Articles on 30 December 2025

The Quiet Foundations for India’s Next Growth Phase

Context

• As 2025 draws to a close, India’s economic progress is often judged by headline indicators such as GDP rankings, export growth, and global partnerships.
• Beneath these visible outcomes lies a sustained and less conspicuous reform effort that has reshaped governance, regulation, and institutional credibility.
• Reform Express 2025 represents a cumulative process of removing bottlenecks, modernising laws, and creating predictable systems.
• Rather than disruptive policy shocks, this phase has relied on consistency and trust-based governance to strengthen India’s long-term growth foundations.

Economic Credibility and the Case for Reform

• India crossed $4.1 trillion in nominal GDP, becoming the world’s fourth-largest economy.
• More telling was the sovereign credit rating upgrade to BBB after nearly two decades, signalling confidence in the durability of India’s macroeconomic framework.
• In a global environment marked by political volatility, stable leadership has made reforms credible.
• Credible reforms reduce uncertainty, align incentives, and encourage private investment.
• When procedures are transparent and time-bound, discretion narrows, competition improves, and investment translates into jobs and productivity gains.

Key Foundational Reforms for India’s Next Growth Phase

• Trade Expansion and Digital Facilitation

  • India’s exports reached $825.25 billion in 2024–25, growing over 6% annually.
  • This expansion has been supported by digital trade infrastructure that simplifies processes and improves access to information.
  • Platforms such as Trade Connect and Trade Intelligence and Analytics have reduced friction for exporters by integrating approvals, data, and market intelligence.
  • These initiatives reflect a shift from control-oriented regulation to facilitative governance that enhances competitiveness.

• Strategic Trade Agreements and Global Integration

  • India’s trade diplomacy in 2025 focused on commercially meaningful agreements.
  • The Comprehensive Economic and Trade Agreement with the United Kingdom expanded duty-free access and clarified services and skilled mobility pathways.
  • Agreements with Oman and New Zealand strengthened India’s presence in strategic and high-value markets.
  • Together, these partnerships deepened integration into global value chains while maintaining policy discipline and reciprocity.

• Entrepreneurship, Innovation, and Digital Public Infrastructure

  • India’s startup ecosystem expanded to over two lakh government-recognised startups, generating more than 21 lakh jobs.
  • Digital public infrastructure played a central role in this growth.
  • The Open Network for Digital Commerce processed hundreds of millions of orders, while the Government e-Marketplace enabled micro and small enterprises to access public procurement at scale.
  • India’s rise to 38th place in the Global Innovation Index reflected the impact of simplified regulations and digital systems on innovation outcomes.

• Legislative Simplification and Regulatory Modernisation

  • Trust-based governance became a defining feature of Reform Express 2025. Parliament repealed 71 obsolete laws, reducing regulatory clutter.
  • The consolidation of 29 central labour laws into four labour codes simplified compliance while expanding social security coverage.
  • Capital market reform progressed through the introduction of the Securities Markets Code Bill, strengthening enforcement, investor protection, and grievance redress mechanisms at a time of growing retail participation and global capital flows.

Infrastructure and Energy Reform

• Infrastructure, Logistics, and Industrial Policy

  • Logistics reform focused on reducing costs and improving reliability.
  • New maritime laws replaced outdated frameworks with modern governance tools, dispute resolution mechanisms, and safety norms.
  • Recognising shipping as a strategic sector, the government approved a ₹69,725 crore shipbuilding package, including a Maritime Development Fund.
  • This approach reflected industrial policy with ecosystem focus, encouraging private investment while building domestic capacity across shipyards, engineering, and services.

• Energy Reform and Long-Term Investment

  • Energy reforms addressed long-cycle investment risks. Amendments to oil and gas legislation emphasised stability of terms, clearer approvals, and single-lease frameworks.
  • The Open Acreage Licensing Policy expanded exploration, particularly offshore, while the National Deep Water Exploration Mission strengthened domestic capabilities.
  • Simultaneously, the Nuclear Energy Mission and the SHANTI Bill advanced low-carbon baseload capacity, enabling regulated private participation in advanced nuclear technologies to support energy security and industrial growth.

Conclusion

• Reform Express 2025 demonstrates a consistent reform logic: clean up outdated statutes, reduce compliance burdens, digitise governance, strengthen market institutions, and de-risk long-term investment.
• Rather than relying on headline-driven interventions, India’s transformation has been built through cumulative, interconnected reforms.
• By lowering the burden on entrepreneurs and improving institutional trust, productivity is allowed to compound.
• The quiet persistence of these reforms has laid the foundation for sustained growth and enhanced resilience in an increasingly uncertain global economy.

The Quiet Foundations for India’s Next Growth Phase FAQs

Q1. What does Reform Express 2025 signify?
Ans. It signifies a steady, cumulative reform process focused on improving governance, reducing bottlenecks, and strengthening institutional credibility.

Q2. Why was India’s sovereign credit rating upgrade significant in 2025?
Ans. The upgrade signalled international confidence in the sustainability and stability of India’s economic reforms.

