In News:

• India has been re-elected to the Council of Administration (CA) and the Postal Operations Council (POC) of the Universal Postal Union (UPU) during the 28th Universal Postal Congress held in Dubai.
• This re-election reaffirms global confidence in India Post’s leadership, digital reforms, and commitment to inclusive postal development, strengthening India’s voice in shaping international postal governance.

About the Universal Postal Union (UPU)

• Founded: 1874 under the Treaty of Bern
• Headquarters: Berne, Switzerland
• Members: 192 countries
• Status: A specialized agency of the United Nations, it is the second-oldest international organization after the International Telecommunication Union (ITU).

Mandate and Objectives

• To promote global postal cooperation and ensure universal connectivity in mail and parcel delivery.
• To establish standards, regulations, and tariffs for international postal exchanges.
• To enhance efficiency, affordability, and reliability of postal services globally.
• To facilitate the growth of e-commerce and cross-border logistics through modern postal systems.

Governance Structure of UPU

The UPU functions through four key organs:

• Congress:
  • The supreme decision-making body, convened every four years.
  • Sets the long-term strategy, budget, and policy framework for global postal operations.
• Council of Administration (CA):
  • Handles policy, legal, administrative, and regulatory issues between Congress sessions.
  • Oversees the implementation of Congress decisions and coordinates global postal governance.
• Postal Operations Council (POC):
  • The technical and operational body comprising 48 elected member countries.
  • Works on service innovation, quality enhancement, digital integration, and modernisation of global postal systems.
• International Bureau:
  • The secretariat of the UPU providing logistical, analytical, and technical support to member states and councils.

Significance of India’s Re-election

• Endorsement of Leadership: India’s re-election underscores the international community’s trust in its postal transformation, particularly in digital and financial inclusion.
• Modernisation Initiatives: India Post’s progress in e-commerce facilitation, postal banking, logistics efficiency, and technology-driven governance has positioned it as a model for developing nations.
• Strategic Representation: Through its roles in both CA and POC, India can influence policy formulation, standard setting, and capacity-building initiatives within the UPU.
• Global Collaboration: Reinforces India’s vision of “One World, One Postal Network”, aligning with its broader digital diplomacy and South-South cooperation goals.

India and the UPU: A Historical Perspective

• India joined the UPU in 1876, just two years after its establishment.
• Over the decades, it has played a constructive role in strengthening postal connectivity across the Global South.
• Under the leadership of the Ministry of Communications, India Post has transitioned from traditional mail delivery to offering digital, financial, and logistical services, supporting Digital India and Atmanirbhar Bharat missions.

In News:

• In a significant policy shift, U.S. President Donald Trump signed a proclamation in October 2025 introducing a $100,000 (≈ ?88 lakh) sponsorship fee for H-1B visas, dramatically raising the cost for U.S. companies hiring foreign skilled workers.
• The move, presented as a measure to “protect American jobs,” marks one of the most stringent immigration-related economic policies in recent years and has wide-ranging implications for India’s IT sector, which remains the largest user of H-1B visas.

About the Policy

• New Regulation: U.S. employers sponsoring an H-1B worker must now pay a non-refundable fee of $100,000 per application, a steep increase from the earlier few-thousand-dollar processing cost.
• Official Objective: To ensure that only “highly skilled, non-substitutable” professionals are brought into the U.S., while deterring misuse of the program by firms replacing American workers with cheaper foreign labour.
• Rationale: According to the U.S. administration, the H-1B system is one of the most abused visa categories, often exploited by outsourcing companies to fill mid-level tech roles at lower wages.

Understanding the H-1B Visa

The H-1B is a non-immigrant U.S. work visa that allows companies to hire foreign professionals in specialty occupations requiring technical or theoretical expertise—mainly in STEM, finance, healthcare, and IT sectors.

• Introduced: Under the Immigration Act of 1990
• Eligibility: Bachelor’s degree or equivalent in a relevant field
• Tenure: Valid for 3 years, extendable up to 6 years (and beyond if Green Card process is ongoing)
• Quota: 65,000 general visas + 20,000 reserved for advanced U.S. degree holders
• Equal Pay Mandate: Employers must offer wages comparable to those of American workers to prevent labour exploitation

Applications are processed through the USCIS lottery system, which randomly selects qualified candidates.

Impact on India

1. Economic & Corporate Impact

• Cost Escalation: Indian IT majors like TCS, Infosys, and Wipro, which collectively sponsor thousands of H-1B employees annually, will face a steep rise in operational expenses.
• Reduced Hiring Abroad: Companies may shift high-skill operations back to India or relocate nearshore to countries such as Canada or Mexico to avoid the inflated cost.
• Automation Drive: Higher labour costs may accelerate automation and AI adoption within U.S. operations, reducing dependence on human capital from abroad.

