Why India Is Deepening Its Engagement with the Taliban

India Taliban Engagement

India Taliban Engagement Latest News

  • Afghanistan’s Foreign Minister Amir Khan Muttaqi is on an official visit to India. This is his first official trip since the Taliban’s return to power. 
  • The visit marks a significant shift in India’s foreign policy, as New Delhi engages with the Taliban despite not officially recognising their government
  • Driven by regional security and geopolitical considerations, India’s outreach reflects a strategic recalibration, though it must tread carefully given the Taliban’s stance on women’s rights and governance.

India’s Early Encounters with the Taliban: A Diplomatic Dead End

  • India’s first significant engagement with the Taliban occurred during the 1999 IC-814 hijacking, when then External Affairs Minister Jaswant Singh communicated with Taliban Foreign Minister Wakil Ahmed Muttawakil.
  • However, India and the Taliban lacked real common ground, as the Taliban remained deeply influenced by Pakistan, making any meaningful diplomatic connection difficult.

India’s Cautious Engagement with the Taliban: Step-by-Step Diplomacy

  • After the Taliban captured Kabul in August 2021, India adopted a strategy of “cautious engagement”, choosing incremental diplomatic contact without granting formal recognition to the regime.
  • The first official interaction occurred on August 31, 2021, when India’s Ambassador to Qatar met Stanekzai, head of the Taliban’s political office in Doha.
  • The meeting, initiated at the Taliban’s request, marked India’s re-entry into Afghan diplomacy. 

India’s Call for Inclusivity

  • Soon after, India urged the Taliban to form an “inclusive government” that represented all ethnic groups and included women.
  • In September 2021, India officially acknowledged the Taliban as “those in positions of power and authority across Afghanistan,” signalling pragmatic recognition of ground realities without formal endorsement.

Humanitarian Outreach and Reopening Channels

  • In December 2021, India sent 1.6 tons of essential medicines to Afghanistan, distinguishing between the Taliban regime and the Afghan people while resuming humanitarian engagement.
  • By June 2022, India deepened ties with a visit by a delegation led by MEA Joint Secretary, followed by the deployment of a “technical team” at the Indian Embassy in Kabul.
    • During the current visit, India decided to upgrade its technical mission in Kabul to an embassy.
  • This marked the first official Indian presence since the Taliban takeover.

Responding to Human Rights Concerns

  • In December 2022, India publicly expressed concern over the Taliban’s ban on women attending universities, reinforcing its stance on women’s rights and inclusive governance.
  • By the end of 2023, tensions resurfaced as the Afghan Embassy in New Delhi ceased operations, citing a “lack of support” from the host government and internal challenges within the Afghan administration.

Evolving Regional Diplomacy (2024–2025)

  • In January 2024, Taliban Foreign Minister Amir Khan Muttaqi hosted diplomats from 11 regional countries, including India, advocating a “region-centric narrative” for constructive engagement.
  • The Taliban government condemned the Pahalgam terror attack, aligning with India’s counterterrorism concerns — a subtle sign of growing diplomatic coordination.

Why India Is Choosing to Engage with the Taliban Now

  • Taliban leaders have consistently praised India’s developmental role in Afghanistan, contrasting it with the “selfish motives” of the United States.
  • Indian officials assessing these interactions believe the Taliban is eager for engagement and seeks India’s assistance to rebuild Afghanistan’s infrastructure and economy.

Balancing Diplomacy with Principles

  • India’s outreach comes with moral and diplomatic dilemmas. 
  • While engagement aligns with strategic and security interests, it raises questions about New Delhi’s stance on the Taliban’s regressive policies, especially regarding women’s rights and freedoms.

A Changed Geopolitical Landscape

  • The regional power matrix has shifted dramatically since the Taliban’s last rule:
    • Pakistan, once the Taliban’s key backer, is now an uneasy partner.
    • Iran is weakened by internal and economic challenges.
    • Russia is embroiled in war.
    • The US, under Donald Trump 2.0, has adopted a non-committal approach.
    • Meanwhile, China has deepened its influence, becoming the first major power to exchange ambassadors with the Taliban.
  • This evolving scenario has opened strategic space for India, pushing New Delhi to recalibrate its Afghanistan policy.

