raw Materials Act (initially announced in 2023), designed to highlight supply chain risks for materials deemed to be crucial for European industries and the green energy shift. India, on a similar track, identified 30 critical raw materials in 2023 with the aim to foster self-reliance. Both India and the EU have increasingly viewed these supply chain risks as “threats“, driving global competition for control over these key resources.

There is a significant overlap in the critical minerals identified by the two partners (see Table 2). Out of the 34 minerals identified by the EU, 20 overlap with India’s list of critical minerals (i.e. 59% of the minerals identified are similar). This may indicate a potential for partnership as it highlights shared strategic priorities and mutual interest in securing these resources.

Table 2: List of 34 critical minerals identified by the EU and the overlaps with India’s list of critical minerals

Source: European Commission, 2023.

The minerals highlighted in green are those that are common between India and the EU based on their latest lists.

One possible answer lies in embedding critical minerals cooperation within the broader framework of their rapidly advancing climate and energy partnership.

Given the geoeconomic convergence between India and the EU, and that critical minerals have emerged as an area of overlapping interest, how can India and the EU partner more effectively? One possible answer lies in embedding critical minerals cooperation within the broader framework of their rapidly advancing climate and energy partnership.

India and the EU have taken on a prominent role in addressing climate change and working together more closely across public and private sectors. They have established partnerships in key areas such as clean energy, water management, and urban development. The EU is actively involved in supporting various Indian initiatives focused on climate action, sustainability, and clean energy. This includes projects on solar energy, offshore wind, promoting energy efficiency and investing in smart girds. Building on this foundation, ensuring resilient and stable supply chains of critical minerals is an emerging and pressing avenue where the two partners can look to collaborate.

Table 3 showcases some of the key policy collaborations between India and the EU on these areas. Yet, as India’s external affairs minister highlighted, cooperation on critical minerals is crucial to sustain and build on this cooperation.

Table 3: Timeline of key India-EU collaborations on climate change and clean energy

Source: Author’s compilation based on various sources; not exhaustive.

The establishment of the TTC has been a significant step in the bilateral relationship between the two countries. The second working group (WG) on green and clean energy technologies has identified three areas of cooperation: renewable and low-carbon hydrogen, batteries for electric vehicles, and standards. Addressing the need for critical minerals security is thus embedded within the TTC. The third WG (trade, investment and resilient supply chains) has the ambit of working on developing a framework for supply chain resilience, which can help address critical minerals. The TTC has held two ministerial meetings and one international workshop on WG-2 and has made significant progress on EV batteries and recycling, and resilient supply chains among other areas.

Improving trade relations between countries has been identified as a crucial step in de-risking supply chains. It aids in diversifying sources of critical minerals, reducing reliance on a single supplier or region. This enhances resilience against geopolitical tensions, market disruptions, and supply shortages, ensuring a steady flow of resources. Improved trade relations can foster economic growth by enabling the efficient exchange of goods, services, and resources, including critical minerals at competitive prices. While there have been disruptions in the India-EU Free Trade Agreement (FTA) negotiations in the past, the relaunching of the negotiations in 2022 has been a welcome step in advancing the bilateral relations.

Exploring convergences: What’s next?

With the EU’s comprehensive policy framework on critical minerals and the overlaps between India’s and the EU’s priority mineral lists, there is a strong foundation for deeper cooperation. Embedding this partnership into their climate and energy collaborations offers both sides a way to secure resilient supply chains, essential for clean energy transitions and technological advancements. There are several opportunities, obstacles and policy options that India and the EU must consider in order to enhance their cooperation on critical minerals.

1. Balance Brussels and bilateral engagements: While India’s engagements with the EU have been significant and forward oriented, it needs to identify how and at what level it will engage with Europe on critical minerals. Will India continue to engage through EU-wide partnerships? Or will it, and should it move towards leveraging its bilateral relationships? This has been the case for India’s climate diplomacy with Europe, where it has inked Green Strategic partnerships with member countries such as Germany, Sweden, and Denmark alongside the EU, often leading to questions about the success of these partnerships.
2. Coordinate via the Mineral Security Partnership: Beyond bilateral cooperation, the EU and India are also part of the MSP. Through sideline consultations, India and the EU should ensure coordination at the MSP to align priorities and build trust. The two partners should also work towards strengthen the MSP as the forum for ensuring resilient critical mineral supply chains.
3. Develop public-private partnerships: India could look to adapt the EU policy model of public-private partnerships to build a strong critical minerals ecosystem. The EU has robust public-private partnership initiatives, the European Battery Alliance (EBA) being one, that allow for collaborations between governments, research institutions and industry towards addressing the challenges of critical minerals. For example, the Swedish company Northvolt received funding support to establish Europe’s first ‘gigafactory’ for lithium-ion batteries through the EBA. These have been instrumental in driving innovation, research, technological advancement and international collaborations in critical minerals exploration and processing.
4. Establish knowledge partnerships: The EU has been working towards resilient supply chains for critical minerals longer than India as it identified its first list of critical minerals in 2008. Hence there are lessons India can learn from the successes and failures of the EU. Knowledge partnerships can help India to build a comprehensive policy framework (see Table 1) on ensuring secure and reliable access to critical minerals and a critical minerals strategy similar to that of the EU.
5. Learn from the EU’s other partnerships: The EU has various other partnerships with countries such as the Australia, US and Japan on securing access to critical minerals and strengthening supply chains. Such as the Critical Minerals Agreement with the US which aims to build international partnerships, diversify supply chains, facilitate trade, improve sustainability and labour standards. Replicating and adapting a partnership given the context of the India-EU relationship could further strategic alignment and interests.
6. Develop trilateral partnerships: India and the EU could consider trilateral partnerships  to ensure mineral security as they can pool resources, share expertise, and improve resilience against global disruptions. Both India and the EU have a growing focus on the African mining space and the potential for partnerships with Africa on critical minerals. This joint focus could be leveraged for potential trilateral agreements with African countries to ensure diversifying critical minerals supply chains.
7. Diversify energy baskets: Currently, the EU has signed 14 partnerships on critical minerals and raw materials with resource rich countries, such as Uzbekistan, Rwanda, Norway and others,  aimed at diversifying its supply chains. India could consider looking at these partners to diversify its own energy basket.
8. Link with trade and investment agendas: European companies seek greater market access and the integration of India into global supply chains. Shifting towards India-centred supply chains for sectors like EVs, technology, defence, and semiconductors, which are dependent on resilient supply of critical minerals, both India and the EU should broaden their approach to cooperation, embedding critical minerals more strategically within their overall economic partnership.
9. Invest in science and technology (S&T) research: Leveraging the EU’s technical expertise in the field of S&T cooperation given the more expansive institutional experience it has, India may seek to develop a robust research ecosystem on critical minerals, especially in sectors like EVs and green technology. Drawing inspiration from initiatives such as Horizon 2020, India can foster collaboration with start-ups and encourage entrepreneurial investment in critical minerals research, enhancing its innovation capabilities in this field.
10. Explore opportunities through Global Gateway: Through the Global Gateway initiative connectivity partnerships with India on sectors like energy, digital infrastructure, and transportation are already being explored. Building on this foundation, it can be further leveraged to develop resilient supply chains for critical minerals, similar to the EU’s approach with Chile, aligning with the broader strategic objectives of green and digital transitions for both regions.

