Why in news?

Under their interim trade agreement, India and the United States have agreed to significantly expand trade in technology products, particularly Graphics Processing Units (GPUs) and other equipment critical for data centres, alongside deeper joint technology cooperation.

The move aligns with India’s broader push to strengthen its digital and AI ecosystem. New Delhi has announced a tax holiday for foreign firms setting up data centres, reduced budgetary support under its flagship AI mission—shifting focus from subsidies to market-driven investment. It is witnessing a surge in iPhone exports, signalling growing integration with global technology supply chains.

As India lacks domestic GPU manufacturing capacity, it will rely heavily on imports, primarily from US-based firms such as Nvidia, to meet the rapidly rising compute demand of AI startups developing models and applications.

The agreement is expected to improve access to high-end computing hardware while positioning India as an attractive destination for data centre investments.

What’s in Today’s Article?

• On GPUs: A Positive Shift for India’s AI Ambitions
• India Meets Key US Demand on Data Centres
• A $100 Billion Opportunity for India’s Electronics Sector

On GPUs: A Positive Shift for India’s AI Ambitions

• The IndiaAI Mission saw its allocation reduced to ₹1,000 crore for 2026–27, down from ₹2,000 crore in the current fiscal, raising concerns about India’s AI momentum.
• The ₹10,370 crore mission aims to subsidise GPU access for startups and researchers developing AI models.
• So far, around 40,000 GPUs have been installed under the mission—widely seen as inadequate, especially when compared to the massive compute capacity available to leading American AI companies.
• India–US Trade Deal Offers an Alternative Route
  • The India–US interim trade agreement to increase trade in GPUs offers a market-driven alternative to public subsidies.
  • Since India lacks domestic GPU manufacturing, improved access to imports—primarily from US firms—can help bridge the compute gap for Indian startups.
• Contrast with Biden-Era Export Controls
  • This marks a clear departure from the approach under former US President Joe Biden.
  • Before leaving office, the Biden administration introduced stringent export controls on GPUs, placing limits on the number of GPUs India could import, citing national security concerns.
    • These restrictions were part of a broader global framework.
  • After President Donald Trump took office, the framework was set aside, easing access for partners like India.
• Escaping China-Style Technology Restrictions
  • From a strategic standpoint, India has secured favourable terms:
    • It has avoided China-style export controls, under which Beijing is barred from importing the most advanced GPUs
    • Although US restrictions on China have seen some recent dilution, they remain far stricter than those applied to India
  • This positions India as a trusted technology partner, rather than a restricted market.

India Meets Key US Demand on Data Centres

• Data centres have emerged as a major pillar of India–US technology cooperation. In a significant policy move, India announced a tax holiday until 2047 for foreign companies setting up data centres in the country, addressing a long-standing US demand.
• This incentive was announced in the Union Budget and signals India’s intent to position itself as a global hub for digital and AI infrastructure.
• US Demands in Trade Negotiations
  • During bilateral trade talks, the United States sought:
    • Greater market access for US data centre companies
    • Tax incentives
    • Affordable access to land, electricity, and water
    • Duty exemptions on select imports
  • By offering a long-term tax holiday, India has acted on one of the core US asks, strengthening the investment climate for foreign tech firms.
• Major US Investments Announced
  • Several US technology giants have announced large-scale investments in India’s data centre ecosystem:
    • Google: Announced a $15 billion investment (October) to build a 1 GW data centre in partnership with Adani Group.
    • Microsoft: Committed $17.5 billion (December), primarily focused on AI data centres.
    • Amazon: Plans to invest $35 billion over five years in India, with a significant portion expected to support data centre expansion.
  • These investments are driven by the surging compute demand of artificial intelligence.
• India’s Data Centre Market Outlook
  • Current market size: ~$10 billion
  • Revenue in FY24: ~$1.2 billion
  • Capacity addition: 795 MW of new capacity expected by 2027; Total capacity projected to reach 1.8 GW.

