APPSC Daily Current Affairs - 30th December 2025
Source: The Hindu
Relevance:
GS Paper 1: Indian culture – traditional crafts and heritage, GI-tagged products
Prelims: GI tags, traditional handicrafts of Andhra Pradesh
Why in News?
- Exports of Narsapuram Crochet Lace, a traditional handicraft from Andhra Pradesh, have crossed ₹150 crore in the current financial year, marking a strong revival after the Covid-19 slowdown.
- The revival is attributed to the Geographical Indication (GI) tag, institutional support, and growing international demand.
Background
- Narsapuram Crochet Lace is a handmade lace craft practised in West Godavari and Dr. B.R. Ambedkar Konaseema districts of Andhra Pradesh.
- The craft dates back to 1844, introduced during the colonial period.
- It survived major economic crises such as:
- Indian Famine of 1899
- Great Depression of 1929
Historical and Social Significance
- By the early 20th century, more than 2,000 women in the Godavari region were engaged in lace-making.
- The craft has historically provided home-based employment, especially to rural women.
- At present, nearly 15,000 artisans are involved, with about 60% being women, making it a key instrument of women empowerment.
Technique and Methodology
- Uses fine cotton threads and crochet needles of varying sizes.
- Employs a single crochet hook technique, forming loops and interlocking stitches.
- Produces lightweight, intricate, and durable lace designs entirely by hand.
Products
- Home furnishings such as:
- Doilies
- Pillow covers
- Bedspreads
- Table linens
- Purses, stoles
- Lampshades and wall hangings
Market and Export Profile
- Major export destinations:
- United Kingdom
- United States
- France
- Middle East
- Exports include direct exports and indirect exports through Indian buyers.
- Europe and the US remain the largest markets.
Institutional Support and Recognition
- Awarded Geographical Indication (GI) tag in March 2025.
- Recognised under One District One Product (ODOP) scheme.
- Supported by:
- International Lace Trade Centre (ILTC), Narsapuram – design development, exhibitions, skill upgradation.
- Exports Promotion Council for Handicrafts (EPCH) – a statutory body under the Ministry of Textiles, promoting Indian handicrafts globally.
Drivers Behind the Revival
- GI tag ensuring authenticity and global branding.
- Design diversification and quality improvement via ILTC.
- Handicrafts expos and buyer–seller meets.
- Direct procurement from artisans, reducing intermediaries.
Significance
- Preservation of intangible cultural heritage.
- Strengthening women-centric rural livelihoods.
- Boost to handicraft exports and MSME sector.
- Contribution to inclusive and sustainable economic growth.
Way Forward
- Expand digital marketing and e-commerce platforms.
- Improve access to institutional credit and social security for artisans.
- Promote cluster-based development under MSME schemes.
- Encourage innovation while preserving traditional techniques.
Conclusion
The resurgence of Narsapuram Crochet Lace highlights how GI protection, institutional support, and global market access can revive traditional crafts, generate employment, and preserve India’s cultural heritage while contributing to export-led growth.
CARE MCQ
Q. With reference to Narsapuram Crochet Lace, consider the following statements:
- It originated in the mid-19th century and survived major global economic crises.
- The craft primarily uses a single crochet hook to create lace patterns.
- It has received a Geographical Indication tag
Which of the above statements are correct?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer: (d)
Explanation:
All three statements are correct. The craft originated in 1844, uses a single crochet hook technique, and has GI recognition with institutional support from EPCH.
Source: The Hindu
Relevance:
GS Paper – 2; Governance: Electoral reforms, political funding, role of ECI; Constitution: Right to Information, transparency, accountability
Important Key Concepts for Prelims and Mains:
For Prelims:
- Electoral Trusts Scheme, 2013; Electoral Bonds Scheme; Supreme Court verdict (2024); CBDT; Election Commission of India (ECI); Sections 80GGB & 80GGC (Income Tax Act); Traceable banking channels; Corporate political donations; Disclosure norms; Quid pro quo.
For Mains:
- Political finance reform; Transparency vs anonymity; Institutionalised corruption; Corporate dominance in elections; Level playing field; Accountability mechanisms; Article 19(1)(a) – Right to Information; Democratic integrity; Public funding of elections; Electoral governance.
