UPSC CARE Mains Practice 23rd June 2025

Introduction

The global economy is witnessing heightened uncertainty due to geopolitical tensions, renewed trade wars, and disrupted supply chains. For India, which is deeply integrated into the global economy through trade and investment flows, these developments pose serious challenges—particularly to export-oriented industries and Micro, Small, and Medium Enterprises (MSMEs). However, these challenges also present opportunities for strategic repositioning within global value chains (GVCs), provided India responds with a calibrated policy mix.

Body

• Impact of Global Headwinds on the Indian Economy
• India’s Resilience Factors and External Cushion
• Strategic Trade and Economic Policy Actions
• Enhancing Industrial Competitiveness
• Monetary and Fiscal Synchronisation

Conclusion

Global turbulence, while threatening, offers India a unique window to reposition itself as a key node in global trade and supply chains. Through trade diplomacy, structural reforms, and investment facilitation, India can turn crisis into opportunity. A resilient domestic economy, powered by innovation, strategic trade deals, and public-private synergy, is essential to secure India’s economic future amidst global troubles.

UPSC Syllabus

Indian industry

Why was this question asked?

Q. To what factors can the recent dramatic fall in equipment costs and tariff of solar energy be attributed? What implications does the trend have for the thermal power producers and the related industry? (2015)

Introduction

The global economy is witnessing heightened uncertainty due to geopolitical tensions, renewed trade wars, and disrupted supply chains. For India, which is deeply integrated into the global economy through trade and investment flows, these developments pose serious challenges—particularly to export-oriented industries and Micro, Small, and Medium Enterprises (MSMEs). However, these challenges also present opportunities for strategic repositioning within global value chains (GVCs), provided India responds with a calibrated policy mix.

Body

Impact of Global Headwinds on the Indian Economy

• Disrupted Supply Chains: Pandemic aftershocks, the Russia-Ukraine war, and Red Sea tensions have hampered global logistics, raising input costs for Indian manufacturers.
• Tariff Uncertainties: U.S. tariff reviews affect Indian exports, especially in sectors such as gems and jewellery, apparel, marine products, and pharmaceuticals.
• Dumping Risks: With reduced demand elsewhere, China and ASEAN countries may redirect surplus production to India, threatening domestic industries.
• MSME Vulnerability: Export margins of MSMEs are particularly sensitive to cost fluctuations and regulatory changes, making them less resilient to global shocks.
• Decision-making Paralysis: Exporters face planning challenges due to tariff volatility, delaying investments and scaling operations.

India’s Resilience Factors and External Cushion

• Robust Services Exports: IT and consulting services to the U.S. and EU continue to grow, offering a cushion against merchandise trade shocks.
• High Forex Reserves: India holds over $600 billion in reserves, providing a buffer against currency volatility.
• Stable Current Account: India’s CAD is well below crisis thresholds, allowing greater flexibility in managing capital flows.
• Strong Remittances: Inward remittances exceeded $125 billion in 2024, supporting domestic consumption.

Strategic Trade and Economic Policy Actions

• Bilateral Trade Agreements (BTAs):
  • Early conclusion of BTAs with the U.S., U.K., and EU can help offset market losses from tariff hikes.
  • Prioritising zero-duty access for critical sectors like electronics and pharmaceuticals.
  • Mutual recognition agreements and addressing non-tariff barriers (NTBs) are essential.
• Import Monitoring and Dumping Control:
  • Strengthen customs surveillance and fast-track anti-dumping investigations.
  • Deploy trade remedial measures via Directorate General of Trade Remedies (DGTR).
• Public Capex as a Growth Driver:
  • Continued investment in infrastructure will crowd in private investments.
  • Schemes like PM Gati Shakti, National Infrastructure Pipeline, and Bharatmala should be fast-tracked.

Enhancing Industrial Competitiveness

• Expand PLI Schemes:
  • Include high-growth sectors like wearables, IoT devices, and green mobility components.
  • Encourage scale, R&D, and deep manufacturing.
• Anchor Global Investments:
  • Offer tailored packages to multinationals diversifying away from China.
  • States should develop plug-and-play industrial clusters with quality logistics and single-window clearances.
• Regulatory Reforms:
  • Expedite implementation of labour codes, land acquisition reforms, and Ease of Doing Business (EoDB) policies.
  • Complete digitalisation of compliance frameworks to reduce transaction costs.

Monetary and Fiscal Synchronisation

• Monetary Policy Flexibility:
  • With inflation under control, a measured rate cut by the RBI can stimulate credit flow to MSMEs and households.
• Fiscal Prudence with Growth Focus:
  • Maintain fiscal glide path while protecting capital expenditure outlays.
  • Use targeted support mechanisms for stressed sectors like exports and manufacturing.

Conclusion

Global turbulence, while threatening, offers India a unique window to reposition itself as a key node in global trade and supply chains. Through trade diplomacy, structural reforms, and investment facilitation, India can turn crisis into opportunity. A resilient domestic economy, powered by innovation, strategic trade deals, and public-private synergy, is essential to secure India’s economic future amidst global troubles.