*Note: The author would like to thank Constantino Xavier, Senior Fellow, CSEP for his insightful feedback and comments.

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These engagements reflect India’s realisation that the quest for self-reliance and domestic initiatives to explore critical minerals must be complemented with a foreign policy focused on international cooperation.

Less is known about the international dimension, where the Indian government has inserted critical minerals into different partnerships, including through related issue areas such as green technology, resilient supply chains, energy security, climate transition, trade and defence.

For India, international cooperation is essential for not only ensuring access to these vital resources but also establishing itself as a major player in the global clean energy economy.

• What steps has India taken together with different partners to ensure access to critical minerals? What is the focus and scope of these agreements and negotiations? What do they reflect in terms of India’s approach to balancing competing economic, geopolitical, and climate diplomacy interests?
• How are India’s partner countries securing their critical mineral supply chains through domestic policy frameworks as well as bilateral, minilateral, and multilateral frameworks? And at what level is India seeking ways to engage?
• What are the implications for countries excluded from these partnership frameworks, especially those in the Global South and that India seeks to engage with? What do these partnerships offer in terms of sustainability, particularly economic, social and governance standards on mining and processing?
• How should India balance its engagements between multilateral efforts focused on global governance of critical minerals, on the one hand, and bilateral engagements focused more narrowly on securing access and resilient supply of critical minerals, on the other?

The post Beyond Self-reliance: India’s International Partnerships on Critical Minerals first appeared on CSEP.

Over the past decade India has signed long-term triangular agreements on specific priority areas. These areas mainly include clean energy, health, disaster risk management, technology, innovation, food security and women’s empowerment. India’s engagement in triangular cooperation, a mechanism that it was once reluctant to partner in, aligns with India’s growing interest in increasing its economic and developmental footprint in the Global South. Further, India has been heralded as an effective bridge between Global North countries and a developing world that is becoming increasingly distrustful of current structures of Western-dominated international institutions.

India has been heralded as an effective bridge between Global North countries and a developing world that is becoming increasingly distrustful of current structures of Western-dominated international institutions.

For instance, the Indo-France Indo-Pacific Roadmap signed in 2023, mentions cooperation towards ‘a free, open, inclusive, secure and peaceful Indo-Pacific Region’. They add that the efforts will be taken to ‘build a balanced and stable order in the region’. As India evolves into an emerging economy, traditional partner countries have recognised that to continue meaningful engagement, they need to go beyond traditional donor-recipient relationships. Economic expansion into countries in the Global South, regional security and developing appropriate, low-cost solutions to address sustainable goals may best be facilitated through triangular coordination.

India has announced or signed triangular agreements with Japan, France, Germany, the United States of America (USA), the United Kingdom (UK) and the United Nations Development Programme (UNDP).

India’s triangular agreements, appear to be based on a strategy of strengthening relationships with countries and multilaterals that India has a history of bilateral cooperation with. Not all triangular agreements look similar or have met the same degree of speed and success.

India’s triangular agreements, appear to be based on a strategy of strengthening relationships with countries and multilaterals that India has a history of bilateral cooperation with. Not all triangular agreements look similar or have met the same degree of speed and success. In the case of Japan, the Asia Africa Growth Corridor (AAGC) is dormant, with no present talk of revival. Unlike with other partners, the focus was primarily based on economic diplomacy, rather than meeting developmental objectives. However, businesses were risk averse to invest under this scheme because there was no concrete plan of action. Further, the agreement was broad-based covering a range of sectors, without a clear understanding of how to approach such projects, and access local entrepreneurships or businesses. The UK and French agreements, while still active are slow to operationalise. This is because they involve the creation of a joint triangular fund, with contributions from both countries to scale-up business innovation in a third country. Creating the financial mechanisms required for both countries to jointly fund and select projects is proving to be time-consuming as India’s Ministry of External Affairs is not a funding agency. After much deliberation, a triangular fund has been set up within the State Bank of India Capital Markets Limited (SBICAPS) investment bank. Projects which have been successful are small-scale developmental pilots and capacity building exchanges as seen with Germany, UNDP and the US. Investments are often lower than USD 1 million, with a grass-root, community focus. These projects are easier to carry out as they do not require infrastructure or investments norms and regulation that meet both country standards, as needed for large-scale projects.

Analysing the regions with completed projects (Table 1), shows a diverse set of recipient countries. The focus appears to be on least developed countries (LDCs) and small island developing countries (SIDs). With the UNDP, India has had a broader geographic scope ranging from Latin America and the Caribbean, Africa and the Pacific Islands. A few projects have also been implemented in South-East Asia. It is interesting to note an absence of triangular projects in India’s immediate neighbourhood.