2. Workforce & Migration Implications

• Major Beneficiaries Affected: Indians account for nearly 71% of all H-1B approvals, followed by China (≈12%).
• Extended Burden: Since most Indian professionals renew their H-1B multiple times due to the 10–15 year Green Card backlog, the cumulative cost will be enormous.
• Talent Diversion: The measure could divert Indian talent toward Canada, the EU, or Australia, which have relatively liberal skilled-migration policies.

‘Gold Card’ Visa Scheme

Alongside the H-1B fee hike, Trump announced a ‘Gold Card Visa Program’:

• Entry Fee: $1 million for individuals and $2 million for businesses.
• Objective: To attract “extraordinary individuals” capable of creating jobs and investments in the U.S. economy.
• Economic Rationale: The administration projects billions in revenue from the program to help reduce public debt and taxes.
• Selective Entry Policy: The move signals a shift from a skill-based to a wealth-based migration system, prioritizing elite entrepreneurs and investors over mid-level professionals.

Broader Policy Context

• The Trump administration has revived tougher citizenship tests, reinstating a 128-question civics and history exam (scrapped by the Biden government earlier), reflecting a wider push for restrictive immigration vetting.
• This marks a continuation of “America First” politics, emphasizing domestic employment protection and economic nationalism.

Implications for India–U.S. Relations

• Technology and Trade Impact: India’s $150+ billion IT export industry—largely dependent on U.S. markets—could face reduced competitiveness and project delays.
• Diplomatic Challenge: New Delhi must engage with Washington to safeguard the interests of Indian professionals and ensure that the visa restrictions do not spill over into bilateral technology and trade cooperation.
• Shift in Talent Dynamics: The policy could push India to strengthen domestic R&D ecosystems and negotiate reciprocal work mobility frameworks under trade agreements.

Global and Strategic Outlook

• Protectionism Resurgence: The policy aligns with a global trend of tightening skilled-migration channels amid economic uncertainty.
• Business Adaptation: U.S. tech firms like Amazon, Microsoft, Meta, and Google, which collectively secured over 25,000 H-1B approvals in early 2025, may now restructure hiring models or expand offshore R&D hubs in India.
• Brain Drain Reversal: Rising visa barriers could retain skilled manpower in India, strengthening domestic innovation capacity under initiatives like “Skill India 4.0” and “Startup India.”

In News:

• India’s manufacturing sector has entered a phase of accelerated growth, driven by policy reforms, robust industrial performance, and rising global investor confidence.
• Recent data for July 2025 shows the Index of Industrial Production (IIP) growing 3.5% year-on-year, led by a 5.4% surge in manufacturing output.
• Simultaneously, the HSBC Manufacturing PMI reached 59.3, its highest in 16 months, signalling sustained expansion in factory activity and optimism among producers.

Current Performance Snapshot

Engines of Growth

1. Electronics: Digital Factory Revolution

India’s electronics sector has witnessed exponential growth:

• Production rose from ?1.9 lakh crore (2014–15) to ?11.3 lakh crore (2024–25) — a 6x jump.
• Mobile phone manufacturing expanded from 2 units to over 300, while exports skyrocketed 127 times (?1,500 crore → ?2 lakh crore).
• Import dependence fell from 75% to 0.02%, reflecting strong domestic capacity.
• FDI inflow of US$ 4 billion since FY2020–21, largely under the PLI Scheme, has made India the world’s second-largest mobile manufacturer.

2. Pharmaceuticals: The Global Health Anchor

India ranks 3rd globally by volume and 14th by value in pharma production, supplying 50% of the world’s vaccines and 40% of U.S. generics.

• Projected to reach US$ 130 billion by 2030 and US$ 450 billion by 2047.
• Backed by PLI (?15,000 crore) and SPI (?500 crore) schemes for high-value drug manufacturing, quality enhancement, and R&D modernisation — consolidating India’s status as the “Pharmacy of the World.”

3. Automobiles: Driving Industrial Scale

The automotive sector contributes 7.1% to GDP and 49% of manufacturing GDP.

• In FY25, production exceeded 3.10 crore units, making India the 4th-largest automobile producer globally.
• GST 2.0’s tax reduction on vehicles and components is expected to boost consumer demand and accelerate production.