A $100 Billion Opportunity for India’s Electronics Sector

• The reduction of US tariffs on Indian goods from 50% to 18% has opened the door to a major expansion of India’s electronics manufacturing sector.
• Industry estimates suggest India–US electronics trade could reach $100 billion, driven by improved market access and smoother technology flows.
• Electronics Exports Gain Momentum
  • Electronics have emerged as a key growth engine for India:
    • Exports in 2024–25: ₹3.27 lakh crore (≈ $38 billion)
    • Largest export market: United States
  • The new trade framework is expected to accelerate export growth and deepen integration with global value chains.
• Employment and Industrial Footprint
  • India’s electronics manufacturing sector:
    • Employs over 2 million workers directly
    • Is concentrated in Tamil Nadu, Karnataka, Uttar Pradesh, and Maharashtra
    • Supports a broad ecosystem of component suppliers, assemblers, and technology service providers

Why in news?

The Economic Survey recently flagged a worrying rise in digital addiction and screen-related mental health issues, especially among children and adolescents. Responding to these concerns, the February 1 Union Budget announced steps to strengthen India’s mental health infrastructure.

Key measures include the proposal to set up a second National Institute of Mental Health and Neuro Sciences (NIMHANS) in north India, alongside plans to upgrade premier mental health institutions in Ranchi and Tezpur.

These steps aim to improve regional access, reduce pressure on existing facilities, and expand specialised mental healthcare services across the country.

What’s in Today’s Article?

• India’s Mental Health Burden: Scale and Severity
• Mental Health Infrastructure in India: Expanding Access Beyond Hospitals
• Where Does India Fall Short on Mental Health Funding
• The Way Ahead: Shifting to Preventive and Community-Based Mental Healthcare

India’s Mental Health Burden: Scale and Severity

• Experts warn that India is facing a serious mental health crisis.
• The country accounts for nearly one-third of global cases of suicide, depression, and addiction, making mental health a major public health challenge.
• High Suicide Burden Among Youth
  • Data from the National Crime Records Bureau and the Sample Registration System under the Ministry of Home Affairs show that:
    • Suicide is among the leading causes of death for Indians aged 15–29 years.
    • Young people are particularly vulnerable due to academic pressure, unemployment, social stress, and digital addiction
• Economic Cost of Mental Illness
  • According to the World Health Organization (WHO):
    • India is expected to lose $1.03 trillion between 2012 and 2030 due to mental health conditions.
    • Losses stem from reduced productivity, healthcare costs, and premature mortality.
• Large Treatment Gap
• A major concern is the treatment gap: 70%–92% of people with mental disorders do not receive proper care.
• Key reasons include: Lack of awareness; Social stigma; Severe shortage of trained mental health professionals.
• Shortage of Mental Health Professionals
  • As per the Indian Journal of Psychiatry:
    • India has 0.75 psychiatrists per 1,00,000 people
    • The WHO recommends at least 3 psychiatrists per 1,00,000
  • This gap severely limits access to diagnosis, counselling, and treatment.
• Low Budgetary Priority
  • Although overall health spending has increased since FY2014–15, mental health has received: Only about 1% of the total health budget.
  • Limited funding has constrained infrastructure, manpower, and outreach services

