India Last Week #52
A round-up of research & reportage on India across climate, energy, foreign policy, politics & more over the last week
Climate, Energy & Environment -
“At a recent high-level meeting on India’s energy transition, there was consensus that a significant fraction of our long-term electricity supply would come from solar power. This prompted an interesting question: what happens when we face a solar eclipse? If, hypothetically, our midday electricity supply is 75 per cent solar, and we have a total solar eclipse, then what? It turns out that this problem, while extreme, isn’t as dire as one could believe, but there are also far more common “extreme” weather and climate events related to both supply and demand that we aren’t planning for sufficiently… How do we plan for these? There are three specific needs India must accelerate. First, we need to dramatically improve our predictions, both short-run and long-run… Second, we need to pay for the right things, or what economists would call signalling (incentives)… Third, we have to accept a very different grid, where we socialise costs that make the grid stronger. This links to point two, but it isn’t just about who does what, but what we do collectively.” Read more: Rahul Tongia, Energyworld
“India is racing against time to forge rare earth magnet supply chains with five nations as China’s export choke-hold imperils EV production here. And the clock is set at: 45-60 days. Discussions have been initiated with five other countries - Vietnam, Indonesia, Japan, the US and Russia - for supply of rare earth magnets, a key EV making component; with parallel discussions being underway at the Chinese Embassy here to allow India buyers access to the item… One alternative, recently discussed but yet to be formalised, is to allow companies to import entire assemblies or sub-assemblies instead of individual magnets. But, necessary changes to quality control rules and eligibility norms under various government schemes mandate domestic value addition need to be relaxed… Rare earth magnet supplies with automobile makers is expected to run till June-end, “at the most”. Since mid-April, there have been “no supplies”. China has already rejected or held back permission to export rare earth magnets to Indian companies. Attempts made by some companies in May were also shot-down by the Chinese. Despite India granting export certificates to auto-makers, the same is yet to be accepted.” Read more: Abhishek Law, The Hindu Businessline
“April marks the start of the cruelest months for residents of Solapur, a hot and dry district in western India. As temperatures soar, water availability dwindles. In peak summer, the wait for taps to flow can stretch to a week or more. Just a decade ago, water flowed every other day, according to the local government and residents of Solapur, some 400 km inland from Mumbai. Then in 2017, a 1,320-megawatt coal-fired power plant run by state-controlled NTPC began operations. It provided the district with energy - and competed with residents and businesses for water from a reservoir that serves the area. Solapur illustrates the Catch-22 facing India, which has 17% of the planet’s population but access to only 4% of its water resources. The world's most populous country plans to spend nearly $80 billion on water-hungry coal plants by 2031 to power growing industries like data center operations… Many of the 20 people interviewed by Reuters for this story, which included power company executives, energy officials and industry analysts, said the thermal expansion likely portended future conflict between industry and residents over limited water resources… The plant's thirst for water has previously led to tensions with residents of nearby Chandrapur city. Locals protested the station during a 2017 drought, prompting officials such as local lawmaker Sudhir Mungantiwar to order it to divert water to homes.” Read more: Krishna N. Das and Sarita Chaganti Singh, Reuters
Economy -
“In a surprise turn, India (which had been receiving consistent FDI inflows even in years when foreign portfolio inflows were volatile) experienced a close to 100 per cent decline in net FDI investment in the country to $354 million in 2024-25 (Chart 1). It is still true that gross FDI inflows have risen from $71.3 billion in 2023-24 (and more or less the same level in 2022-23) to $81 billion in 2024-25… There appear to be three factors underlying the collapse of net FDI. First, despite the rise in 2024-25, gross FDI inflow peaked in 2021-22 at $84.8 billion, fell sharply in the next year, and despite the 2024-25 rise remained below the previous peak level. Second, there has been a rise in repatriation of investments made by incumbent foreign direct investors, which rose from $29.3 billion in 2022-23 to $51.5 billion in 2024-25. Most of that repatriation ($27.1 billion in 2022-23 and $49.5 billion in 2024-25) occurred through the divestment of equity. Third, as noted there has been a sharp increase in overseas FDI by resident investors. That was the result of both new equity outflows and investment of retained earnings, with unusual increases in particular years such as 2021-22 and 2024-25… The instability in net FDI inflow trends, in a context in which there has been a substantial accumulation of footloose portfolio foreign capital in Indian markets, increases the danger of capital flight if developments abroad or domestically affect the so-called “confidence” of investors.” Read more: C. P. Chandrasekhar and Jayati Ghosh, The Hindu Businessline
“When the Make in India initiative was launched in 2014, it set a target of GDP from manufacturing by 2025. In reality, the share of manufacturing has remained almost constant at about 16%. Amidst this underperformance, one state that stands out for getting 25% of GSDP from manufacturing is Tamil Nadu… TN has also emerged as a major export powerhouse across garments, automobiles, engineering goods and electronics. While it has less than 6% of India’s population, it now accounts for almost 15% of India’s non-oil exports. Over 41% of India’s electronics, 38% of footwear and 45% of auto and auto components manufacturing come from TN… TN boasts a bureaucracy that acts not as a roadblock but as a launchpad.. In TN, key clearances are digitised, timelines are tracked publicly, and grievance redressal mechanisms are institutionalised… Importantly, policy continuity has been its hallmark. Bureaucrats feel reassured to take difficult calls because there is no witch-hunt even when the party in power changes. That sort of predictability is gold for investors looking to make billion-dollar commitments.” Read more: Ashish Dhawan and Piyush Doshi, Times of India
