Why in News?

• The newly elected government in Nepal has raised objections to India and China for planning to conduct the Kailash Mansarovar Yatra through the Lipulekh Pass, a disputed tri-junction.
• This has revived longstanding boundary tensions rooted in historical treaties and competing territorial claims.

What’s in Today’s Article?

• Background - The Lipulekh Dispute
• Positions of Stakeholders
• Historical Evolution of the Dispute
• Key Issues and Challenges
• Way Forward
• Conclusion

Background - The Lipulekh Dispute:

• Strategic location: Lipulekh Pass lies at the India-Nepal-China tri-junction and serves as a key route for trade and pilgrimage.
• Historical basis:
  • Nepal claims the region based on the Treaty of Sugauli of 1816.
  • It asserts that Limpiyadhura, Lipulekh, and Kalapani, east of the Mahakali River, belong to Nepal.
• India’s stand: Lipulekh has been a traditional route for the Kailash Mansarovar Yatra since 1954. It rejects Nepal’s claims as “unjustified and not based on historical evidence.”
• China’s role: Engaged in trade resumption with India through Lipulekh (2025), adding a trilateral dimension to the dispute.
• Immediate trigger:
  • India’s announcement (April 2026) to resume the Kailash Mansarovar Yatra (June–August) via Lipulekh.
  • Nepal’s formal diplomatic protest to both India and China, calling the route part of its sovereign territory.

Positions of Stakeholders:

• Nepal:
  • Reiterates territorial sovereignty based on historical treaties, maps, and evidence.
  • Demands halt to infrastructure, trade, and pilgrimage activities in the disputed region; preferably trilateral negotiations involving China, emphasizing resolution through diplomatic means.
• India:
  • Asserts longstanding customary usage of Lipulekh for pilgrimage.
  • Blame Nepal’s territorial claims as “artificial enlargement”.
  • Supports bilateral dialogue mechanisms to resolve boundary issues.
  • Significance of route for India:
    • Geopolitical: Maintaining influence in Nepal amid growing China presence.
    • Security: Strategic control over Himalayan passes.
    • Cultural diplomacy: Ensuring continuity of pilgrimage routes.
  • China: Maintains trade cooperation with India via Lipulekh, and has been informed by Nepal of its territorial claims but remains largely silent publicly.

Historical Evolution of the Dispute:

• 1954 onwards: India uses the Lipulekh route for the Mansarovar Yatra.
• 2020: Dispute intensifies after India builds a road in the region; Nepal publishes a new political map including disputed areas.
• 2025: Nepal protests India-China trade resumption via Lipulekh.
• 2026: Fresh tensions due to Yatra announcement.

Key Issues and Challenges:

• Boundary ambiguity: Different interpretations of the Mahakali River’s origin under the Sugauli Treaty.
• Nationalism and domestic politics: The boundary issue embedded in Nepal’s constitution—limits flexibility of any government.
• Strategic sensitivity: The tri-junction area has implications for India-China relations and regional security.
• Trilateral vs bilateral approach: Nepal’s demand for trilateral talks vs India’s preference for bilateral resolution.
• Impact on cultural/religious diplomacy: Potential disruption of the Kailash Mansarovar Yatra, affecting people-to-people ties.

Way Forward:

• Revitalise boundary dialogue mechanisms: Expedite meetings under existing India-Nepal boundary committees.
• Evidence-based resolution: Use historical maps, satellite imagery, and joint surveys.
• Confidence-building measures (CBMs): Temporary arrangements for pilgrimage while dispute resolution continues.
• Avoid escalatory rhetoric: Maintain diplomatic maturity to prevent strain in bilateral ties.
• Explore selective trilateral coordination: Limited engagement with China where necessary, without diluting bilateral frameworks.

Conclusion:

• The Lipulekh dispute underscores the complexities of Himalayan boundary politics, where history, geography, and nationalism intersect.
• While the Kailash Mansarovar Yatra serves as the immediate flashpoint, the underlying issue remains unresolved territorial claims.
• A calibrated diplomatic approach, rooted in dialogue and mutual sensitivity, is essential to preserve India-Nepal relations and regional stability.

Why in the News?

