Why in the News?

Prime Minister Modi will visit Mauritius on March 11-12, 2025, to strengthen relations with the new government and confirm India’s support for the island’s security and growth.

Why is maritime security cooperation between India and Mauritius crucial? 

• Strategic Location in the Indian Ocean: Mauritius lies at a key maritime crossroads in the western Indian Ocean, making it vital for monitoring international shipping lanes and securing regional trade. Example: The Colombo Security Conclave (including India, Mauritius, Sri Lanka, Maldives, and Bangladesh) enhances cooperation to ensure maritime safety.
• Countering China’s Expanding Influence: With China increasing its presence in the Indian Ocean Region (IOR) through infrastructure projects and naval activities, India’s partnership with Mauritius helps balance regional power. Example: India’s Agaléga Island redevelopment supports surveillance and counters China’s maritime ambitions.
• Securing Exclusive Economic Zones (EEZs): Mauritius has an EEZ of 2.3 million sq. km, rich in marine resources. Collaboration ensures these areas are protected from illegal activities like fishing and piracy. Example: India’s INS Sarvekshak recently completed an ocean survey of 25,000 sq. km in Mauritius’ EEZ to enhance maritime mapping and security.
• Joint Surveillance and Intelligence Sharing: Surveillance cooperation enhances maritime domain awareness and secures trade routes against piracy, trafficking, and other threats. Example: Mauritius has access to India’s Information Fusion Centre-Indian Ocean Region (IFC-IOR) in Gurugram for real-time maritime intelligence.
• Humanitarian Assistance and Disaster Relief (HADR): Close maritime ties enable swift disaster response and the delivery of humanitarian aid in times of crisis. Example: India provided naval assistance to Mauritius during the MV Wakashio oil spill disaster in 2020.

Where has India invested in maritime infrastructure and security cooperation with Mauritius?

• Agaléga Island Development: India is redeveloping Agaléga Island to establish airstrips and port facilities for joint surveillance and maritime domain awareness. Example: This facility enhances monitoring of maritime traffic and strengthens anti-piracy and anti-smuggling operations.
• Coastal Radar Surveillance Network: India has installed a network of coastal radar stations in Mauritius to improve maritime security and real-time surveillance of the Indian Ocean Region (IOR). Example: This system helps track illegal maritime activities like smuggling and unauthorized fishing.
• Access to the Information Fusion Centre (IFC-IOR): India provides Mauritius access to its Information Fusion Centre – Indian Ocean Region (IFC-IOR), which enables intelligence sharing and coordinated maritime operations. Example: Mauritius can monitor maritime traffic, enhancing its ability to protect its Exclusive Economic Zone (EEZ) and respond to emerging threats.

Way forward: 

• Enhance Maritime Security Collaboration: There is a need to strengthen joint surveillance, intelligence sharing, and capacity-building initiatives to secure the Indian Ocean Region (IOR) and safeguard maritime trade routes.
• Deepen Economic and Financial Cooperation: The Government should adapt the DTAA framework to maintain investor confidence while fostering transparent, sustainable investment flows between the two nations.

Mains PYQ:

Q Why was indentured labour taken by the British from India to their colonies? have they been able to preserve their cultural identity over there? (UPSC IAS/2018)

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now

Why in the News?

U.S. President Donald Trump criticised the high tariffs imposed by India and other countries, calling them “very unfair,” and announced that reciprocal tariffs would be implemented from April 2 on nations that levy duties on American goods.

What are the main reasons for imposing reciprocal tariffs on countries like India and China?

• High Import Tariffs Imposed by These Countries: The U.S. administration has expressed concerns over the substantial tariffs that nations such as India and China impose on American goods. For instance, India charges auto tariffs exceeding 100%.
• Trade Imbalances: The U.S. aims to address significant trade deficits with countries like China. By imposing reciprocal tariffs, the U.S. seeks to encourage these nations to reduce their tariffs and open their markets to American products, thereby promoting fairer trade practices.
• Protection of Domestic Industries: High tariffs from countries like China have adversely affected U.S. industries, particularly manufacturing and agriculture. The reciprocal tariffs are intended to protect these sectors from unfair competition and to support domestic employment.

Why did USA’s President emphasize that India “will not be spared” from the reciprocal tariff measures?