Mental Health Infrastructure in India: Expanding Access Beyond Hospitals

• To meet the rising demand for mental health services, the government has integrated mental healthcare into primary healthcare under Ayushman Bharat.
• Mental health services are now part of the Comprehensive Primary Health Care package delivered through Ayushman Arogya Mandirs (Health and Wellness Centres).
• Over 1.73 lakh sub-health centres and primary health centres have been upgraded into Ayushman Arogya Mandirs
• These centres provide basic mental health screening, counselling, and referrals, reducing dependence on specialised hospitals
• Strengthening Specialist Capacity
  • To address the shortage of trained professionals, the government has expanded education and training infrastructure:
    • Over 20 Centres of Excellence sanctioned for postgraduate training in mental health
    • 47 postgraduate departments in mental health established nationwide
  • These initiatives aim to increase the availability of psychiatrists, psychologists, and mental health specialists, especially in underserved regions.
• Tele-Mental Health Support: Tele MANAS
  • India has complemented physical infrastructure with digital outreach through Tele MANAS (Tele Mental Health Assistance and Networking Across States):
    • 24×7 free mental health support via helplines 14416 or 1-800-891-4416
    • Launched on October 10, 2022
    • 53 operational cells across 36 States and Union Territories
    • Backed by 23 specialised mentoring institutes
  • Tele MANAS bridges access gaps, especially for people in remote areas or those hesitant to seek in-person care.

Where Does India Fall Short on Mental Health Funding?

• India’s mental health budget has increased from ₹683 crore in 2020–21 to about ₹1,898 crore in 2024–25.
• However, experts argue that this rise masks a deeper problem of chronic underinvestment.
• The allocation remains below 2% of the total health budget, which itself is only around 2% of India’s GDP—far short of what the scale of the mental health burden demands.
• Mismatch Between Spending and Need
  • The underinvestment becomes stark when weighed against:
    • India’s high suicide and depression burden
    • Massive treatment gaps
    • Economic losses due to untreated mental illness
  • Despite these realities, mental health continues to receive low fiscal priority.
• Overemphasis on Tertiary Institutions
  • A major concern is where the money goes. A significant portion of allocations continues to be directed toward tertiary institutions such as NIMHANS and newly established centres of excellence.
  • While important, experts argue that:
    • Tertiary institutions alone cannot mainstream mental healthcare in a country of India’s size
    • They serve a limited population and are often concentrated in urban areas
  • They stress the need for targeted funding for grassroots mental health programmes, including:
    • Community-based services
    • Early intervention models
    • Preventive and promotive mental healthcare
  • Such approaches are more effective in reaching underserved populations and reducing long-term disease burden.
• Utilisation Gap Compounds the Problem
  • Beyond low allocations, there is also a utilisation issue:
    • Funds earmarked for mental health are not fully utilised at the national level
    • Administrative bottlenecks and lack of local capacity hinder effective spending
    • Health experts argue that better utilisation requires decentralised planning and community-led models, not just increased funding.

The Way Ahead: Shifting to Preventive and Community-Based Mental Healthcare

• India urgently needs affordable access, continuity of care, and timely treatment to prevent avoidable deaths and disability from mental illness.
• Experts highlight an over-reliance on specialist-led, tertiary care, severe shortages of trained professionals, and a 95% access gap.
• The government is pivoting to a whole-of-community approach, integrating mental well-being into schools and strengthening workplace policies to address stress and burnout—signalling a shift from curative to preventive, community-based care.

Why in News?

• The United States and India have agreed upon a Framework for an Interim Trade Agreement (ITA) aimed at delivering early trade gains while negotiations continue for a comprehensive US–India Bilateral Trade Agreement (BTA).
• The US-India BTA was launched in February 2025 by President Donald Trump and Prime Minister Narendra Modi.
• The framework reflects evolving geopolitical realities, particularly China’s rise, supply chain diversification, energy security concerns, and technology competition, which have injected new urgency into bilateral trade negotiations.

What’s in Today’s Article?