Strategic Imperatives for India

  • India fears that non-engagement would erode its decade-long investments — in infrastructure, education, and connectivity projects — and diminish its regional security leverage.
  • Given Afghanistan’s proximity and potential to influence India’s internal security and trade routes, maintaining direct communication with Kabul has become essential.
  • Unlike in the 1990s, the Taliban now faces no internal political opposition within Afghanistan. 
  • India’s decision to side with the Taliban in rejecting Trump’s plan to reclaim the Bagram air base underscores how far New Delhi’s position has evolved — from isolation to pragmatic engagement.

The Pakistan Factor in India–Taliban Relations

  • The deteriorating relationship between the Taliban and Pakistan has created new opportunities for India’s engagement with Kabul. 
  • As Pakistan deports thousands of Afghan refugees, India has stepped in to provide humanitarian aid and logistical support to Afghanistan.
  • India has delivered extensive relief shipments to Afghanistan, including: 50,000 metric tonnes of wheat; 300 tonnes of medicines; 27 tonnes of earthquake relief material; 40,000 litres of pesticides; 100 million polio doses; 1.5 million Covid-19 vaccine doses; 11,000 hygiene kits for drug de-addiction programmes.
  • India and Afghanistan have also discussed strengthening sports cooperation, particularly in cricket, which enjoys massive popularity among Afghan youth.
  • Additionally, both sides agreed to enhance trade through Iran’s Chabahar Port, facilitating commercial exchange and humanitarian shipments, and reinforcing India’s strategic role in regional connectivity.

What the Taliban Seeks from India

  • The Taliban government has requested India to issue visas for Afghan businessmen, patients, and students, aiming to restore people-to-people ties disrupted since the regime change.
  • However, this demand faces challenges because India does not officially recognise the Taliban, has security concerns regarding visa applicants, and currently lacks functional consulates or a visa office in Afghanistan.
  • Despite these limitations, New Delhi has expressed willingness to continue and expand development projects across all 34 Afghan provinces, signalling a pragmatic approach focused on reconstruction and long-term engagement rather than formal recognition.

Source: IE

India Taliban Engagement FAQs

Q1: Why is India engaging with the Taliban now?

Ans: Changing regional dynamics and security concerns have pushed India to re-establish contact, safeguard its investments, and maintain influence in Afghanistan.

Q2: How did India’s engagement with the Taliban begin?

Ans: India’s cautious diplomacy began post-2021 with meetings in Doha and humanitarian aid, gradually evolving into structured contact through its Kabul technical mission.

Q3: What role does Pakistan play in this context?

Ans: Strained Taliban–Pakistan relations have opened diplomatic space for India to strengthen humanitarian, trade, and regional connectivity ties with Afghanistan.

Q4: What are the Taliban’s key demands from India?

Ans: The Taliban seeks Indian visas for students, patients, and businessmen, and hopes for renewed Indian development projects across Afghan provinces.

Q5: How is India balancing diplomacy and principle?

Ans: While deepening engagement, India continues to advocate women’s rights, inclusive governance, and a people-focused approach without formally recognising the Taliban regime.

India to Revise IIP Base Year to 2022–23 for Accurate Industrial Data

IIP Base Year Revision

IIP Base Year Revision Latest News

  • As economies develop, they undergo structural transformation, where the relative importance of sectors shifts over time. 
  • Typically, nations move from agriculture-based economies to industrial expansion, and eventually to a services-dominated structure. 
  • This transition reflects long-term economic growth, greater productivity, and diversified sources of income.
  • This article highlights India’s plan to revise the base year of the Index of Industrial Production (IIP) to better reflect the country’s evolving industrial and economic structure.

India’s Industrial Growth: Progress and Untapped Potential

  • India’s services sector now dominates the economy, contributing about 62.5% to Gross Value Added (GVA) — double its share since the 1950s. 
  • Meanwhile, agriculture contributes around 15%, and industry about 22%, indicating room for expansion.
  • Government initiatives such as Make in India, PLI schemes, ease of doing business reforms, and industrial corridors have spurred growth across mining, manufacturing, and electricity — the three key sectors under the Index of Industrial Production (IIP).
    • The IIP index, is a composite indicator that measures the short-term growth of the industrial sector in India, including mining, electricity, and manufacturing. 
    • It is published monthly by the National Statistics Office (NSO) and compares the volume of a selected basket of industrial products in a given period to that of a chosen base year. 
    • The current base year for the IIP is 2011-12. 
  • Post-pandemic, these measures, along with GST rate cuts, deregulation, and the rise of new industries, have strengthened industrial recovery and signalled a renewed phase of economic dynamism.