The U.S. President emphasized that India “will not be spared” from reciprocal tariff measures due to several key factors:

• High Tariffs Imposed by India on U.S. Goods: The U.S. argues that India imposes excessively high tariffs on American products, particularly in the automobile and agricultural sectors. Example: India levies over 100% import duty on U.S. motorcycles like Harley-Davidson, which the U.S. considers an unfair trade barrier.
• Trade Imbalance Between the U.S. and India: The U.S. has consistently faced a trade deficit with India, meaning India exports more to the U.S. than it imports. This imbalance is viewed as economically disadvantageous. Example: In 2023, the U.S. trade deficit with India was approximately $42 billion, prompting calls for more balanced trade relations.
• Market Access Restrictions: The U.S. claims India imposes non-tariff barriers and complex regulatory frameworks, limiting American companies’ access to the Indian market. Example: U.S. agricultural products such as dairy face strict Indian regulations on sourcing and labeling, restricting their market entry.
• Retaliation Against U.S. Tariff Policies: India has imposed retaliatory tariffs on several U.S. products in response to American tariffs on steel and aluminum. This reciprocal action has escalated trade tensions. Example: After the U.S. raised tariffs on Indian steel (25%) and aluminum (10%), India imposed tariffs on U.S. agricultural products like almonds and apples.
• Strategic Leverage in Trade Negotiations: By targeting major trading partners like India, the U.S. aims to pressure these countries into negotiating more favorable trade agreements. Example: The U.S. sought reduced tariffs on electric vehicles to facilitate the entry of companies like Tesla into the Indian market, using tariff threats as a bargaining tool.

What are the potential global trade implications of the U.S. imposing reciprocal tariffs? 

• Escalation of Global Trade Wars: Reciprocal tariffs can trigger retaliatory measures from affected countries, leading to prolonged trade conflicts and increased global economic uncertainty. Example: After the U.S. imposed tariffs on Chinese goods under Section 301, China retaliated with tariffs on U.S. agricultural products, disrupting global supply chains and trade flows.
• Rising Costs for Consumers and Businesses: Increased tariffs raise the cost of imported goods, leading to higher prices for consumers and increased production costs for businesses reliant on global supply chains. Example: U.S. tariffs on Chinese electronics increased costs for American companies like Apple, which faced higher prices for components and devices.
• Disruption of Global Trade Agreements and Alliances: Imposing unilateral tariffs undermines multilateral trade frameworks like the World Trade Organization (WTO), weakening global cooperation and trade stability. Example: U.S. tariffs on European steel and aluminum strained transatlantic relations and led the EU to impose counter-tariffs on American motorcycles and bourbon.

How will it impact India? 

• Widening of the Current Account Deficit (CAD): Higher U.S. tariffs on Indian exports can reduce foreign exchange earnings, leading to a wider CAD as export revenue declines while import costs remain unchanged or increase. Example: The U.S. withdrawal of GSP benefits in 2019 reduced India’s export competitiveness, contributing to a widened CAD of 2.1% of GDP in FY19 from 1.8% in FY18.
• Depreciation of the Indian Rupee: A higher CAD increases demand for foreign currency, putting pressure on the rupee’s value and causing depreciation, which raises the cost of imports like crude oil. Example: In 2018, after U.S. tariffs and India’s rising oil import bill, the rupee fell to ₹74 per USD, increasing inflation and making imported goods more expensive.
• Reduced Export Competitiveness: Higher tariffs on Indian goods in the U.S. market can make Indian products more expensive, reducing their competitiveness and affecting export-driven industries. Example: U.S. tariffs on Indian steel and aluminum (25% and 10%, respectively) in 2018 affected Indian exporters, leading to a decline in shipments and increased production costs.
• Disruption in Key Sectors: Industries such as pharmaceuticals, textiles, and auto parts—major contributors to India’s exports—could face higher barriers, impacting growth and employment. Example: U.S. withdrawal of Generalized System of Preferences (GSP) benefits in 2019 affected $6 billion worth of Indian exports, especially in textiles and jewelry.

Way forward: 

• Bilateral Trade Negotiations: Strengthen diplomatic efforts to negotiate mutually beneficial trade agreements with the U.S., focusing on reducing tariffs and enhancing market access for key sectors like pharmaceuticals, textiles, and technology.
• Diversification of Export Markets: Reduce dependency on the U.S. by exploring new markets through regional trade agreements (e.g., Comprehensive Economic Partnership Agreements) and expanding in regions like Africa and Southeast Asia.

Mains PYQ:

Q “What introduces friction into the ties between India and the United States is that Washington is still unable to find for India a position in its global strategy, which would satisfy India’s National self-esteem. (UPSC IAS/2019)

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now

Why in the News?

The UAE’s potential role in supporting India’s ambition to become a global aviation powerhouse has been highlighted due to increasing collaboration between the two nations in the aviation sector.

What are the key challenges faced by the India-UAE aviation sector?