Introduction

Generative Artificial Intelligence (AI) models, particularly large language models (LLMs), rely on extensive datasets, often sourced from freely accessible online content, including copyrighted news articles. This practice has raised fundamental questions about intellectual property (IP), journalistic sustainability, and ethical AI development. With billions invested in AI innovation, concerns are mounting over the lack of compensation for news publishers, whose content is being used to train models and generate monetised outputs.

Body

• How Generative AI Uses News Content
• Legal and Policy Frameworks: India and Global Trends
• Challenges Faced by News Publishers
• India-Specific Impacts and Structural Vulnerabilities
• The Way Forward: Equitable Compensation and Ethical AI Integration

Conclusion

The rise of AI must not replicate earlier patterns of digital exploitation that hollowed out creative industries. A balanced regulatory regime is essential—one that fosters AI innovation while safeguarding journalistic ecosystems. India, with its vibrant media landscape and growing AI ambitions, must pioneer a rights-based framework to ensure that the AI revolution is inclusive, ethical, and sustainable. News publishers deserve their fair share of the digital future they helped build.

UPSC Syllabus

Artificial Intelligence (AI)

Why was this question asked?

Q. Introduce the concept of Artificial Intelligence (AI). How does Al help clinical diagnosis? Do you perceive any threat to privacy of the individual in the use of Al in healthcare? [2023]

Introduction

Generative Artificial Intelligence (AI) models, particularly large language models (LLMs), rely on extensive datasets, often sourced from freely accessible online content, including copyrighted news articles. This practice has raised fundamental questions about intellectual property (IP), journalistic sustainability, and ethical AI development. With billions invested in AI innovation, concerns are mounting over the lack of compensation for news publishers, whose content is being used to train models and generate monetised outputs.

Body

How Generative AI Uses News Content

• Generative AI models such as ChatGPT, Gemini, or Claude are trained using large text corpora scraped from the Internet, including journalistic outputs from media organisations.
• This process lacks prior consent or compensation, bypassing traditional copyright licensing mechanisms.
• While AI firms argue for “fair use” in model training, this often undermines the original creators whose efforts form the foundation of AI-generated summaries or narratives.
• As the models improve, they can summarise, rephrase, or mimic original journalistic styles—eroding attribution and revenue channels.

Legal and Policy Frameworks: India and Global Trends

• In India, the Copyright Act, 1957 does not explicitly account for AI training datasets, creating a regulatory vacuum.
• The Department for Promotion of Industry and Internal Trade (DPIIT) has recently set up a committee on copyright and AI, aiming to examine fair compensation models and content scraping guidelines.
• Canada’s Online News Act (2023) mandates platforms like Google and Meta to pay publishers for linking or reusing news.
• The EU’s Digital Services Act and Digital Markets Act enforce transparency of AI training data and mandate fair competition.
• In contrast, US copyright law remains vague, with ongoing litigation (e.g., New York Times vs. OpenAI) challenging unlicensed model training.

Challenges Faced by News Publishers

• Revenue loss: AI models summarise content, reducing traffic to original websites and lowering advertising income.
• Erosion of brand identity: When AI platforms aggregate news, the publisher’s distinct voice is lost.
• No attribution or backlinks: Summaries often appear without credit or direct links, further isolating creators from audiences.
• Asymmetric power dynamics: Tech giants have far greater bargaining power, controlling both AI platforms and user traffic pipelines.

India-Specific Impacts and Structural Vulnerabilities

• Indian media faces declining subscription revenue and rising costs. AI content use further hollows out their digital margins.
• Vernacular publishers are particularly vulnerable, as their content may be mined without consent or even recognition in model outputs.
• Given India’s fragmented digital IP enforcement, most small and medium news enterprises cannot track or challenge misuse.
• Additionally, AI’s multilingual generation capacity allows it to bypass original content in regional languages.

The Way Forward: Equitable Compensation and Ethical AI Integration

• Legal reform: Amend the Copyright Act to include AI-specific data usage and licensing provisions.
• Licensing frameworks: Mandate AI companies to negotiate licenses with content creators, akin to blanket licenses in the music industry.
• Collective rights management: Create a digital media rights collective to negotiate and monitor content use.
• Transparency norms: Require AI firms to disclose dataset sources, especially for monetised outputs.
• Fair Revenue Sharing Models: Encourage platform-publisher partnerships, where media houses are compensated for content used in AI training or outputs.
• Technological safeguards: Deploy watermarking or blockchain-based tracing to track unauthorized use of news content.

Conclusion

The rise of AI must not replicate earlier patterns of digital exploitation that hollowed out creative industries. A balanced regulatory regime is essential—one that fosters AI innovation while safeguarding journalistic ecosystems. India, with its vibrant media landscape and growing AI ambitions, must pioneer a rights-based framework to ensure that the AI revolution is inclusive, ethical, and sustainable. News publishers deserve their fair share of the digital future they helped build.