Why in News?
- In February 2024, the Supreme Court struck down the Electoral Bonds Scheme (2018) for violating transparency and citizens’ Right to Information.
- Post-verdict, electoral trusts emerged as the primary lawful channel for corporate political funding in FY 2024–25.
- This shift has revived debates on unequal political funding, corporate dominance, quid pro quo, and democratic accountability.
Background: Political Funding in India
- Free and fair elections are a core feature of India’s constitutional democracy.
- However, persistent inequality in political funding has undermined the level-playing field among political parties.
- Despite multiple reform attempts, corporate money continues to dominate political finance, raising concerns of:
- Institutionalised corruption
- Policy capture
- Unequal political participation
Supreme Court Verdict on Electoral Bonds (2024)
- The Court invalidated the scheme citing:
- Violation of Article 19(1)(a) (Right to Information)
- Erosion of electoral transparency
- Key observation:
“The reason for political contributions by companies is as open as daylight… Contributions are purely business transactions made with intent of securing benefits in return.”
- The Court described quid pro quo as “institutionalised corruption.”
Post-Electoral Bonds Shift
- With electoral bonds annulled:
- Companies sought alternative lawful channels
- Electoral trusts became dominant in 2024–25
- Reasons for preference:
- Legal clarity
- Traceable banking channels
- Mandatory disclosures
- Tax incentives under Income Tax Act
What Are Electoral Trusts? (Historical Background)
- Introduced via Electoral Trusts Scheme, 2013 by Central Board of Direct Taxes (CBDT).
- Created to:
- Receive voluntary contributions from corporates and individuals
- Distribute funds to registered political parties
- Intended to replace opaque funding with institutionalised transparency.
- Initially secondary to electoral bonds, but reclaimed centrality post-2024 verdict.
Electoral Bond Scheme
- Introduced: 2018
- Issuing Authority: State Bank of India (SBI)
- Nature: Interest-free bearer bonds
- Denominations: ₹1,000, ₹10,000, ₹1 lakh, ₹10 lakh, ₹1 crore
- Purchase Mode: Cheque or digital transfer only (no cash)
- KYC Requirement: Mandatory for purchasers
- Anonymity: Donor identity not disclosed to political parties or public
- Validity: 15 days from date of issue
- Eligibility of Parties: Must have secured ≥1% votes in last Lok Sabha/State Assembly election
- Unencashed Bonds: Credited to Prime Minister’s National Relief Fund (PMNRF)
- Legal Basis: Electoral Bond Scheme, 2018 + amendments to Representation of People Act, Income Tax Act, Companies Act
- Key Criticism: Opaque funding, corporate dominance, violation of voters’ right to know
- Declared Unconstitutional: February 2024 (Supreme Court)
- SC Ruling (2024): Violates Article 19(1)(a) — right to information
Legal Framework Governing Electoral Trusts
Non-Profit Nature
- Registered as non-profit entities
- Sole purpose: political funding
- Prohibited from profit-making or unrelated activities
Tax Provisions
- Donations qualify for exemptions under:
- Section 80GGB (Companies)
- Section 80GGC (Individuals)
Disclosure Norms
- Mandatory annual reporting to ECI, including:
- Names of donor companies
- Amounts received
- Distribution among political parties
Compliance & Oversight
- Donations only via traceable banking channels
- Oversight by:
- Election Commission of India
- Income Tax Department
Core Issue: Unequal Political Funding
- Unequal access to funds distorts:
- Electoral competition
- Campaign visibility
- Organisational reach
- No legal cap on political party expenditure (only candidates capped).
- India now among the most expensive electoral democracies globally, surpassing even the US.