• Nature and Scope of the Interim Agreement
• Trade, Technology and Supply Chain Cooperation
• Strategic Significance
• Key Challenges
• Way Forward
• Conclusion

Nature and Scope of the Interim Agreement:

• A transitional but strategic arrangement:
  • Designed as a reciprocal and mutually beneficial trade arrangement, it is -
    • Intended to generate early trade benefits
    • Serves as a stepping stone toward a comprehensive BTA
  • The agreement signals renewed momentum in a relationship that has struggled for years over issues such as agriculture, digital trade, and market access.
• India’s commitments:
  • Tariff liberalisation and rationalisation: India will eliminate or reduce tariffs on all US industrial goods, reduce tariffs on US agricultural and food products, including dried distillers’ grains, red sorghum, tree nuts, fresh and processed fruits, soybean oil, wine and spirits.
  • Addressing non-tariff barriers (NTBs):
    • India agreed to tackle import licensing delays; standards-related restrictions; and barriers affecting medical devices, ICT goods, food and agricultural products.
    • Talks to align with US or international standards to conclude within six months.
    • Significance: Non-tariff barriers have long been contentious in WTO discussions. Their removal signals regulatory convergence.
• US commitments:
  • Tariff reductions for Indian exports:
    • The US will remove tariffs on generic pharmaceuticals; gems and diamonds; selected aircraft and aircraft parts.
    • India will receive ally-equivalent tariff treatment in certain aviation sectors, and get a preferential quota for auto parts at lower tariff rates.
    • However, the US will apply an 18% reciprocal tariff on several Indian exports including textiles, clothing, leather, footwear, plastics, chemicals, and certain machinery.
  • Relief under national security tariffs:
    • The US will lift certain tariffs imposed under national security provisions, especially in aviation sectors.
    • This is significant because national security tariffs are often invoked under domestic trade laws, and their removal indicates strategic trust.

Trade, Technology and Supply Chain Cooperation:

• Strategic economic integration:
  • India plans to purchase $500 billion worth of US goods over five years, including energy products, aircraft, precious metals, technology products, and coking coal.
  • Both sides agreed to expand trade in high-tech goods such as GPUs, and deepen cooperation in innovation, supply chains, economic security, and addressing non-market practices of third countries (implicit reference to China).
• Digital trade commitments:
  • Both countries agreed to address barriers to digital trade, committed to establishing clear and mutually beneficial digital trade rules.
  • Digital trade has been a key friction point, especially concerning data localisation, cross-border data flows, and e-commerce regulations.

Strategic Significance:

• Geopolitical drivers: China–US rivalry, supply chain realignment (“China +1” strategy), energy security, and Indo-Pacific strategic convergence.
• Economic implications: Enhanced market access for both sides, strengthening India’s position in global value chains, potential boost to manufacturing and exports, reinforcing India’s role in trusted technology supply chains.

Key Challenges:

• Agricultural sensitivities: US agricultural access may affect Indian farmers.
• Reciprocal tariffs: The US will apply a reciprocal tariff rate of 18% on many Indian goods, which may hurt labour-intensive sectors like textiles and leather.
• Pharmaceutical uncertainty: Subject to US tariff investigations.
• Digital trade disputes: Data sovereignty vs open digital markets.
• Rules of origin enforcement: Ensuring benefits accrue primarily to US and Indian producers.

Way Forward:

• Fast-track: Conclusion of the Interim Trade Agreement (ITA).
• Build: Trust through early harvest implementation.
• Protect: Sensitive sectors via calibrated tariff reduction.
• Align: Digital governance frameworks with global best practices.
• Strengthen: Institutional mechanisms for dispute resolution.
• Integrate: Trade negotiations with broader strategic cooperation (Quad, Indo-Pacific frameworks).

Conclusion:

• The India–US Interim Trade Framework represents more than a tariff adjustment exercise—it reflects a strategic recalibration of bilateral economic ties amid shifting global power dynamics.
• If implemented effectively, this framework could redefine India–US economic relations, reinforce supply chain resilience, and strengthen India’s position in the evolving global trade architecture.

Why in the News?

• The Union Budget 2026-27 significantly increased allocations for the AYUSH sector and announced major institutional and regulatory initiatives to expand its domestic and global footprint.

What’s in Today’s Article?

• AYUSH (Background, Budgetary Expansion, Strengthening Infrastructure, Impact of FTA with EU, Concerns, etc.)