Q3. How did digital platforms support India’s trade growth?
Ans. Digital platforms simplified procedures, improved access to market information, and reduced transaction delays for exporters.

Q4. What role did legislative reforms play in economic transformation?
Ans. Legislative reforms reduced compliance burdens, simplified regulations, and improved trust between the state and businesses.

Q5. Why are energy reforms important for long-term growth?
Ans. Energy reforms reduce investment risk, improve energy security, and support sustainable industrial expansion.

Source: The Hindu

India’s Clean Energy Transition - Manufacturing Push, Market Paradoxes and Structural Bottlenecks

Context

• India is accelerating its clean energy transition to meet climate commitments (NDCs), reduce import dependence, and position itself as a global renewable energy and green hydrogen hub.
• Recent gains in domestic solar manufacturing and clean energy investments signal momentum, but deep structural challenges persist across manufacturing, finance, grid infrastructure, and emerging technologies.

Key Developments

• Solar manufacturing - From import dependence to domestic capacity

  • For years, India relied heavily on Chinese solar imports. In 2024, domestic firms added 25.3 GW of module manufacturing capacity, nearly doubling national capacity.
  • The Production Linked Incentive (PLI) scheme catalysed private investment, and signalled India’s intent to move up the global value chain.
  • Adoption of TOPCon (Tunnel Oxide Passivated Contact) cells reflects a shift toward higher-efficiency, higher-value innovation.

• Structural contradictions in solar supply chain

  • Despite capacity expansion, India imported about 66 GW of solar modules and cells in 2024, while exports marginally declined.
  • Upstream integration is weak - only 2 GW wafer capacity commissioned, compared to nearly 80 GW downstream module capacity.
  • Absence of polysilicon and wafer manufacturing risks dependency substitution, not elimination, highlighting the missing middle of manufacturing.

• Clean energy investment boom with financial stress

  • $3.4 billion FDI attracted in the first nine months of FY2025 (over 80% of power sector inflows).
  • Competitive auctions pushed tariffs to record lows, making renewables among the cheapest electricity sources
  • However, DISCOM financial distress (unpaid dues), post-auction contract renegotiations in some states, undermine contractual sanctity and investor confidence.

• Grid and transmission constraints

  • Nearly 60 GW of renewable capacity is stranded due to inadequate transmission infrastructure.
  • Issues include - Grid congestion, curtailment without compensation, etc.
  • Consequences:
    • Difficulty in financial modelling.
    • Higher risk premiums.
    • India’s renewable financing costs are about 80% higher than advanced economies.
  • National Green Hydrogen Mission (NGHM) - Strategic promise, economic hurdles:
    • India currently consumes about 5 million tonnes of grey hydrogen.
    • Target under NGHM: 5 million metric tonnes of green hydrogen annually by 2030. Pilot projects in steel, refining, transport (hard-to-abate sectors).
    • Challenges:
      • Current costs of $4.1–$5.0 per kg is projected to be around $2.4 per kg by 2030, which remains uncompetitive without subsidies, carbon pricing, and regulatory mandates.
      • Infrastructure gaps in storage, transport, and end-use.
      • Chicken-and-egg problem - No demand without supply certainty, no supply without assured demand.

Challenges and Way Ahead

• Weak upstream solar manufacturing (polysilicon, wafers): Promote end-to-end solar value chain integration.
• Regulatory uncertainty and contract renegotiation: Ensure contractual sanctity to protect investor confidence.
• Transmission bottlenecks and uncompensated curtailment: Synchronise transmission expansion with renewable capacity addition. Establish clear curtailment compensation frameworks.
• Green hydrogen’s cost and demand uncertainty: For green hydrogen -
  • Adopt realistic timelines.
  • Create demand through mandates, incentives, and carbon markets.
  • Invest in shared infrastructure for storage and transport.

Conclusion

• India’s clean energy transition reflects both ambition and complexity.
• While manufacturing gains, low tariffs, and green hydrogen vision signal leadership potential, unresolved structural bottlenecks threaten sustainability.
• Addressing grid, financial, and supply-chain weaknesses—while safeguarding policy credibility—will determine whether India emerges merely as a large clean energy market or as a global model for energy transition in the developing world.

India’s Clean Energy Transition FAQs

Q1. How has the PLI scheme contributed to India’s solar manufacturing ecosystem?

Ans. It has catalysed private investment, doubled domestic module capacity in 2024, etc.

Q2. Why does India’s solar manufacturing expansion still risk continued import dependence?

Ans. The absence of upstream manufacturing in polysilicon and wafers has created a value-chain imbalance.

Q3. What are the major financial and regulatory risks affecting India’s renewable energy sector?

Ans. DISCOM payment delays, post-auction contract renegotiations, and regulatory uncertainty undermine contractual sanctity.

Q4. How do transmission constraints impact renewable energy deployment in India?

Ans. Inadequate transmission infrastructure leads to curtailment without compensation, stranded capacity, etc.

Q5. What are the key challenges to the commercial viability of green hydrogen under India’s National Green Hydrogen Mission?

Ans. High production costs, underdeveloped infrastructure, and a demand–supply coordination gap necessitate subsidies.

Source: IE