Table 1: Triangular Partnerships where projects have been completed

Source: Based on author’s compilation

The regions that India has chosen as recipient countries provide an insight into India’s strategy for triangular engagement.

As the country tries to build up its portfolio as a developmental partner, it is expanding its footprint in regions and countries where it does not have a strong diplomatic presence. This is both in terms of physical missions, and development cooperation experience.

As the country tries to build up its portfolio as a developmental partner, it is expanding its footprint in regions and countries where it does not have a strong diplomatic presence. This is both in terms of physical missions, and development cooperation experience. Leveraging on partners which already have networks in these regions, India is able to reach regions where it would not have been able to do on its own. India is not using triangular cooperation to engage the immediate neighbourhood. In fact, officials state that they prefer to bilaterally engage with South Asian countries, as they don’t want to impact established channels of diplomacy.

India must see triangular cooperation as means to an end, of learning to strengthen its domestic cooperation capacity and strategy.

India’s new avatar of triangular agreements sees differences compared to previous projects. The agreements are programmatic and long-term, with specific areas of focus. India does not merely play the role of carrying out a project in a third country on behalf of the facilitating partner. Rather, India is seen as an equal partner, carving out the agenda for cooperation. India is leveraging such agreements to further its strategic interests of expanding its diplomatic footprint in the Global South, showcasing its innovations and creating economic opportunities. On a cautious note, projects remain quite small-scale, and this modality is still at an experimental stage.  The extent to which India and its partners can create norms, standards and institutional mechanisms to work with each other and whether this modality can be scaled-up remains to be seen. Nevertheless, whatever the outcome, India must see triangular cooperation as means to an end, of learning to strengthen its domestic cooperation capacity and strategy.

The post India’s Triangular Cooperation Strategies – Not a One-size-fits-all Model first appeared on CSEP.

Yet this original, flexible, sub-regional, technocratic and economic dimension of BIMSTEC, including an ambitious FTA that dragged on since 2004, has gradually withered away. For the last two decades, BIMSTEC has gone through various phases of expansion and reinvention. In 2004, the two landlocked Himalayan states of Nepal and Bhutan joined, giving the organisation an inland dimension. Many new sectors were added subsequently, bringing the total areas of cooperation to 14. This diluted the foundational focus on trade and economic integration. Finally, BIMSTEC also assumed a heavier, more formal profile, including a new secretariat in Dhaka (2014) and a charter giving it legal standing (2024).

Yet the most notable shift for BIMSTEC has been its growing focus on security cooperation, particularly since 2016, following the leaders’ retreat that India hosted in Goa. Since then, over the last eight years, there has been an expansion and deepening of security-related matters, including on intelligence and counter-terrorism, as well as a new security approach to energy, health and food. Four meetings have been held of the BIMSTEC “national security chiefs”. And a variety of official and track 1.5 dialogues have been established on security cooperation.

The late securitisation of BIMSTEC was however a rather unusual development given that regional organisations in South and Southeast Asia have traditionally either refrained from engaging in security cooperation, as in the case of SAARC, or taken several decades to build the requisite trust to do so, with far more robust institutions or under the umbrella of external powers such as China and the United States, as in the case of ASEAN.

Why has security cooperation been gaining ground within BIMSTEC over the last few years? There are several possible explanations. First, India’s attempt to add a security dimension to its Act East policy following geopolitical competition with China in the Bay of Bengal, for example on sea lines of communication. Second, while smaller member-states are increasingly keen to engage India as a regional security actor they may be more comfortable with a multilateral platform such as BIMSTEC than bilateral cooperation which carries the risks of politicisation and domestic opposition.

Finally, in what remains one of the least integrated and most conflictual regions of the world, member-states may also be more cognisant of how security cooperation is paramount to enhance political stability, institutional resilience and economic development.

Finally, in what remains one of the least integrated and most conflictual regions of the world, member-states may also be more cognisant of how security cooperation is paramount to enhance political stability, institutional resilience and economic development. The securitisation of BIMSTEC, beginning in 2016, coincided with one of the most peaceful periods of the region.

While we examine these possible causes in a longer study, as part of the Sambandh Initiative for Regional Connectivity at CSEP’s Foreign Policy and Security vertical, in this piece we focus on two separate tasks based on a survey of open-access sources. First, we empirically map the trend of how BIMSTEC has expanded its sectoral cooperation to both traditional and non-traditional security cooperation, from counter-terrorism to energy and food. And second, we discuss the possible consequences of BIMSTEC’s securitisation, including the major challenges for the seven member states to sustain and deepen security cooperation in the Bay of Bengal region.

Mapping the Shift Towards Security under BIMSTEC

Following the 2nd BIMSTEC Ministerial Meeting in 1998, the organisation identified a set of six priority sectors for cooperation. However, none of these sectors were directly related to security. In 2004, following discussion at the 8th BIMSTEC Ministerial Meeting, these sectors of cooperation were expanded to 14, with Counter-Terrorism and Transnational Crime being one of the seven additional sectors. However, there was still no specific sector for security-based cooperation.

The 2016 BIMSTEC leaders’ retreat, hosted by India at Goa, marked a turning point: for the first time, member states committed to formalising cooperation between their intelligence and security organisations.

The 2016 BIMSTEC leaders’ retreat, hosted by India at Goa, marked a turning point: for the first time, member states committed to formalising cooperation between their intelligence and security organisations. The following year was marked by the first meeting between National Security Chiefs from the seven member states, who referred to the Bay of Bengal as a “common security space”. Later that year, a Track 1.5 Security dialogue forum would also be held in India, addressing both traditional and non-traditional security. And in 2018, New Delhi also hosted the first BIMSTEC Think Tanks Dialogue on Regional Security.

The tides were shifting towards the securitisation of BIMSTEC, and this would subsequently be institutionalised. The 17th  Ministerial Meeting, held in 2021, would recommend a restructuring of sectors and subsectors to streamline the functioning of the organisation, with the 5th BIMSTEC summit formally approving these recommendations the following year. Seven sectors emerged, including one exclusively dedicated to security, led by India and with three sub-sectors: Counter-Terrorism and Transnational Crime, Energy and Disaster Management.