Corporate Donations and Party-Wise Skew
Direct Corporate Donations (FY 2013–14 to 2023–24)
- Incumbent party (BJP):
- Received 84.65% of all declared corporate donations
- Donations 4× more than all other national parties combined
Electoral Trust Funding
- BJP received 71.67% of total electoral trust funds
- Indicates systemic financial asymmetry favouring ruling party
Electoral Trust Performance & Concentration
Trust-Level Concentration
- Among top 10 trusts:
- Prudent Electoral Trust alone received ₹33,330.54 crore (86.38%)
- 75% of its funds went to BJP
FY 2024–25 Data
- Prudent Electoral Trust:
- Received: ₹2,668.49 crore
- Distributed:
- ₹2,180.71 crore to BJP
- ₹216.34 crore to Congress
Inference
- Political funding is:
- Concentrated among few trusts
- Skewed towards incumbent party
Transparency Deficit in Electoral Trusts
What Is Disclosed
- Names of donor companies
- Total amount donated
- Recipient parties (via ECI filings)
What Is NOT Disclosed
- Which company donated to which party
- Rationale or criteria for fund allocation
Quid Pro Quo and Democratic Risks
- Corporates tend to donate to ruling parties at Centre or States.
- Creates reciprocal expectations:
- Policy favours
- Regulatory leniency
- Supreme Court termed this institutionalised corruption.
Public Funding of Elections: Historical Debate
- Constituent Assembly (1948):
- Elections viewed as state responsibility
- Preconditions suggested:
- Internal party democracy
- Transparency in party functioning
- Bringing parties under RTI
- Regulation or restriction of private donations
Lessons from the Past
- Corporate donations banned (1969–1985)
- Absence of lawful alternatives led to:
- Illegal cash funding
- “Briefcase politics”
- Shows that blanket bans without systemic reform worsen opacity.
Challenges & Way Forward
- Funding Disparity → Design comprehensive political finance framework
- Opaque Trust Operations → Public donor–donee mapping
- Unlimited Party Spending → Cap party expenditure
- Corporate Dominance → Diversify funding sources
- High Entry Barriers → Reduce financial barriers for new parties
- Weak Oversight → Strengthen ECI and judicial supervision
- Future Reform → Introduce calibrated public funding
Conclusion
- Electoral trusts have replaced electoral bonds as the primary channel of political finance.
- They offer greater legality and traceability, but not full transparency or equity.
- Without urgent reform, elections risk becoming contests of money rather than mandates of the people.
- India’s democracy demands not just transparent funding, but equal access to political competition.
CARE MCQ
Q. Consider the following statements regarding Electoral Trusts in India:
- Electoral trusts were introduced through a scheme notified by the Central Board of Direct Taxes (CBDT) in 2013.
- Electoral trusts must disclose donor identities and fund distribution details to the ECI.
- Donations routed through electoral trusts are anonymous to the public and the Election Commission.
Which of the statements given above is/are correct?
A. 1 and 2 only
B. 2 only
C. 1 and 3 only
D. 1, 2 and 3
Answer: A
Explanation:
- Statement 1 is correct.
Electoral Trusts in India were introduced under the Electoral Trusts Scheme, 2013, which was notified by the Central Board of Direct Taxes (CBDT). The scheme was aimed at channelising political donations through a regulated and transparent institutional mechanism. - Statement 2 is correct.
Electoral Trusts are mandated to disclose donor identities, amounts received, and the distribution of funds to political parties through annual filings to the Election Commission of India (ECI). This requirement is a key feature distinguishing electoral trusts from the now-invalidated Electoral Bond Scheme. - Statement 3 is incorrect.
Donations routed through electoral trusts are not anonymous. While trusts act as intermediaries, donor details are disclosed to the ECI and the Income Tax Department, ensuring traceability and regulatory oversight. Hence, anonymity to the Election Commission does not exist.
Source: The Hindu
Relevance:
GS Paper II – International Relations, Trade Diplomacy;
GS Paper III – External Trade, Investment, MSMEs, Employment
Important Key Concepts for Prelims and Mains:
For Prelims:
- Free Trade Agreement (FTA), Zero-duty Market Access, Foreign Direct Investment (FDI), Tariff Liberalisation, Rules of Origin, Labour Mobility, MSMEs
For Mains:
- Trade Diversification, Strategic Autonomy, Global Value Chains, Services Trade, Investment-led Growth, Soft Power, WTO-plus Commitments
Why in News?