Understanding the AYUSH System in India

• AYUSH refers to Ayurveda, Yoga & Naturopathy, Unani, Siddha, and Homoeopathy, India’s traditional systems of medicine that coexist with modern allopathic healthcare.
• Over the last decade, the government has sought to integrate AYUSH into the public health system while also positioning it as a source of economic growth and soft power.
• Institutionally, AYUSH functions under the Ministry of AYUSH, established in 2014.
• The sector operates through a nationwide network of AYUSH hospitals, dispensaries, teaching institutions, research councils, and regulatory bodies.
• The National AYUSH Mission (NAM) is the primary vehicle for integrating AYUSH services into primary healthcare by co-locating AYUSH facilities in existing health centres.
• India also hosts Institutes of National Importance such as the All India Institute of Ayurveda, New Delhi, and the National Institute of Homoeopathy, Kolkata, along with research bodies like the Central Council for Research in Ayurvedic Sciences.
• Regulatory oversight is provided by the National Commission for Indian System of Medicine and the National Commission for Homoeopathy, while drug standards are set by the Pharmacopoeia Commission for Indian Medicine and Homoeopathy.

Budgetary Expansion of the AYUSH Sector

• The Union Budget 2026-27 marked a sharp increase in government spending on AYUSH.
• The total allocation rose to Rs. 4,408 crore, up from Rs. 3,992 crore in 2025-26 and Rs. 2,122 crore in 2020-21.
• This reflects a long-term policy shift to mainstream traditional medicine within India’s healthcare framework.
• A major announcement was the establishment of three new All-India Institutes of Ayurveda, envisioned as centres of excellence on the lines of AIIMS.
• These institutions will combine patient care, advanced research, and high-quality medical education, aiming to standardise Ayurvedic practice nationally.
• The Budget also proposed enhanced funding for upgrading the WHO Global Traditional Medicine Centre in Jamnagar, signalling India’s ambition to lead global standard-setting for traditional medicine practices.

Strengthening Infrastructure, Research, and Supply Chains

• The National AYUSH Mission received a 66% hike to Rs. 1,300 crore, focusing on modernising AYUSH hospitals and dispensaries, expanding preventive healthcare, and upgrading existing facilities.
• Additional funds were earmarked for improving AYUSH pharmacies and drug-testing laboratories to address long-standing quality and safety concerns.
• A notable innovation announced was Bharat-VISTAAR, a multilingual AI-based digital assistant designed to support farmers cultivating medicinal plants.
• It will provide real-time guidance on crop quality, market prices, and export certification, strengthening the medicinal plant supply chain.

India-EU Free Trade Agreement and Global Outreach

• A key driver behind the Budget push is the India-European Union Free Trade Agreement (FTA), which has opened new opportunities for AYUSH in European markets.
• In EU countries that do not specifically regulate traditional medicine, Indian AYUSH practitioners can now offer services based on qualifications obtained in India.
• The FTA also allows Indian companies to establish wellness centres and Ayurvedic clinics across the EU with legal certainty.
• Importantly, it enables mutual recognition of certain laboratory test results and safety certifications, easing the export of AYUSH products.
• The agreement also recognises India’s Traditional Knowledge Digital Library, helping prevent biopiracy and wrongful patent claims on Indian formulations.

Concerns Around Evidence, Safety, and Regulation

• Despite the expansion, the AYUSH sector faces persistent criticism.
• Medical bodies such as the Indian Medical Association argue that many AYUSH therapies lack rigorous empirical validation through randomised controlled trials.
• Safety concerns remain, particularly regarding the presence of heavy metals like lead and mercury in some Ayurvedic formulations, which have triggered international health advisories.
• Another contentious issue is “mixopathy”, the overlap between AYUSH and allopathic practices.
• Policy decisions allowing Ayurveda practitioners to perform certain surgical procedures and prescribe allopathic drugs have led to legal disputes and professional opposition, highlighting the need for clearer regulatory boundaries.