The sub-sector that has since then been most active is on Counter Terrorism and Transnational Crime, which has subgroups on human trafficking, combating financing of terrorism, countering radicalisation, legal and law enforcement issues, and prevention of illicit trafficking. There have also been a number of diverse expert groups focusing on cyber security, maritime cooperation, space security and Himalayan science. Perhaps the most influential initiative under this were the meetings of the National Security Chiefs conducted in 2017, 2018, 2019 and, after a hiatus, again most recently in July 2024, hosted by Myanmar.

Table 1: Key initiatives on BIMSTEC security cooperation

There has been an equal emphasis placed on non-traditional security areas like disaster management and energy. There is even a separate sector for agriculture and food security. Under the Disaster Management sub-sector, two joint exercises have been organised since 2018, which consisted of tabletop exercises, field training and information sharing. The BIMSTEC Centre for Weather and Climate, assisted by a Scientific Advisory Committee, has also engaged in disaster management cooperation. The Centre’s governing board met thrice between 2018 and 2023 to effectively oversee its functioning.

With pressing challenges from climate and the need to secure natural resources for growing economic demands, BIMSTEC has also deepened energy cooperation from a strategic and security perspective.

With pressing challenges from climate and the need to secure natural resources for growing economic demands, BIMSTEC has also deepened energy cooperation from a strategic and security perspective. The Energy sub-sector has focused on grid interconnection, overseen by the Grid Interconnection Coordination Committee, following a Memorandum of Understanding in 2018. In 2022, the Energy Ministers of BIMSTEC countries met after a 12 year long hiatus. The newly established Energy Centre based in Bengaluru defines energy trade in the region for “enhancing energy security” as one of its key functions.

Finally, the securitisation of BIMSTEC also found expression in more regular engagements beyond the official, governmental or military tracks. Starting in 2017, BIMSTEC hosted or supported a variety of track 1.5 and track 2 policy dialogues that involved think tanks and experts from across the Bay of Bengal region. These platforms emerged as an important auxiliary site for informal exchange of perspectives on the regional security environment. Among the most frequent topics were counter-terrorism, cyber and maritime security (see Table 2).

Slow Progress and Different Conceptions of Security

The fast emergence of security as an area of cooperation from BIMSTEC member states poses some significant challenges. In terms of finalising common legal instruments, the organisation has not been particularly efficient. The sub group on Legal and Law Enforcement issues oversees a number of security related conventions, having met nine times. Despite this, gaining consensus on a range of regional conventions has been a difficult process plagued by numerous delays.

The Convention on Cooperation in Combating International Terrorism, Transnational Organized Crime and Illicit Drug Trafficking (mainly calling for cooperation between law enforcement agencies) was signed back in 2009, but only came into force in 2021, having been ratified only by India and Bangladesh for a long time. Similarly, the Convention on the Transfer of Sentenced Persons and Convention on Extradition is still being drafted and negotiated.

In some areas, the security sector seems to have adopted excessively ambitious goals that were quickly abandoned or paused. For instance, the Expert Group on Space Security Cooperation has not held a single meeting, nor has the proposed Home Ministers’ Meeting ever taken place. The Expert Group on Cyber Security Cooperation has also only met once in 2022. The organisation thus needs to be more strategic about selecting and prioritising areas for security cooperation and member-states should also be more willing to abandon areas where there is limited scope or persistent challenges.

Operationally too there remains a lot to be desired in terms of the frequency and level of participation from member-states. Till date there has only been one multinational military field training exercise, where Thailand and Nepal were merely observers. Regular joint naval or counterinsurgency exercises will be essential to the future success of BIMSTEC’s security sector.

The Secretariat’s security division (headed by India) has no dedicated director, and as of 2024 has remained in the interim hands of the Bangladeshi director in charge of the Trade, Investment and Development division.

India, despite being the lead of the security sector, barely plays a substantive role in the secretariat. India’s involvement with the secretariat has remained severely lacking, despite the Secretary General currently being an Indian official. India has only had two directors as part of BIMSTEC, well below the time put in by directors from Bhutan. Between May 2020 to July 2022, there was no Indian director deputed to BIMSTEC, and this has again been the case since November 2022 up to mid-2024. Resultantly, the Secretariat’s security division (headed by India)  has no dedicated director, and as of 2024 has remained in the interim hands of the Bangladeshi director in charge of the Trade, Investment and Development division. While political will from New Delhi is important, it will be difficult for India to sustain and expand levels of security cooperation without allocating a full-time director and other resources to the BIMSTEC Secretariat.

Hosting meetings more consistently is critical to build rapport and trust among officials, especially when it comes to security cooperation on matters of “high politics” such as intelligence sharing or counter-terrorism.

Most importantly, member states need to utilise the organisation for more frequent engagements. Hosting meetings more consistently is critical to build rapport and trust among officials, especially when it comes to security cooperation on matters of “high politics” such as intelligence sharing or counter-terrorism. Sustaining this is a challenge but the socialisation element is important. For instance, the annual ASEAN foreign ministers’ meetings under the political-security pillar have taken place 57 times, with no hiatus in recent years (even through the COVID pandemic). Yet in the case of BIMSTEC, no National Security Chiefs meeting was held between 2019 and 2024.

Finally, BIMSTEC will also have to harmonise different perceptions of security among its member states. This gap is indicated by the wide range of different representatives at the NSC (see Table 3). The participants at the four meetings held so far include a mix of civilian, military, intelligence, and police representatives.

Political Instability and Security

After 2016, BIMSTEC has gone through a rapid trend of securitisation, with a variety of organisational changes and new initiatives. For the former Bangladesh defence and security advisor, Tariq Ahmed Siddique, BIMSTEC’s growing focus on “cooperative security” strived to collectively identify and combat shared security risks in the Bay of Bengal. With the region facing a variety of both domestic and transnational security challenges, both tradition and non-traditional, the stakes for BIMSTEC are high: will it be able to emerge as a site for deliberations, consultations and coordination, and maybe even as a platform for cooperative action?