• Chief Economic Adviser Anantha Nageswaran highlighted that inland waterways are strengthening India’s logistics resilience amid global supply disruptions caused by the West Asian crisis.

What’s in Today’s Article?

• Inland Waterways (Meaning, Governing Body, Major Operational National Waterways, Significance, etc.)
• News Summary

About Inland Waterways in India

• Inland water transport (IWT) refers to the movement of goods and passengers through navigable rivers, canals, backwaters, and creeks using boats and vessels.
• It is one of the most efficient and environmentally friendly modes of transport, complementing road and rail networks in India’s multimodal logistics strategy.
• India has an extensive network of over 14,500 km of navigable waterways, of which 111 waterways have been declared as National Waterways (NWs) under the National Waterways Act, 2016.
• The Inland Waterways Authority of India (IWAI), established in 1986, is the nodal agency for developing and maintaining these national waterways.
• Major operational National Waterways include:

• NW-1: Ganga-Bhagirathi-Hooghly River system from Prayagraj to Haldia
• NW-2: Brahmaputra River in Assam
• NW-3: West Coast Canal in Kerala
• NW-4 & NW-5: Connecting river systems in Andhra Pradesh, Odisha, and Tamil Nadu

• These waterways are being developed with modern terminals, navigational aids, and vessel support services to facilitate steady cargo and passenger operations.

Importance of Inland Waterways

• Cost Efficiency: Water transport has the lowest per-tonne-per-kilometre cost, saving fuel and reducing logistics expenditure.
• Environmental Benefits: It generates lower carbon emissions compared to road and rail transport.
• Decongests Roads and Railways: By shifting bulk cargo movement to waterways, pressure on other modes is reduced.
• Boosts Trade and Connectivity: Enhances access to markets for agricultural and industrial goods, especially in hinterland regions.
• The government’s Jal Marg Vikas Project (JMVP) on NW-1 and several regional initiatives under the Sagarmala and PM Gati Shakti programmes aim to integrate inland waterways with ports, rail, and road connectivity, thereby strengthening India’s logistics ecosystem.

News Summary

• India’s Chief Economic Adviser (CEA) underscored the growing role of inland waterways in fortifying India’s logistics resilience amid ongoing global supply chain disruptions triggered by the West Asian conflict.

Inland Waterways: A Key Pillar of Resilience

• Describing inland water transport as one of the most gratifying developments of recent years, the CEA noted that cargo movement through inland waterways increased from about 18 million tonnes in 2013-14 to 146 million tonnes, registering a compounded annual growth rate (CAGR) of 21%.
• He explained that this rapid growth has helped India build a more self-reliant and stable logistics network, insulating domestic cargo movement from the volatility of global shipping lanes affected by geopolitical tensions.

Mitigating the Logistics Shock of Global Conflicts

• CEA Nageswaran described the ongoing West Asian crisis as not only an energy price shock but also a logistics shock.
• Disruptions in international maritime routes have caused elevated freight and insurance costs, which in turn affect the movement and pricing of goods across the world.
• In this context, India’s inland waterways serve as a relatively insulated channel for domestic cargo operations.
• By facilitating riverine transport and reducing dependence on international maritime routes, they help contain logistics costs and maintain supply chain stability.

Shift in Government Spending and Infrastructure Development

• The CEA pointed out that the success of inland waterways is part of India’s broader infrastructure transformation.
• Government spending has evolved from focusing mainly on roads and railways to creating a multimodal logistics network that includes national waterways, ports, and dedicated freight corridors.
• This shift has addressed long-standing logistics bottlenecks and contributed to sustaining economic growth above 7%, while keeping inflation moderate in the post-pandemic period.

Need for Resilient and Redundant Systems

• The CEA emphasised that global disruptions have made it essential to build redundancy and resilience into India’s logistics system instead of prioritising cost efficiency alone.
• With energy imports, including crude oil, LPG, and natural gas, remaining exposed to global volatility, domestic alternatives like inland waterways offer much-needed stability.
• He also remarked that “logistics is one of the key channels through which external shocks transmit into the economy,” and that improved internal connectivity can mitigate these risks.

Turning Challenges into Opportunities

• Framing the current global challenges as a strategic opportunity, CEA encouraged businesses and policymakers to focus on turning “compulsions into convictions and opportunities.”
• He cited inland waterways as a striking example; once underutilised, they are now emerging as a vital component of India’s transport mix and economic resilience strategy.