• Restricted Bilateral Air Service Agreements: Limited flight frequencies and destination access for both Indian and UAE carriers. Example: UAE airlines can operate flights to only 15 Indian cities, excluding key growth centers like Surat and Indore despite high passenger demand.
• Capacity Constraints and Rising Airfares: Limited flight slots lead to insufficient capacity, causing increased ticket prices. Example: During peak travel seasons, such as festivals or school holidays, airfares between India and the UAE surge due to restricted airline capacity.
• Limited Connectivity to Emerging Cities: Many Tier-2 and Tier-3 Indian cities lack direct UAE connections. Example: Business hubs like Visakhapatnam and Patna face limited or no direct international flights to the UAE, restricting trade and tourism.
• Inability to Meet Growing Passenger Demand: Rapid growth in Indian outbound travel is unmet by the current aviation framework. Example: Despite 4.5 million Indian tourists visiting the UAE in 2023, airlines struggle to increase operations due to bilateral restrictions.
• Missed Economic and Strategic Opportunities: Limited flight options restrict business engagement, investment, and tourism growth. Example: The Comprehensive Economic Partnership Agreement (CEPA) between India and the UAE aims to boost trade, but insufficient air connectivity hinders the free flow of goods and professionals.

Why is there a need for a modernized aviation strategy between India and the UAE?

• Meeting Rising Passenger Demand: A revised aviation strategy is crucial to handle the increasing flow of Indian travelers to the UAE. Example: For every 1% increase in passport holders, approximately 10 million additional Indian travelers are expected, which the current framework cannot accommodate.
• Lowering Airfares and Improving Access: Expanding bilateral agreements can boost flight availability, foster competition and reduce travel costs. Example: During peak seasons, limited flights cause sharp increases in ticket prices, making travel between India and the UAE expensive.
• Expanding Connectivity to Regional Cities: Modernising aviation policies can facilitate direct flights from Tier-2 and Tier-3 Indian cities to the UAE, enhancing regional growth. Example: Cities like Surat, Patna, and Visakhapatnam remain disconnected from the UAE, hindering trade, tourism, and cultural exchanges.
• Boosting Trade and Economic Cooperation: Improved air services can strengthen business ties and enhance trade between India and the UAE. Example: Despite the CEPA agreement aimed at fostering economic collaboration, restricted flight options limit the movement of professionals and goods.
• Advancing Aviation Infrastructure and Innovation: A modernized strategy encourages collaboration in aviation technology and infrastructure development. Example: UAE investments in India’s UDAN scheme can improve regional connectivity and support India’s goal to become a leading aviation hub.

Which Indian cities are currently excluded from UAE airline operations despite growing demand?

• Cities Not Fully Integrated: Emirates has not yet expanded its services to cities like Amritsar, Lucknow, and Goa Mopa, despite growing demand. These cities are not explicitly excluded but rather await service expansion due to current operational limitations and bilateral agreements.
• Bilateral Restrictions: The current bilateral agreements between India and the UAE limit the number of seats available for UAE airlines, which can restrict the expansion of services to new cities. While there are no specific cities excluded, the capacity constraints under these agreements affect the ability of UAE airlines to meet demand in various Indian cities.

What initiatives can the UAE undertake to support India’s ambition to become a global aviation powerhouse?

• Expanding Aviation Agreements: The UAE-India Comprehensive Economic Partnership Agreement (CEPA) aims to improve air travel and cargo transport between the two countries. Increasing the current limits to 134,000 weekly passenger seats and 4,000 tonnes of cargo through relaxed rules can boost trade and improve connectivity.
• Using UAE’s Logistics Strength: The UAE’s major airports, like Dubai International and Al Maktoum International, can help meet India’s growing air cargo needs.
  • Working together can make cargo transport faster and more efficient between the two nations.
• Improving India’s Aviation Sector: India, as the third-largest domestic aviation market, can learn from the UAE to improve international flights and upgrade airport facilities.

Way forward:

• Enhancing Policy Frameworks: India can revise its aviation policies to allow greater flexibility in bilateral agreements, enabling increased flight frequencies and better access for UAE carriers.
  Example: Updating the Open Sky policy for Gulf nations can promote competition, reduce airfares, and improve passenger services.
• Strengthening Aviation Infrastructure:India can invest in upgrading airport capacity, regional connectivity, and advanced Maintenance, Repair, and Overhaul (MRO) facilities to accommodate increased traffic. 

Mains PYQ:

Q How will I2U2 (India, Israel, UAE and USA) grouping transform India’s position in global politics? (UPSC IAS/2022)

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now

Why in the News?

Australia is confident in India’s promising economic future, anticipating it will become the world’s third-largest economy by 2030.

What are the key sectors identified as the “Superhighways of growth” in the new Roadmap for Australia’s Economic Engagement with India?