The ambitious agenda started in 2016, and largely driven by India, is facing some significant headwinds from within its member-states. In 2021, a military coup in Myanmar ended its democratic experiment and the country has, since then, seen a spiral of new conflicts and instability. In 2022, Sri Lanka witnessed a massive political uprising and a financial default that severely curtailed its historical ambition to shape the Bay of Bengal into a regional economic and security commons anchored in BIMSTEC. And in 2024, Bangladesh plunged into political turmoil, ending fifteen years of political and economic stability that facilitated regional security cooperation. This is on top of other persistent conflicts between member-states, including Bangladesh-Myanmar tensions regarding Rohingya refugees with the potential of derailing or delaying BIMSTEC initiatives.

Rather than just formal cooperation structures, the organisations may play an important role as a platform for informal consultation on domestic, bilateral and regional security flashpoints.

How will BIMSTEC be able to craft a productive cooperative in such a difficult regional context? The way ahead will be rocky and require continued political investment from member states in BIMSTEC. The India-Myanmar-Thailand trilateral of July 2024, held at the side-lines of the BIMSTEC Foreign Ministers retreat, may be one among several possible solutions: rather than just formal cooperation structures, the organisations may play an important role as a platform for informal consultation on domestic, bilateral and regional security flashpoints. This would be an adaptation of the “ASEAN Way” on political and security issues in the Bay of Bengal region.

The post BIMSTEC and Security Cooperation in the Bay of Bengal first appeared on CSEP.

Copper, a non-ferrous base metal, is highly valued for its exceptional conductivity, ductility, efficiency, corrosion resistance, machinability, and recyclability. Its extensive usage encompasses power generation, transmission, electricity distribution, and a myriad of end-use applications and consumer products.

Copper is used as a fundamental raw material across various industries, making it ‘Doctor Copper’, an important determinant of the economic health of any nation.

Beyond traditional sectors, copper is integral to energy transition technologies such as wind and solar power, storage batteries, and electric vehicles (EVs). The copper intensity for power generation from solar and wind sources is approximately twice that required for conventional power generation (International Energy Agency, 2022). Additionally, an EV necessitates two to three times more copper than an internal combustion engine vehicle.

The Criticality of Copper

Copper is essential for economic development and the green transition, leading major mining jurisdictions like the USA, Canada, Australia, and the EU to classify it as a critical and strategic mineral. The Ministry of Mines highlights copper’s high economic importance (Ministry of Mines, 2023). CSEP’s study on ‘Assessing the Criticality of Minerals for India’ assesses the criticality of 43 minerals based on their economic importance and supply risks (Chadha et al, 2023). The study points out that copper’s economic importance outweighs its supply risks. Its diversified supply sources, mature markets, and recyclability make it less risky on the supply side.

Economic Significance of Copper

To emphasise the economic significance, the latest ASI data (2021–22) indicates that the GVA by this sector amounted to Rs 6,80,944 lakh, representing approximately 11% of the GVA for the entire basic and non-ferrous metals manufacturing sector (Table 1). Based on the sectoral cathode consumption, it is estimated that approximately 10% of the country’s manufacturing GVA would be affected in the absence of effective substitutes if the cathode supply gets stalled. Copper cathode is extensively used as a critical raw material in various industries (Figure 1). A bulk portion of cathodes is consumed by copper product manufacturers and steel fabricators. Consequently, due to the widespread and diverse applications of copper across various industries, any disruption in the copper supply chain would have a substantial impact on the basic metals and metallurgical sectors. Moreover, cathodes serve as intermediary products not only to produce finished copper goods but also for other manufacturing industries, highlighting their crucial role in the economy.

Source: Annual Survey of Industries, 2021-22, MoSPI

In this emerging era of energy transition and economic growth, the annual global demand for refined copper is expected to reach 50 million tonnes by 2050, up from 26.1 million tonnes in 2022 (International Copper Association, 2023).

The Refined Copper (Cathode) Conundrum

The highest value addition in terms of purity occurs at the smelting and refining stage when copper concentrates are smelted into blister (90.5% Cu) and then refined into copper cathodes (> 99.99% Cu) which become available to the fabricators and downstream industries for end-use product manufacturing. Copper cathode is typically traded either through contracts or on-spot trading on the Commodity Exchange (COMEX) and London Metal Exchange (LME) and the cathodes’ price determines the prices of other embedded finished products.

Refined Copper Status: Production vs Consumption

Source: Indian Minerals Yearbook, IBM

The domestic production of copper cathode in India showed significant growth until 2017–18, followed by a sharp decline. While production saw a slight increase since 2020–21, it has not returned to pre-2017–18 levels (Figure 2). Globally, the average annual growth rate of refined copper production was 2% from 2013 to 2022 (International Copper Study Group, 2023). The domestic production of cathode has seen an average annual growth rate of just 0.01% over the past decade. For FY 2023–24, production was approximately 5.09 lakh tonnes, reflecting an 8% decrease from the previous year. Domestic consumption is computed by excluding each year’s exports of refined copper from the total domestic production and adding imported refined copper. Yearly trends in domestic consumption also reflect the demand for refined copper. Although demand dipped slightly in 2020–21, perhaps on account of the COVID-19 pandemic, it has been rising since 2021–22.

Until 2017–18, India was self-sufficient in meeting its domestic copper demand and exported a substantial amount of refined copper overseas.

However, Sterlite’s copper plant, with a production capacity of four lakh tonnes per year, has been shut down since 2018 due to environmental non-compliance and pollution concerns, drastically reducing domestic production afterwards (Yadav, 2024). As a result, the additional supply of refined copper is being met through imports, leading to a gradual increase in import volumes. The trade scenario is discussed in the following section.