“India must challenge the misleading US narrative that frames the bilateral trade relationship solely through the lens of goods trade deficits. While India ran a trade surplus of $44.4 billion with the US in FY2025 (Table 1), US quietly earns $80-85 billion (Table 2) annually from India through education exports, financial services, intellectual property royalties, digital operations, and arms sales. When these flows are included, the US enjoys a $35-40 billion surplus vis-à-vis India — hardly the picture of a disadvantaged partner. Yet, rather than assert this reality, India has rushed to appease. Since January, India has unilaterally cut import duties on bourbon whiskey, fish feed, motorcycles, satellite parts, and mobile components. It has removed a 6 per cent digital tax on US tech giants and is preparing to revise its nuclear liability law to facilitate the sale of US reactors. This pattern of concessions without reciprocal gains has emboldened Washington’s negotiating stance… The risks of going too far are real. India’s recent agreement with the UK, for example, included an unprecedented cut in car import tariffs from 100 per cent to 10 per cent, even covering electric and hybrid vehicles where India is just starting to build capacity.” Read more: Ajay Srivastava, The Hindu Businessline
Foreign Policy & Security -
“The India-U.S. relationship currently appears buffeted between three “Ts”—TRUST, Tariffs, and Trump… TRUST was seen as iCET reincarnated or even iCET plus: a positive message for bipartisan continuity, sustained since the Clinton visit to India in 2000, and through Democratic and Republican administrations. Tariffs, on the other hand, are a political impediment to overcome in Trump 2.0… The optics of the negotiations have been occasionally awkward for India, with Trump repeatedly claiming that India had offered to reduce tariffs to zero under his demands, and without any indication of Indian gains… Additionally, the U.S.’ position on the May 7 conflict between India and Pakistan revived assessments in India that the U.S. was not fully behind India on cross-border terrorism and on the need to bring Pakistan to book.” Read more: Arun K. Singh, Carnegie India
“Since the Taliban took power in Afghanistan in August 2021, the relationship between the Taliban and BJP government has made remarkable progress. However, on the contrary, the relationship between Kabul and Islamabad has deteriorated and is becoming tenser by the day… Despite this history, since August 2021, the relationship between the Taliban and BJP-led India has started to take a different direction, and New Delhi has sought to interact with the Taliban in a more pragmatic way, in order for India to better pursue its interests in Afghanistan, especially those related to security… The evolving relationship between the Taliban and India is tactical, and based on pragmatic considerations about security and geopolitics. Therefore, current Taliban-India relations are neither natural nor based on long-term interests.” Read more: Mirwais Balkhi, Wilson Center
“In India, the country that sends more students to the United States than any other, young people who had hoped to pursue higher education in America this fall described feeling in a state of limbo after the Trump administration’s decision to pause interviews with foreign nationals applying for student visas. Some are scrubbing their feeds, deleting comments and unfollowing accounts after the State Department said that it would screen social media use… Shashank Shukla, co-founder of IVYDreams, an admissions consulting service, said he expected the dust to settle soon, but he noted that the tenor of questions asked by visa officers at the American Embassy in New Delhi had changed… The swelling number of Indian students going to the United States also has to do with growing wealth in India and the desire for a degree from a “brand name” school, Mr. Gupta said. No other country offers as many options as the United States, so many students and their parents consider it worth spending about $40,000 to $100,000 a year on tuition.” Read more: Anupreeta Das and Pragati K. B., The New York Times
“Gautam Adani, Asia’s second-richest man, is trying to get the Trump administration to drop foreign bribery charges against him. Instead, he is facing a new front in his fight with prosecutors: a probe into whether his companies are buying Iranian petrochemical products. U.S. prosecutors are investigating whether Adani’s companies imported Iranian liquefied petroleum gas, or LPG, into India through the company’s Mundra port… The expanding scrutiny by the U.S. Attorney’s Office in Brooklyn could prove problematic for Adani’s rehabilitation effort… A Journal investigation into a group of LPG tankers making journeys between the Adani-run Mundra port and the Persian Gulf since early 2024 found they showcase signs that ship trackers say are typically evidence of ships attempting to obscure their activities. A common tactic includes manipulating the ship’s automatic identification system, or AIS, which shares a ship’s position, according to Tomer Raanan, a maritime risk analyst at Lloyd’s List Intelligence who tracks LPG tankers… Purchasers of Iranian oil and gas products often use forged documents from Oman and Iraq, according to several people familiar with the trade.” Read more: Ben Foldy and Dave Michaels, The Wall Street Journal