4. Textiles: Weaving Inclusive Growth

The textile and apparel industry contributes2.3% to GDP, 13% to industrial production, and 12% to exports, employing 45 million people.

• With a growth target of US$ 350 billion by 2030, the sector benefits from PM MITRA Parks (?4,445 crore), aimed at attracting ?70,000 crore investment and creating 20 lakh jobs.
• The recently inaugurated Dhar PM MITRA Park (Madhya Pradesh) is projected to generate 3 lakh jobs across 1,300 acres.

Investment, Employment, and Skills

• FDI Surge: Total inflows (2014–25) reached US$ 748.78 billion, up 143% from the previous decade.
• Top FDI sources: Singapore (30%), Mauritius (17%), U.S. (11%).
• Employment Creation: 17 crore jobs added over the last decade.
  • Worker Population Ratio (WPR): 52.2% overall; Female WPR: 32%.
  • Manufacturing’s job share: Up from 6% (2004–14) to 15% (2014–24).
• Skill Development Push: The Skill India 4.0 framework (?8,800 crore outlay) integrates major schemes (PMKVY 4.0, Apprenticeship, Jan ShikshanSansthan) to create an industry-aligned workforce equipped for Industry 4.0 technologies.

Policy Catalysts Powering the Surge

1. GST 2.0: Rationalisation for Growth

Launched in September 2025 under the banner “GST Bachat Utsav”, the reform simplifies tax slabs and lowers rates on 375+ items.

Impact on Manufacturing:

• Reduced Input Costs: 5% GST on packaging, textiles, and logistics lowers production expenses.
• MSME Boost: Faster refunds and simplified compliance enhance liquidity.
• Auto Sector Support: Lower taxes on small vehicles and parts drive consumption.
• Logistics Efficiency: Reduced GST on trucks and delivery vans enhances competitiveness.

2. National Manufacturing Mission (NMM)

The NMM provides a strategic, cross-ministerial roadmap integrating sustainability with industrial expansion. It promotes green manufacturing in solar PV, EV batteries, and hydrogen — aligning with India’s Net Zero 2070 goal.

3. Production Linked Incentive (PLI) Scheme

Covering 14 sectors with an outlay of ?1.97 lakh crore, the PLI scheme has:

• Boosted exports (e.g., smartphones > ?1 lakh crore in FY26 first half).
• Shifted pharma from trade deficit to surplus.
• Generated large-scale investments and jobs in electronics, autos, and medical devices.

4. National Logistics Policy (NLP)

Aims to reduce logistics cost (~13–14% of GDP) to single digits, improving LPI ranking to top 25 by 2030.
The PM GatiShakti Plan and Comprehensive Logistics Action Plan (CLAP) strengthen multi-modal connectivity and digital coordination.

5. Startup India & Industrial Corridors

• Over 1.91 lakh startups and 17.69 lakh direct jobs (as of 2025).
• 12 new industrial corridor projects worth ?28,602 crore approved to create smart, sustainable manufacturing cities.

Challenges Ahead

• Infrastructure Costs: Logistics remains costlier than global average, affecting export competitiveness.
• Skill Mismatch: Need for advanced training in automation, robotics, and AI.
• Regulatory Friction: Land and compliance issues constrain MSMEs.
• Global Headwinds: Trade protectionism and geopolitical volatility may disrupt export growth.
• Sustainability Imperative: Transition to low-carbon manufacturing critical to meet Net Zero goals.

Way Forward

• Plug-and-Play Manufacturing Parks: Accelerate park development with ready utilities for MSMEs.
• Skill India 4.0: Modernize ITIs, establish Centres of Excellence in robotics, AI, and green manufacturing.
• Tariff Rationalization: Lower duties on industrial raw materials to strengthen global competitiveness.
• Strengthen MSME Ecosystem: Provide concessional finance, technology upgradation, and global market access.
• Global Integration: Conclude FTAs (UK, EU) and join supply-chain alliances to diversify markets.
• Energy Diplomacy: Secure long-term access to crude oil, gas, and critical minerals.

In News:

• Recently, Saudi Arabia and Pakistan signed a Strategic Mutual Defence Agreement (SMDA) in Riyadh, formalising a long-discussed framework for joint defence and mutual security.
• The agreement, viewed as a landmark in bilateral ties, symbolises a renewed effort to institutionalise their security partnership amid changing regional dynamics and waning U.S. influence in West Asia.