Why India Is Revising the Base Year of the Index of Industrial Production (IIP)

  • As India’s economy becomes more market-driven and dynamic, the need for timely and accurate industrial data has grown. 
  • Since industry contributes over one-fifth of national output and links closely with other sectors, updating the Index of Industrial Production (IIP) is essential for capturing real-time economic changes.
  • To improve data accuracy, the Ministry of Statistics and Programme Implementation (MoSPI) formed a Technical Advisory Committee for Base Year Revision (TAC-IIP). 
  • The committee has recommended revising the IIP base year to 2022–23, aligning it with the new GDP base year.

Background

  • The IIP, first compiled in 1937, has undergone nine base-year revisions to reflect shifts in industry and technology. 
  • The current revision continues this process, ensuring compliance with the International Recommendations for the Index of Industrial Production (IRIIP) 2010, while adapting it to India’s evolving industrial structure.

Key Improvements in the New IIP Base Year Revision

  • The upcoming Index of Industrial Production (IIP) base year revision introduces major updates to better reflect India’s evolving industrial landscape. 
  • The new series will feature expanded scope, modernised product coverage, enhanced data accuracy, and methodological refinements.

Expanded Coverage and Modern Product Basket

  • The revised item basket will capture both innovation and obsolescence, removing outdated items like fluorescent tubes, CFLs, kerosene, and printing machinery, and adding laptops, vaccines, LED bulbs, and aerospace components.
  • For the first time, the IIP will include data from minor minerals and gas supply, in line with international IRIIP guidelines.
  • The MoSPI has re-examined 276 “not elsewhere classified” items, assigning 95% of their weights to specific categories — significantly improving the index’s information precision and reducing data distortion.

Dynamic Factory Substitution Mechanism

  • Under the new framework, factories that shut down or change production lines will be replaced using a systematic methodology, ensuring continuity through 12 months of overlapping data between outgoing and incoming firms.
  • To improve forecasting and trend analysis, the new series will introduce a de-seasonalised IIP, aligning with global statistical standards and helping identify true cyclical patterns in industrial output.

Data Integration and Digital Modernisation

  • The integration of GST data, along with digital adoption, is set to be a game-changer, enhancing timeliness and reliability. 
  • The reduced reporting lag and ongoing collaboration with TAC-IIP underline that this revision is more than a statistical update — it’s a structural modernisation of India’s industrial data system.

Source: IE

IIP Base Year Revision FAQs

Q1: What is the Index of Industrial Production (IIP)?

Ans: The IIP measures monthly industrial growth across sectors like manufacturing, mining, and electricity, comparing production volumes against a fixed base year.

Q2: Why is India revising the IIP base year?

Ans: To better capture economic changes, reflect new industries, and align with the updated GDP base year, ensuring more accurate and relevant industrial data.

Q3: What is the proposed new base year for the IIP?

Ans: The Ministry of Statistics and Programme Implementation (MoSPI) has recommended updating the IIP base year to 2022–23.

Q4: What improvements will the new IIP series include?

Ans: It will expand coverage, replace outdated products, include gas and minor minerals, use digital data, and apply seasonal adjustment for better trend analysis.

Q5: How will digital integration improve IIP data?

Ans: By using GST and digital records, the new IIP will provide faster, more reliable, and comprehensive industrial output data for planning and forecasting.

RBI Launches Unified Markets Interface to Tokenise Assets

Unified Markets Interface

Unified Markets Interface Latest News

  • The Reserve Bank of India has launched the Unified Markets Interface (UMI) to enable tokenisation and settlement of financial assets using wholesale CBDC.

About the Unified Markets Interface

  • The Reserve Bank of India (RBI) has unveiled the Unified Markets Interface (UMI), a ground-breaking initiative that aims to transform India’s financial infrastructure by introducing asset tokenisation and settlements using wholesale Central Bank Digital Currency (CBDC)
  • The announcement was made by the RBI Governor at the Global Fintech Fest 2025, emphasising UMI as a “next-generation financial market infrastructure.”
  • The initiative is expected to enhance market efficiency, transparency, and liquidity, while also reinforcing India’s leadership in fintech innovation.