India and New Zealand concluded a Free Trade Agreement (FTA) in December 2025, under which New Zealand will provide zero-duty access to 100% of India’s exports, while committing $20 billion in Foreign Direct Investment (FDI) by 2030. The agreement was finalised in a record nine months, reflecting India’s renewed push for rapid trade diversification.
What is the India–New Zealand FTA?
The India–New Zealand FTA is a comprehensive trade and investment agreement aimed at enhancing market access, boosting services trade, facilitating labour mobility, and deepening long-term economic cooperation. It marks a shift from narrow tariff negotiations to a framework-based partnership covering goods, services, investment, skills, and people-to-people ties.
What are the Key Bargains in the Agreement?
Market Access and Tariffs
- New Zealand:
- Zero-duty access for 100% of Indian exports.
- India:
- Tariff relaxation on 95% of imports from New Zealand.
- 57% of these imports become duty-free from day one.
Investment Commitments
- New Zealand has committed $20 billion in FDI by 2030, with:
- Firm clawback mechanisms if investment timelines are not met.
- Investment aims to promote:
- Skill mobility
- Services trade
- Employment and growth across 118 sectors
Services and Labour Mobility
- First-ever agreement by New Zealand to facilitate trade in Ayurveda, yoga, and traditional medicine services.
- Enhanced mobility for:
- IT professionals
- Engineers
- Yoga instructors
- Indian chefs and music teachers
- Easier access to opportunities in healthcare, education, construction, and services.
Student and Youth Opportunities
- Work permits of up to 20 hours per week while studying.
- Extended post-study work visas, enabling global exposure for Indian youth.
Free Trade Agreements (FTAs):
Definition:
Free Trade Agreements are formal trade arrangements entered into by two or more countries with the objective of lowering or removing barriers to trade, such as customs duties, quotas, and import–export restrictions. By granting preferential tariff treatment and easing non-tariff barriers, FTAs improve access to each other’s markets.
Key Features
- FTAs cover trade in goods, including agricultural and manufactured products, as well as trade in services such as banking, information technology, and construction.
- More comprehensive FTAs may also include provisions related to:
- Investment
- Intellectual Property Rights (IPRs)
- Government procurement
- Competition policy
Types of Trade Agreements
- Partial Scope Agreement (PSA):
Applies to a restricted set of goods, with limited tariff concessions. - Free Trade Agreement (FTA):
Member countries reduce or eliminate tariffs among themselves while retaining their own tariff regimes for non-member countries. - Customs Union:
Combines free trade among members with a common external tariff on imports from non-members. - Common Market:
Ensures the free movement of goods, services, capital, and labour among participating countries. - Economic Union:
Involves deeper integration through coordination of macroeconomic and exchange rate policies among member states.
Which Sectors are Excluded and Why?
India has excluded sensitive sectors from the agreement to protect domestic livelihoods:
- Dairy and agricultural products such as:
- Milk, cheese, butter, yogurt
- Onions, sugar, edible oils
- Spices and rubber
This safeguards Indian farmers and MSMEs, particularly against competition from New Zealand, one of the world’s largest dairy exporters.
Agricultural Cooperation (Non-Tariff)
- New Zealand will support productivity and quality enhancement for Indian fruit growers, especially:
- Kiwifruit
- Apples
- Honey
- Cooperation includes:
- Centres of excellence
- Improved planting material
- Capacity building and post-harvest management
- Supply chain and food safety improvements
- Dairy and agricultural products such as:
Why is the FTA Important for India?
- India’s bilateral merchandise trade with New Zealand is currently $1.3 billion, targeted to double in five years.
- New Zealand offers a gateway to Oceania and Pacific Island markets, with high purchasing power (per capita income ~$49,380).
- The Indian diaspora (5% of New Zealand’s population; ~3 lakh people) strengthens cultural exchange and soft power.
- India has ensured strict safeguards for agriculture and dairy while expanding access for manufactured and services exports.
- Notably, the agreement was negotiated and concluded by a women-led team, marking an institutional milestone.
Why is India Accelerating FTAs?
India’s rapid FTA push reflects multiple strategic drivers:
- Trade Diversification: Reducing dependence on traditional markets like the U.S., EU, and China.