Nature and Scope of the Pact

• The SMDA commits both nations to collective defence, stipulating that any attack on one country will be treated as an attack on both.
• It builds upon the 1982 Bilateral Security Cooperation Agreement, strengthening channels of military coordination, intelligence exchange, training, and arms trade.
• The pact extends across conventional defence cooperation, advisory roles, and — in principle — joint deterrence, though not explicitly nuclear.

Strategic Context

• The timing of the agreement follows rising regional uncertainty, including Israel–Qatar tensions, Yemen conflict spillovers, and Iran–Saudi rivalry.
• By signing the SMDA, Riyadh signals its intent to pursue greater regional self-reliance in defence, moving beyond full dependence on the U.S. security umbrella.
• For Pakistan, it secures much-needed economic and energy support from Saudi Arabia amid a deep fiscal crisis, while reaffirming its role as a key security partner in the Islamic world.

Key Drivers

• Mutual Security Assurance: Establishes a framework for joint deterrence and defence coordination.
• Economic Complementarity: Opens avenues for Saudi financial assistance, arms procurement, and energy trade with Pakistan.
• Symbolic Islamic Solidarity: Positions Pakistan as a pan-Islamic security contributor, enhancing its strategic visibility.
• Regional Rebalancing: Demonstrates Saudi Arabia’s effort to diversify security partnerships beyond Washington and regional blocs.

Implications

1. For India

• Strategic Caution: While the pact theoretically enables Pakistan to seek Saudi backing in a potential India–Pakistan confrontation, Riyadh’s growing ties with India — including $42.9 billion in bilateral trade, defence collaboration, and major investments — make an overt anti-India stance unlikely.
• Diplomatic Opportunity: New Delhi can leverage its energy and economic partnerships to maintain Saudi neutrality in South Asian affairs.
• Policy Imperative: India must sustain strategic dialogue and ensure Arab neutrality in regional crises through proactive diplomacy.

2. Regional and Global Dimension

• Shift in Gulf Security Architecture: Reflects a decline in U.S. dominance and emergence of a multipolar Gulf order, with Riyadh exploring independent alliances.
• Iran–Saudi–Pakistan Equation: Enhances Saudi deterrence posture against Iran, Yemeni Houthis, and potentially Israel’s unilateral actions.
• Nuclear Sensitivities: Raises concerns about possible nuclear collaboration, though the actual transfer of Pakistani nuclear technology to Saudi Arabia remains highly improbable, constrained by global non-proliferation norms and Israeli sensitivities.

Way Forward for India

• Deepen Defence and Security Cooperation: Expand joint training, exercises, and intelligence exchanges with Saudi Arabia.
• Energy Diplomacy: Pursue long-term crude oil and green hydrogen partnerships to consolidate interdependence.
• Strategic Monitoring: Closely track SMDA implementation, including possible Pakistani troop deployments or defence projects.
• Maritime Synergy: Strengthen India’s presence in the Arabian Sea through naval cooperation to protect vital energy routes.
• Economic Leverage: Utilize India’s market potential and diaspora network as stabilising anchors in Indo-Saudi relations.

In News:

The Government of India launched GST 2.0, marking a significant revamp of the Goods and Services Tax framework. Prime Minister Narendra Modi described the initiative as the “GST Bachat Utsav”, highlighting its focus on savings, simplicity, and growth.

Overview

• GST 2.0 represents the most comprehensive reform since the introduction of the Goods and Services Tax in 2017.
• It focuses on rationalising tax rates, reducing compliance burden, and boosting consumption and investment by lowering tax rates on more than 375 items.

Objectives

• Enhance household savings: By cutting rates on essential goods and services, it seeks to leave more disposable income with consumers, thereby stimulating demand.
• Simplify the tax framework: Aligns similar goods under the same slab to minimise disputes and litigation.
• Promote ease of doing business: Reduces procedural complexities and enhances transparency through digital solutions.

Key Features

• Simplified Tax Structure:Moves towards a broad two-slab system—5% (merit rate) and 18% (standard rate)—with a 40% slab for demerit or luxury goods.
• Consumer-Centric Relief:Tax reductions on essential food items, life and health insurance, and beauty and wellness services.
• Technology-Driven Compliance:Introduces digital registration, pre-filled returns, and automated refund systems, including 90% provisional refunds for Integrated Dispute Settlement (IDS) cases.
• Input-Output Correction:Aligns related goods under the same tax bracket to avoid input-output tax mismatches.
• Support for Key Sectors:Rate cuts to encourage investment and growth in textiles, agriculture, construction, and services industries.

Revised Tax Slabs

Significance: GST 2.0 is expected to spur demand, enhance compliance, and boost industrial growth, positioning India’s indirect tax system among the most simplified globally.