Understanding Asset Tokenisation

  • Asset tokenisation is the process of converting real-world assets, such as government securities, bonds, or commodities, into digital tokens recorded on a blockchain or distributed ledger. Each token represents a share of ownership in the underlying asset.
  • This approach allows for:
    • Fractional ownership, enabling small investors to participate in large-value assets.
    • Improved liquidity, as tokens can be traded globally and instantly.
    • Enhanced transparency, since all transactions are recorded on an immutable blockchain.
    • Faster settlements, reducing intermediaries through smart contracts.
  • Globally, tokenisation has emerged as a major innovation in financial systems. 
  • Countries like Singapore, Switzerland, and the UK are piloting tokenised securities, while India’s RBI is among the first major central banks to explore tokenisation via wholesale CBDC.

Integration with Wholesale Central Bank Digital Currency

  • The UMI will leverage the wholesale CBDC, a digital form of central bank money, for settlements. 
  • Unlike the retail CBDC, which targets individual users, the wholesale CBDC is designed for institutional financial transactions, offering secure, real-time settlements without intermediary banks.
  • Early pilot results of the wholesale CBDC under the RBI’s Digital Rupee project have shown promising outcomes in reducing settlement risks and improving market efficiency
  • With UMI, the RBI plans to integrate CBDC into the broader market ecosystem, enabling tokenised trading of financial assets such as corporate bonds, Treasury bills, and derivatives.

Enhancing Data Integration and Financial Inclusion

  • The Governor highlighted the need for a robust digital public infrastructure (DPI) to ensure seamless data integration across financial entities
  • The RBI aims to strengthen frameworks like the Account Aggregator (AA) system, which empowers individuals to safely share financial data with regulated entities.
  • As of 2025, the Account Aggregator ecosystem includes:
    • 17 registered aggregators,
    • 650 Financial Information Users (FIUs) such as banks and NBFCs,
    • 150 Financial Information Providers (FIPs), and
    • Over 160 million linked accounts, processing 3.66 billion data-sharing requests.
  • The RBI is now developing new standards to:
    • Enhance data security and transparency,
    • Improve customer onboarding processes,
    • Refine consent management and user interfaces, and
    • Ensure greater interoperability among AAs.
  • These efforts complement the introduction of UMI by ensuring that digital market systems remain secure, efficient, and inclusive.

Broader Fintech Innovations Announced

  • Alongside UMI, the RBI also launched four new digital payment innovations to strengthen India’s fintech landscape:
    • UPI HELP - An AI-based Small Language Model (SLM) developed in-house, capable of assisting users with transaction queries, complaint tracking, and mandate management. Currently available in English, it will soon expand to Indian languages.
    • IoT Payments with UPI - A feature enabling machine-to-machine payments using the Internet of Things (IoT), allowing devices like cars, appliances, and smart meters to make automatic payments.
    • Banking Connect - An interoperable net banking platform designed to resolve challenges like slow navigation, inconsistent merchant integration, and complex dispute resolution.
    • UPI Reserve Pay - A service that lets users block or reserve part of their credit card or credit line limit for recurring payments across e-commerce and service platforms, enhancing convenience and credit control.

Significance of the Unified Markets Interface

  • Modernisation of Financial Markets: By integrating blockchain and CBDC, UMI will help move toward a fully digital market infrastructure.
  • Transparency and Traceability: Tokenisation ensures every transaction is verifiable and tamper-proof.
  • Global Integration: Enables cross-border trading and interoperability with international digital financial systems.
  • Operational Efficiency: Reduces transaction times, costs, and settlement risks.
  • Inclusion and Accessibility: Smaller investors can access traditionally high-entry financial assets through fractional tokenised units.

Source: IE | TH

Unified Markets Interface FAQs

Q1: What is the Unified Markets Interface (UMI)?

Ans: The UMI is a next-generation financial infrastructure developed by the RBI to tokenize financial assets and settle them using wholesale CBDC.

Q2: What is asset tokenization?

Ans: Asset tokenization converts real-world financial assets into digital tokens, enabling fractional ownership and transparent trading.

Q3: How does UMI use wholesale CBDC?

Ans: UMI utilizes the RBI’s wholesale CBDC (e₹-W) for faster and secure settlements of tokenized assets.

Q4: What role does the Account Aggregator framework play?

Ans: It enables individuals and financial entities to securely share and integrate financial data, improving transparency and efficiency.

Q5: What other fintech innovations did RBI launch along with UMI?

Ans: RBI introduced UPI HELP, IoT Payments with UPI, Banking Connect, and UPI Reserve Pay to enhance digital payment infrastructure.

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