- WTO-plus Commitments: Enabling deeper cooperation in services, digital trade, and investment beyond WTO norms.
- Geopolitical Realignment: Using FTAs to build long-term strategic partnerships across the Pacific, West Asia, and Africa.
- Domestic Policy Alignment: Supporting initiatives such as Make in India, PLI schemes, and global value chain integration.
U.S. Factor
- India–U.S. bilateral trade stands at $132 billion, but recent U.S. tariff hikes hurt Indian exports.
- Exports to the U.S. fell sharply in September (12%) and October (8.5%).
- With Indo-U.S. FTA talks stalled and 50% tariffs unchanged, India has intensified diversification efforts.
How Will Labour-intensive Sectors Benefit?
The FTA offers significant gains for employment-rich sectors:
- Textiles and apparel
- Leather and footwear
- Gems and jewellery
- Engineering goods
- Processed food products
By combining zero-duty access, MSME support, and skill mobility, the agreement strengthens India’s labour-intensive export base.
What Criticisms Does the Agreement Face?
In New Zealand
- The FTA excludes dairy and agriculture, the country’s largest industry.
- Coalition partners criticised the deal as “neither free nor fair”.
- New Zealand’s Foreign Minister has stated they will vote against the bill in Parliament in 2026.
In India
- Past FTAs are criticised for:
- Widening trade deficits
- Imports growing faster than exports
- While safeguards are built into this FTA, actual outcomes will depend on implementation over time.
Way Forward
- Strengthen domestic competitiveness and product quality.
- Invest in R&D and innovation to meet global standards.
- Enforce strong rules of origin and anti-dumping provisions.
- Align MSMEs and sensitive sectors with global markets through technology and skill upgradation.
- Monitor implementation to ensure balanced gains and investment delivery.
Conclusion
The India–New Zealand FTA marks a decisive shift in India’s trade strategy—from short-term tariff bargains to long-term economic alliances. By combining zero-duty access, investment commitments, services trade, and labour mobility, the agreement enhances India’s global economic footprint while safeguarding sensitive sectors. Its success will ultimately depend on effective implementation, domestic capacity-building, and sustained competitiveness in global markets.
UPSC PYQ
Q. Consider the following countries: (2018)
- Australia
- Canada
- China
- India
- Japan
- USA
Which of the above are among the ‘free-trade partners’ of ASEAN?
(a) 1, 2, 4 and 5
(b) 3, 4, 5 and 6
(c) 1, 3, 4 and 5
(d) 2, 3, 4 and 6
Answer: (c)
CARE MCQ
Q. Consider the following statements regarding the India–New Zealand Free Trade Agreement:
- The agreement provides duty-free access to 100% of Indian exports to New Zealand.
- New Zealand committed USD 20 billion investment over 15 years to strengthen long-term economic cooperation.
- The agreement safeguards India’s interests in dairy and agriculture while benefiting labour-intensive sectors like textiles and leather.
- It introduces new visa pathways for student mobility and skilled professionals, including STEM graduates.
Select the correct answer using the code given below:
- 1 and 2 only
- 1, 3 and 4 only
- 2, 3 and 4 only
- 1, 2, 3 and 4
Answer: D
Explanation:
- Statement 1 – Correct:
The FTA eliminates customs duties on 100% of Indian exports, significantly enhancing market access. - Statement 2 – Correct:
New Zealand has committed USD 20 billion investment over 15 years, strengthening strategic and economic ties. - Statement 3 – Correct:
India successfully protected its dairy and agriculture sectors, while labour-intensive industries like textiles and leather gain export advantages. - Statement 4 – Correct:
The agreement includes provisions for student mobility and post-study work visas, opening pathways for 5,000 skilled professionals, including STEM graduates.
Additional Information:
- This is India’s first FTA with New Zealand, marking a milestone in India’s Indo-Pacific economic engagement.
- The Health and Traditional Medicine Services Annex was signed for the first time under this FTA.
- The agreement supports India’s trade diversification strategy and strengthens cooperation beyond goods—covering services, investment, and mobility.
