The Hindu Editorial Analysis- 2025-12-19

Temporary Relief

Introduction

India's recent increase in merchandise exports provides temporary reassurance amidst global trade challenges. The strong growth in exports to the U.S., despite high tariffs, showcases the resilience of Indian exporters. However, these gains are built on fragile foundations, with companies currently absorbing costs and facing rising demand risks. While the overall figures are encouraging, they conceal deeper structural vulnerabilities that could emerge in the near future.

Strong Headline Numbers, Limited Comfort

• India's merchandise exports saw a significant increase of 19.4% in November 2025, reaching $38.1 billion, marking the highest figure for November in a decade.
• Exports to the U.S. experienced a notable rise of 22.6% year-on-year, amounting to $6.98 billion, and were 10.7% higher than the figures for October.
• While these numbers are reassuring for the government, they do not warrant complacency, as there are underlying concerns.

Tariff Shock Masked by Short-Term Adjustments

• The recovery in exports to the U.S. is occurring despite the imposition of 50% tariffs, primarily because exporters are currently absorbing these costs.
• Exporters are adopting this strategy with the hope that the tariffs will be temporary, as losing customers now could have long-term negative consequences.
• However, this buffer is not sustainable in the long run, especially if the tariffs remain in place.

Stress on MSMEs and Supply Chains

• A significant portion of exporters consists of Micro, Small, and Medium Enterprises (MSMEs) in labour-intensive sectors, which have limited capacity to endure prolonged losses.
• While a depreciating rupee provides some relief, India's competitive disadvantage due to tariffs compared to other countries remains substantial.
• Additionally, reorienting supply chains takes time, and early indicators suggest a decline in orders for January, raising concerns about future demand.

Trade Deficit Shrinkage Signals Weak Demand

• The narrowing of the trade deficit is primarily attributed to a 1.9% decrease in imports, bringing the total to $62.7 billion.
• Given India's limited domestic capabilities, the decline in imports is more indicative of weakening demand rather than strengthening economic conditions.
• This trend, following recent GST rate cuts, requires careful monitoring to understand its implications.

Policy Response: Urgency Over Assurances

• The government's Export Promotion Mission recognizes the challenges faced by exporters, but detailed support schemes are still pending and need to be expedited.
• Implementing credit guarantee schemes, which proved effective during the COVID-19 pandemic, may provide more immediate assistance than a loan repayment moratorium.
• Given the unpredictable nature of tariff resolutions dependent on the U.S. President, it is prudent for India to prepare for worst-case scenarios while hoping for relief.

Conclusion

• Maintaining export momentum will require more than temporary resilience.
• Ongoing tariff pressures, declining import demand, and stress on MSMEs necessitate swift and targeted policy actions.
• While a resolution of trade tensions could alleviate some pressures, India must enhance export support mechanisms and be ready for uncertainties.
• Striking a balance between optimism and contingency planning will be crucial for sustained export growth.

A Bold Step Amid an Ambitious Nuclear Energy target

Context

The SHANTI Bill, 2025, aims to enhance and expedite India's nuclear energy plans.

Introduction

The connection between energy consumption and human development has been evident throughout history. Earl Cook's research in a 1971 Scientific American paper illustrated how as societies progressed from primitive stages to hunting, agriculture, industry, and technology, their energy requirements increased. Today, in the digital era, the digitalisation of the economy adds another layer to our energy needs.

Growth Rate and Generation

The Human Development Index (HDI) measures human development based on income, education, and health. There is a strong link between HDI and per capita Final Energy Consumption (FEC), which helps estimate the energy needed for a certain HDI level.

• As a member of the G-20, India aims to reach an HDI above 0.9.
• To achieve this, India would need to generate nearly 24,000 TWh of energy annually, with about 60% used as electricity and the rest for hydrogen production.
• Hydrogen is essential for decarbonising industries like steel, fertiliser, and plastics.
• Currently, India generates about 1,950 TWh of electricity annually, with a growth rate of 4.8%. At this rate, it could take four to five decades to reach the 24,000 TWh target.

There are two main challenges:

• Decarbonising the energy mix
• Expanding end-use electrification

Currently, electricity makes up 22% of FEC, and this needs to increase significantly. India's energy mix relies heavily on fossil fuels, which must be replaced with low-carbon sources like hydro, nuclear, solar, and wind energy.

The Decarbonised Energy Mix

In India, the potential for hydropower and wind energy is limited, and high population density restricts the availability of large land areas for solar photovoltaic deployment. Although the full potential of hydro, solar, and wind must be utilized, these sources alone are insufficient to meet the energy levels required for an HDI above 0.9.

• Consequently, nuclear power generation needs to be significantly expanded, and until then, fossil fuels will continue to play a role in meeting energy demand.
• Solar and wind energy are inherently intermittent, with electricity output varying by time of day and season. Balancing electricity supply and demand requires energy storage when generation is high and backup generation when it is low.
• Large-scale storage, especially to manage seasonal variability, is extremely expensive, making it an impractical standalone solution. To ensure affordable electricity, the power mix must include adequate baseload capacity-sources that operate independently of weather or time.
• Nuclear power plants provide reliable baseload electricity and are therefore essential to a decarbonised energy mix.
• Recognising this need, institutions under the Department of Atomic Energy, in collaboration with Indian industry, have worked to make the nuclear supply chain largely indigenous. Uranium remains the only major input that must be imported, as domestic reserves are insufficient.
• India has developed capabilities for nuclear fuel fabrication, heavy water production, and manufacture of reactor equipment, particularly for Pressurised Heavy Water Reactors (PHWRs).
• The Nuclear Power Corporation of India Limited (NPCIL) has mastered the design and operation of PHWRs, with capacities up to 700 MW.
• Three 700 MW PHWR units are already operational, a fourth is nearing completion, and two more are at an advanced construction stage. In 2017, the central government approved the construction of 10 additional 700 MW PHWRs, and progress on these projects is ongoing.
• A dedicated nuclear regulatory body, established in the 1980s, now possesses the expertise and capacity to effectively regulate nuclear power plants. The Bhabha Atomic Research Centre (BARC) has developed technologies to reprocess spent fuel, recover valuable materials, and manage nuclear waste safely.

Collectively, these efforts make nuclear energy a technically feasible, economically viable, and safe option for India's long-term decarbonisation strategy.

The SHANTI Bill

• Recent achievements in the nuclear sector have encouraged the central government to set an ambitious target of 100 GW of installed nuclear capacity by mid-century.
• Both Houses of Parliament have passed the Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Bill, 2025.
• The SHANTI Bill is an overarching legislation, consolidating key provisions from the Atomic Energy Act, 1962 and the Civil Liability for Nuclear Damage Act, 2010.
• The Bill provides legal continuity by stating that the existing Atomic Energy Regulatory Board shall be deemed to have been constituted under this Act.
• It clearly assigns the primary responsibility for safety, security, and safeguards to the licensee operating the nuclear facility.
• The 100 GW nuclear target is undeniably ambitious, reflecting the scale of India's long-term development and decarbonisation goals.
• Passage of the SHANTI Bill represents a bold policy step, signalling strong political commitment to nuclear energy.
• For India to transition into a developed country, such ambitious targets and decisive legislative actions are both necessary and timely.

Conclusion

Achieving high human development requires energy that is reliable, affordable, and clean, in large quantities. Given India's limitations with renewable energy sources, nuclear power becomes a vital solution for providing a stable energy base while significantly reducing carbon emissions. The SHANTI Bill, 2025 offers the necessary institutional clarity and policy assurance to expand nuclear energy capacity. Such bold reforms are crucial for India to sustainably achieve its developmental goals.