Trade Scenario

Source: Ministry of Commerce https://tradestat.commerce.gov.in/eidb/default.asp

Since 2018–19, India has transitioned from being a net exporter to a net importer of copper. The inability of other domestic industries to pace up, combined with accelerating domestic demand, has exacerbated India’s reliance on copper imports, including refined copper (Figure 3).

Post-2018–19, the trade deficit has widened, with imports in FY 2023–24 increasing by 107% compared to the previous year.

Another factor contributing to rising imports, as reported by industries, is the reduction of duty rates to near-zero under Free Trade Agreements with Japan and ASEAN nations (Dhoot, 2015).

Closer Look at the Indian Copper Sector

Indian refined copper market faces a significant demand-supply gap. To address this critical challenge, we need to understand the loopholes and challenges faced by Indian copper processing and mid-stream processing industries, including smelters, refiners, and fabricators, as well as potential geopolitical challenges.

In the Indian copper scenario, three key players: Hindustan Copper Limited (HCL) from the public sector predominately engages in the mining and beneficiation of copper ore. In contrast, Sterlite Copper (a unit of Vedanta) and Hindalco from the private sector are mostly engaged in the processing, with a total installed smelting and refining capacity of nearly 10.28 lakh tonnes (Ministry of Mines, 2024).

The HCL produces copper ore and concentrates at their five operating copper mines. Moreover, HCL has two primary smelting and refining plants and a secondary copper smelter with a combined installed capacity of 0.68 lakh tonnes. However, since 2020, HCL has phased out its cathode production due to economic non-viability and entered a public-private partnership with Hindalco. Under this partnership, HCL will sell 60% of its concentrates to Hindalco for refined copper production, whereas the rest will be sold through open tender at LME-linked prices (Hindalco Industries Limited, 2020).

With HCL ceasing its copper cathode production, Hindalco and Vedanta remain the only dominant players in the refined copper market.

Hindalco operates a port-based custom copper smelter at Dahej, Gujarat, housing three smelters and three refineries with a combined installed capacity of 500 thousand tonnes, making it the second-largest smelter and sixth-largest refiner in the world. In FY 2022–23, it produced 407 thousand tonnes of cathode, exhibiting a growth rate of 13% over the preceding year (Hindalco Industries Limited, 2023). Hindalco meets more than 50% of domestic refined copper requirements, catering to diverse sectors such as railways, electrical equipment, consumer durables, automotive and transport.

Vedanta Ltd.’s Sterlite Copper used to contribute more than 36% of India’s demand for refined copper with an installed capacity of 460 thousand tonnes in their two operating units at Thoothukudi, Tamil Nadu and Silvassa, Daman and Diu (Ministry of Mines, 2024). However, in 2022–23, Vedanta recorded 148 thousand tonnes of cathode production from its only operational Silvassa plant, which has an installed capacity of 216 thousand tonnes per annum (Vedanta Limited, 2022–23). A study estimated the consolidated loss due to the closure of the Thoothukudi plant is approximately Rs 14,749 Cr which is about 0.72% of the state GDP of Tamil Nadu (Batra, 2022). Both companies rely on importing copper concentrates from their mines abroad or other overseas reserves (Ministry of Mines, 2024).

As an emerging player, Adani Enterprises’ subsidiary, Kutch Copper, has recently launched the first unit of its greenfield copper refinery at Mundra, Gujarat. With an initial investment of USD 1.2 billion, the first phase will establish a smelter with a capacity of 500 thousand tonnes, eventually expanding to one million tonnes per annum in the second phase, making it one of the largest port-based single-location custom smelters in the world (Adani Enterprises Limited, 2024).

Global Concerns of Processing

Copper processing is apparently more concentrated than copper mining, where China dominates approximately 44% of global refined copper production. In contrast, the top three countries in copper mine production are Chile (23%), Peru (12%) and the Democratic Republic of Congo (DRC) (11%) (Mineral Commodity Summary, 2024). Despite, being the largest extractor of copper, Chile produced only 8% of the world’s refined copper in 2023, down from 12% in 2015. A substantial portion of Chile’s copper concentrate is exported for refining, primarily to China (IEA, 2024).

In a usual copper business model, commissioning new projects involves long-term agreements between miners, semi-fabricators and refiners, as smelters require a guaranteed supply of copper concentrates as feedstock. However, there is a tightened supply of concentrates due to resource exhaustion in existing mines, diminishing grades, geotechnical and operational issues, limited discoveries, and delays in commissioning new mining operations. This constrained supply, combined with the expansion of smelting and refining capacity, will affect treatment and refining charges (TC/RCs)[1], leading to an increase in capital and operating costs. Most miners and smelters negotiate long-term contracts based on an annually agreed benchmark framework, where the first settlement between a major miner and a smelter typically sets the benchmark TC for the year ahead (Charlesworth, 2024). In November 2023, Chilean miner Antofagasta and Chinese smelter Jinchuan established the benchmark at USD 80 per tonne. The same rate was adopted by Freeport-McMoRan and Jiangxi Copper. This TC is 9% lower than the previous year’s USD 88 per tonne, marking the first drop in TCs in three years (Mining.Com, 2023).

[1] TC/RCs are the fees which the mining companies pay to the smelters to convert their semi-processed ore or concentrate into cathodes or finished metal.

This global plummeting of TCs/RCs adversely impacts Indian processors’ revenue as well as the entire copper supply chain, market, and investment. To offset this, domestic smelters must prioritise increasing value-added output over enhancing tonnage.

While Kutch Copper’s entry might boost production and ease the trade deficit, currently, only 50% of India’s mid-stream processing capacity gets utilised. Huge working capital requirements, complex raw material procurement, scarce availability of domestic ore and concentrates, and bulk imports of cathodes and other finished products have adversely impacted India’s primary and downstream copper industry. 

The Way Forward

Copper industries face several challenges in terms of global supply-chain vulnerabilities, import reliance, limited geopolitical presence, shutting down of major production units, scarce domestic ores, and insufficient exploration to convert resources into reserves and reserves into production.