“India's defence ecosystem is at an inflection point, driven by public sector tailwinds, but sluggish private investment is holding it back, defence secretary Rajesh Kumar Singh said on May 29 at a CII industry event in New Delhi… While India’s defence sector has grown 6–7 percent annually over the past decade, largely due to government-led initiatives, the next phase of growth must be fuelled by deeper private sector participation and investment in R&D, he said… “We need to reduce all hurdles and promote ease of doing business in defence,” he said, adding that streamlining procurement processes is a priority. “We’ll bury you, the private sector, in orders but there is a need for greater investment in R&D from your side,” he said. For the first time in years, the defence modernisation budget was fully utilised in the last fiscal, breaking a long-standing pattern of underspending caused by slow procurement decisions. The pace of modernisation is expected to pick up, Singh said.” Read more: Moneycontrol
People & Politics -
“Nevertheless, it is not possible to ignore the present moment, which has formally and frontally disbanded Indian nationalism not merely through the subterfuge of practice but through the assault of ideology. Today, “belonging” is replaced by a conditionality: One doesn’t belong, someone else decides who belongs, and who must belong, to the nation on the basis of one trait or the other… December 1992 marked a major departure from the imagination of inclusion and accommodation. And as we know, December 1992 itself was a culmination of a long history of imagining the nation only through othering… Moreover, while we need not hesitate to admit the many failings of the elite and the political leadership of the post-Independence era, in holding them responsible for the current crisis of Indian nationalism, we may be making the mistake of ignoring the deep rivalry between Indian nationalism and its phoney alternative… The audacity of the project of Indian nationalism itself signified that it would have strong challenges and many inner hiccups. A fuller history of its rise and fall may include the failings of its supporters and the inaction of its well-wishers but the limitations of the nationalist project lay in its very audacity.” Read more: Suhas Palshikar, Indian Express
“Through organising lectures, workshops and film screenings, and by forming anti-caste and Ambedkarite student societies on campus, marginalised students in the UK are amplifying voices from within their communities on an international platform and contributing to the global understanding of caste and resistance to it… At the University of Oxford, the Oxford South Asian Ambedkar Forum (OxSAAF) was formed in 2021 with the intention to create an alternative to the existing Indian cultural presence on campus, mostly associated with Diwali and Bollywood… Although university administrations in the UK are generally sensitive to the diverse needs of students, a lack of understanding of caste and its impact on the student experience means that universities are ill-equipped to address the specific issues of marginalised caste students.” Read more: Meghana Choukkar, The Wire
“Can factories use all their land? No: Fifty per cent of an industrial plot is lost to just three standards; micro and small factories lose the most land to standards more stringent than those of countries 10 times richer. Can workers work the hours they want? No: A factory worker loses 270 plus hours of annual earnings to working hour restrictions, and these limits force workers to give 156 to 416 fewer hours in a quarter than in Japan… Viksit Bharat by 2047 requires deregulation. This deregulation does not mean lower government spending, poorna swaraj for employers, or fewer government employees. A modern state is a welfare state, and government spending on social security, infrastructure, and defence is crucial to mass prosperity… The scale of India’s challenge means it cannot be finessed within existing structures and philosophies. Once that is accepted, unpleasant truths await. The massive culling of regulatory compliance, filing, and jail provisions required to improve the ease of doing business for small entrepreneurs now equals civil service reform.” Read more: Manish Sabharwal, Indian Express
Tech -
“Elon Musk’s Starlink’s satcom permit from the Indian government will make it mandatory for the company to share information, including details of users or owners of satellite kits seized in the country, particularly in the North-East region in the past few months, information the US company was unwilling to share earlier. India’s security agencies have pointed out the misuse of Starling devices in Indian territory, especially in the border areas, officials said. But the Musk company hasn’t been cooperating in sharing details of those devices… The DoT was asked to investigate the matter and take preventive measures to safeguard national interests. Experts believe that the situation may become more complicated as Bhutan and Bangladesh are now commercially offering Starling services and the terminals may be smuggled into Indian territory as geofencing the exact location of the international border will have limitations.” Read more: Kiran Rathee, Economic Times
India to roll out its first indigenous semiconductor chip in 2025, says IT Minister Ashwini Vaishnaw
“In a significant development for India’s technology manufacturing ambitions, Union Minister for Electronics and IT, Ashwini Vaishnaw, announced on Thursday that the country’s first homegrown semiconductor chip, ranging between 28 to 90 nanometres, will be launched this year, reported NDTV. Speaking at the Confederation of Indian Industry’s (CII) Annual Business Summit, the minister said the government had adopted a focused approach by targeting a specific market segment that constitutes 60 per cent of global semiconductor demand, stated the publication… "Today, six fabrication units are under construction. The rollout of the first Made in India chip is expected this year. We initiated this journey in 2022, and the progress has been steady," Vaishnaw stated. As per the report, chips within the 28-90 nm range are commonly used in automotive systems, telecommunications, power equipment, and railway applications. In semiconductor terms, smaller nanometre values indicate more densely packed transistors, enhancing performance and efficiency.” Read more: Mint