• Clean Energy: Focus on renewable energy and critical minerals to support India’s green transition. Example: Australia, as the largest producer of lithium, supplies essential materials for India’s electric vehicle (EV) manufacturing goals.
• Education and Skills: Collaboration on skill development and higher education to equip India’s workforce. Example: Australian universities have opened campuses in Gujarat’s GIFT City and are expanding to Noida to offer advanced training programs.
• Agribusiness and Tourism: Enhancing agricultural trade and food security and fostering tourism between the two countries. Example: Australia’s advanced agritech supports India’s agricultural modernization while increased bilateral tourism strengthens cultural ties.

Why does Australia consider itself a natural partner for India’s economic growth?

• Complementary Economies: Australia produces resources that India needs, and India provides services that Australia requires. Example: Australia supplies critical minerals (like lithium and cobalt) essential for India’s electric vehicle (EV) manufacturing.
• Strategic Alignment: Both nations share common regional and global strategic interests, including maritime security in the Indo-Pacific region. Example: Regular participation in Quad (with the U.S. and Japan) strengthens defense and economic cooperation.
• Geographic Proximity: Australia and India are geographically close across the Indian Ocean, facilitating easier trade and collaboration. Example: The Economic Cooperation and Trade Agreement (ECTA) has significantly increased bilateral trade.
• Shared Democratic Values: Both countries are committed to democracy, rule of law, and a rules-based international order, fostering mutual trust. Example: Australia supports India’s bid for a United Nations Security Council (UNSC) permanent seat.
• Strong People-to-People Ties: A large and growing Indian diaspora in Australia acts as a bridge for cultural and economic collaboration. Example: Australia’s Maitri grants program supports Indian diaspora-led initiatives to boost bilateral engagement.

How has the Economic Cooperation and Trade Agreement (ECTA) impacted trade between India and Australia?

• Increased Bilateral Trade Volume: ECTA has accelerated trade growth between the two countries by reducing tariffs and improving market access. Example: India’s exports to Australia have grown by 66% in the past five years, nearly twice as fast as India’s exports to the rest of the world.
• Tariff Reductions and Market Access: ECTA has eliminated or reduced custom duties on a wide range of products, enhancing the competitiveness of Indian and Australian goods. Example: Australia removed tariffs on 96.4% of Indian exports, including textiles, jewelry, and pharmaceuticals.
• Boost to Key Sectors: The agreement has strengthened trade in minerals, energy, and education—areas where both countries have complementary strengths. Example: Australia’s exports of critical minerals like lithium support India’s electric vehicle (EV) manufacturing ambitions.
• Enhanced Services Trade and Mobility: ECTA facilitates greater cooperation in education, IT, and professional services, including easier movement of skilled workers. Example: Indian professionals in IT and engineering benefit from streamlined visa processes for work in Australia.
• Foundation for a Comprehensive Agreement: ECTA serves as a stepping stone toward a broader Comprehensive Economic Cooperation Agreement (CECA) to further deepen economic ties. Example: Negotiations for CECA are ongoing to expand trade in technology, healthcare, and defense collaboration.

What steps is Australia taking to support India’s ambition for manufacturing electric vehicles and addressing its skill development needs?

• Supplying Critical Minerals for EV Manufacturing: Australia is leveraging its position as a leading producer of critical minerals essential for EV production. Example: Australia, the largest producer of lithium and with significant reserves of nickel and cobalt, supplies these key raw materials to support India’s goal of increasing EV adoption eight-fold by 2030.
• Collaborating on Skill Development and Education: Australian universities are providing high-quality technical education to equip the Indian workforce with advanced skills. Example: Australian universities have established campuses in GIFT City (Gujarat) and soon in Noida (Uttar Pradesh) to train Indian professionals in emerging technologies, including EV and clean energy sectors.
• Investing in Training and Workforce Mobility: Australia is investing in initiatives to improve vocational training and enhance workforce mobility between the two nations. Example: Through its Maitri grants program, Australia is fostering collaboration in technical training to meet India’s aim of skilling two crore people annually.

Way forward: 

• Strengthen Critical Supply Chains: Deepen collaboration on critical minerals by establishing long-term supply agreements and joint ventures to support India’s EV and renewable energy ambitions.
• Expand Education and Workforce Partnerships: Enhance mutual recognition of qualifications and dual-degree programs to address India’s skill gaps in advanced manufacturing, clean energy, and digital sectors.

Mains PYQ:

Q Quadrilateral Security Dialogue (Quad) is transforming itself into a trade bloc from a military alliance, in present times Discuss. (UPSC IAS/2020)

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now