Addressing these challenges requires strategic investments, adherence to environmental standards, and leveraging public-private partnerships to enhance production capacities. Building domestic processing capabilities, focusing on research and development, and technological innovation are essential to secure the copper supply chain. Given the capital intensity of the industry, incorporating copper mid-stream processors into India’s production-linked incentive scheme would incentivise domestic processors to attract further investments (Raizada & Moerenhout, 2024). However, providing such incentives is a short-term solution to an overall push to make the industry internationally competitive.

The strategic acquisition of mines abroad in copper-rich countries such as Chile, Peru, DRC, Australia, and South Africa, along with bilateral cooperation in copper processing ventures and knowledge-sharing through diplomatic and trade agreements, should be augmented. Alongside Khanij Bidesh India Limited’s (KABIL’s) government-to-government (G-to-G) negotiations, efforts should also be directed towards business-to-business (B-to-B) collaborations.

The exemption of customs duties on 25 critical minerals, as declared in the Union Budget 2024-25, will boost the domestic processing and refining sector, thereby enhancing competitiveness in the manufacturing sector (Press Information Bureau, 2024).

References

Adani Enterprises Limited. (2024). Adani’s copper unit in Mundra begins operations. Retrieved from https://www.adanienterprises.com/en/newsroom/media-releases/adanis-copper-unit-in-mundra-begins-operations

Chadha, R. Sivamani, G. and Bansal, K. (2023). Assessing the Criticality of Minerals for India: 2023 (CSEP Working Paper 49). New Delhi: Centre for Social and Economic Progress. Retrieved from https://csep.org/wp-content/uploads/2023/04/Critical-Minerals-for-India-2.pdf

Charlesworth, L. (2024, June). Copper concentrate benchmark structure at risk in current market – Fastmarkets. Fastmarkets. Retrieved from https://www.fastmarkets.com/insights/copper-concentrate-benchmark-structure-at-risk/

Dhoot, V. (2015, October). As cheaper imports increases copper industry sends SOS to government. The Economic Times. Retrieved from https://economictimes.indiatimes.com/industry/indl-goods/svs/metals-mining/as-cheaper-imports-increases-copper-industry-sends-sos-to-government/articleshow/49344924.cms?from=mdr

Hindalco Industries Limited. (2020, September). Hindalco and Hindustan Copper sign MoU for supply of copper concentrate. Retrieved from https://www.hindalco.com/media/press-releases/hindalco-and-hindustan-copper-sign-mou-for-supply-of-copper-concentrate

Hindalco Industries Limited. (2023). Integrated annual report 2022–23. Retrieved from https://www.hindalco.com/upload/pdf/hindalco-annual-report-2022-23.pdf

IEA. (2024). Global Critical Minerals Outlook 2024, IEA, Paris. Retrieved from https://iea.blob.core.windows.net/assets/ee01701d-1d5c-4ba8-9df6-abeeac9de99a/GlobalCriticalMineralsOutlook2024.pdf

International Copper Association. (2023). COPPER—THE PATHWAY TO NET ZERO. In Copper—The Pathway to Net Zero: Summary. Retrieved from https://internationalcopper.org/wp-content/uploads/2023/03/ICA-GlobalDecarb-Summary-A4-202302-R3.pdf

International Copper Study Group. (2023). The World Copper Factbook 2023. Retrieved from https://icsg.org/copper-factbook/

International Energy Agency. (2022). The role of critical minerals in clean energy transitions. https://iea.blob.core.windows.net/assets/ffd2a83b-8c30-4e9d-980a-52b6d9a86fdc/TheRoleofCriticalMineralsinCleanEnergyTransitions.pdf

Mineral Commodity Summary. (2024). U.S. Geological Survey, 64–65. Retrieved from https://pubs.usgs.gov/periodicals/mcs2024/mcs2024.pdf

Mining.Com. (2023, December). Copper miners, Chinese smelters agree on first drop in fees in 3 years – MINING.COM. Retrieved from https://www.mining.com/web/copper-miners-chinese-smelters-agree-first-drop-in-fees-in-3-years/

Ministry of Mines, Indian Bureau of Mines. (2024, April). Indian Minerals Yearbook 2022 (Part II: Metals and Alloys). Retrieved from https://ibm.gov.in/writereaddata/files/1715685346664347e2b0816Copper_2022.pdf

Ministry of Mines. (2023). Critical Minerals for India. Retrieved from https://mines.gov.in/admin/storage/app/uploads/649d4212cceb01688027666.pdf

Press Information Bureau. (2024, July). Reforms In Customs Duties Will Support Domestic Manufacturing and Promote Export Competitiveness. Ministry of Finance. Retrieved from https://pib.gov.in/PressReleasePage.aspx?PRID=2035601

Raizada, S., & Moerenhout, T. (2024). Securing India’s Copper Supply Challenges and the way forward. International Institute for Sustainable Development. Retrieved from https://www.iisd.org/system/files/2024-07/securing-india-copper-supply.pdf

Vedanta Limited. (2022-23). Integrated Report and Annual Accounts 2022-23. Retrieved from https://www.vedantalimited.com/uploads/investor-overview/annual-report/Vedanta-Limited-Integrated-Annual-Report-202022-23-VF.pdf

Yadav, K. (2024). SC junks Vedanta’s plea to reopen Sterlite Copper’s Thoothukudi plant. Mint. Retrieved from https://www.livemint.com/companies/news/setback-for-vedanta-as-sc-dismisses-plea-to-reopen-sterlite-copper-plant-in-tamil-nadus-thoothukudi-11709205833536.html

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Full implementation of CBAM would be coupled with the gradual phasing out of free allowances allocated to the EU manufacturers under EU ETS to ensure it complies with the World Trade Organization (WTO) rules.

With regard to the potential impacts of CBAM, concerns have been raised that it may further strain international trade. Numerous studies in the literature indicate that CBAM might hurt exporters of CBAM-targeted sectors to the EU, especially from countries like China and India, which have relatively higher carbon intensity in their production processes. In addition to that, CBAM which has been imposed with the intent of boosting the competitiveness of domestic manufacturers might not yield the anticipated benefits, especially in the case of manufacturers of downstream products. This is because, the imposition of carbon price on imports of select sectors by the EU and phasing out of free allowances may lead to an increase in the cost of production of downstream sectors, as these targeted sectors are not only consumed as a final product, but are also absorbed as intermediate products. As a result, carbon price might emerge as a significant factor for the increase in cost of production and may thus affect the international trade of the EU itself. Considering the potential implications of CBAM on prices of EU’s own manufactured products too, its closer scrutiny becomes imperative.

EU’s Relevance in International Trade

EU is a major player in international trade and ranks among the top three globally when it comes to the value of global exports and imports. In 2023, its share of world exports accounted for around 13.1% (Figure 1) which is the second largest in the world, next to China. To get a better understanding of the EU’s contribution to international trade, one may also look at the EU’s total exports i.e. the sum of intra-EU[1] exports and extra-EU exports, which account for around 36% of total exports globally. Figure 1 also shows that a significant portion of exports by EU member countries (64% of EU’s total exports) head to other EU members. This trend is more evident in case of CBAM sectors, as EU-27 imports most of these products from its member nations only (Table 1).

The top three sectors contributing most to the EU’s exports to the rest of the world include machinery and equipment, transport equipment, and chemical and chemical products, which in aggregate account for about 50% of the EU’s total exports to the rest of the world (Table 2). These are also the sectors which have huge dependence in terms of intermediate inputs on CBAM sectors such as Iron and Steel, Aluminium, Electricity, etc. for their production. The next section further examines the possible impacts of CBAM.

CBAM and its Unanticipated Impacts on EU Manufacturers’ Competitiveness

The implementation of CBAM will make it mandatory to pay the carbon price on emissions embedded in imports of targeted sectors while allowing a rebate for any carbon price paid domestically. The implementation and extension of CBAM to other sectors will be coupled with the gradual phasing out of free allowances given to certain domestic producers within the EU. In the case of Iron and Steel, Fertilizers, Cement and Electricity, almost 3/4th of imports of these targeted sectors by the EU come from its member states only (Table 1), suggesting that gradual removal of free allocation of allowances from these sectors might result into an increase in their production cost. Imports of these CBAM products from other trading partners like the UK, USA, China, India, etc. would experience imposition of carbon price under CBAM as scope and carbon prices under existing carbon pricing policies of UK, China or USA are not comparable with the EU’s carbon pricing policies.

The duo of imposition of carbon price on imports of select sectors and removal of free allowances is expected to push up the production cost and prices of targeted sectors in the European market.

Since these targeted products are also absorbed as intermediates for further processing, an increase in the price of these intermediates is expected to increase the cost of production of downstream sectors too, which in turn will have an impact on the cost of production of further downstream sectors.

As long as the scope of CBAM is not being extended to cover emissions embedded in downstream sectors, CBAM in its present form may hamper the competitiveness of EU manufacturers disproportionately. ​ADB (2024)​ also suggests that while CBAM may help fight against carbon leakage due to EU-ETS by bringing production back to the EU, downstream producers in the EU however may shift some of their production outside of the EU because of CBAM.
As per the TiVA 2023 database, the value added as a share of total production by the Transport equipment and machinery sectors within the EU was around 28% and 37% in 2020, highlighting the huge dependence of the two sectors on upstream sectors including CBAM sectors. To better understand how CBAM sectors like steel may impact the EU manufacturers in downstream sectors, we may further look into how steel is consumed across various economic activities in their production processes. As per ​EUROFER (2022)​, 19% of the finished steel was consumed by the automotive and other transport sectors, and almost 15% went to the mechanical engineering sector. These are also the sectors which contribute to the EU’s total exports the most (around half of the EU’s total merchandise exports to the world outside), suggesting that an increase in the price of steel due to CBAM and phasing out of free allowances is expected to have a significant impact on the cost of production and hence exports of sectors like automotive, mechanical engineering, etc. which in turn may hamper the competitiveness of manufacturers of these sectors. Since, the EU is among the world’s largest producers of Automotive ​(European Commission, n.d.)​ and the largest producer and exporter of machinery ​(European Commission, n.d.)​, and the two sectors contribute significantly to the EU’s value addition, output, employment, trade and have an important multiplier effect on the economy, an adverse impact of CBAM on manufacturers of these sectors may have huge ramifications.

While CBAM may offer protection to Europe’s green producers of select sectors by bringing their production back to the EU, downstream manufacturers are left vulnerable to the unintended consequences of higher costs, as they might have to face the prospect of soaring production costs, which may threaten their competitiveness. This analysis does not account for potential implication of the increasing efforts taken by the companies globally to decarbonise their production processes, which are expected to reduce emissions and, consequently, may lessen the impact of carbon price on targeted sectors due to CBAM and phase-out of free allowances. This suggests that the true impact of CBAM will also depend on the cost of mitigation. Although the actual effects of CBAM on EU manufacturers remain uncertain and are yet to be fully realised, as CBAM in its definitive regime[2] is going to be implemented, it is crucial to assess if the anticipated economic benefits of levelling the playing field for EU manufacturers will outweigh the potential adverse impacts. With more countries, including the UK, and Australia announcing their intention to implement similar CBAM mechanisms, thoughtful consideration of the potential impacts and trade-offs involved is essential.

References 

​​ADB. (2024). Asian Economic Integration Report 2024: Decarbonizing Global Value Chains. https://www.adb.org/sites/default/files/publication/945596/asian-economic-integration-report-2024.pdf 

​EUROFER. (2022). EUROFER, 2022, European-Steel-in-Figures-2022-v2. https://www.eurofer.eu/assets/publications/brochures-booklets-and-factsheets/european-steel-in-figures-2022/European-Steel-in-Figures-2022-v2.pdf 

​European Commission. (n.d.). Mechanical engineering. https://single-market-economy.ec.europa.eu/sectors/mechanical-engineering_en  

​European Commission. (n.d.).  Automotive industry. https://single-market-economy.ec.europa.eu/sectors/automotive-industry_en  

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