Context

• The European Union’s Carbon Border Adjustment Mechanism (CBAM), implemented on January 1, 2026, represents a significant shift in the intersection of global trade and climate policy.
• Marketed as a tool of fairness, CBAM seeks to equalise carbon costs between European producers and foreign exporters.
• While this principle appears equitable in theory, its practical application reveals structural imbalances, particularly for developing economies such as India.
• The policy raises broader concerns about fairness, climate justice, and economic sovereignty in the global green transition.

CBAM and the Question of Fair Competition

• Unequal Carbon Cost Burden
  • CBAM requires importers to pay a carbon price equivalent to that faced by EU producers under the Emissions Trading System (ETS).
  • However, European industries continue to benefit from extensive state support, including subsidies for decarbonisation, concessional financing, and the gradual phase-out of free emission allowances between 2026 and 2034.
  • These measures significantly reduce their effective carbon costs.
  • In contrast, Indian exporters face the full burden of CBAM charges without comparable domestic support.
• Concerns Under Global Trade Norms
  • This imbalance appears inconsistent with the spirit of GATT Article III, which discourages internal measures that indirectly protect domestic industries.
  • By maintaining support for its own producers while imposing full carbon costs on imports, the EU risks undermining the principle of non-discriminatory trade.

India–EU FTA: Limited Openings

• No Exemption from CBAM
  • The India–EU Free Trade Agreement (FTA), concluded on January 27, 2026, does not provide India with any exemption or special treatment under CBAM.
  • The EU has maintained a uniform approach, refusing country-specific flexibility.
• Significance of Annex 14-A
  • Despite this, Annex 14-A of the FTA establishes a formal technical dialogue on CBAM implementation.
  • It allows for:
    • Recognition of carbon pricing in the country of origin
    • A most-favoured-nation clause ensuring equal treatment if flexibility is granted to others
  • Though limited, this provision offers India a critical institutional mechanism to negotiate the recognition of its domestic carbon policies.

The Deeper Issue: Climate Justice and Sovereignty

• By shifting part of its decarbonisation burden onto developing countries while retaining the associated revenues, the EU creates a structural imbalance.
• For India, this translates into a loss of policy autonomy.
• Without control over carbon pricing or revenue utilisation, countries risk becoming passive participants, rule-takers rather than rule-makers, in the global climate regime.

India’s Domestic Preparedness: The CCTS

• Establishing a Carbon Market
  • India’s Carbon Credit Trading Scheme (CCTS), introduced in 2023, provides a foundation for domestic carbon pricing.
  • It requires industrial installations to hold tradable carbon credits against verified emissions, creating a measurable carbon cost.
• Leveraging CBAM Article 9
  • CBAM’s Article 9 allows importers to deduct carbon costs already paid in the country of origin.
  • This creates a legal pathway for India to ensure that its domestic carbon price is recognised at the EU border.
• Avoiding Double Pricing
  • Crediting CCTS under Article 9 would:
    • Prevent double carbon pricing
    • Maintain environmental integrity
    • Ensure fairness in trade
  • However, this requires strong monitoring systems, transparent pricing mechanisms, and safeguards against policy distortions.

The Case for an India Border Adjustment Mechanism (IBAM)

• A Strategic Countermeasure
  • India can respond proactively by introducing an IBAM, which would impose a carbon-based charge on exports destined for CBAM-regulated markets.
• Need for Coordinated Implementation
  • IBAM should not be implemented unilaterally. Instead, it must be developed through the institutional framework of Annex 14-A to ensure:
    • Recognition under CBAM Article 9
    • Seamless offsetting of CBAM liabilities
    • Policy credibility and international acceptance
• Capping the Carbon Burden
  • If properly aligned with CBAM, IBAM can ensure that Indian exporters do not face any higher net carbon cost than what CBAM would impose alone.

Retaining Carbon Revenues for Domestic Transition

• Shifting the Revenue Base
  • A key advantage of IBAM is that it allows India to retain carbon revenues domestically rather than transferring them to the EU.
• Investing in Green Development
  • These revenues should be channelled into a dedicated, transparent fund supporting:
    • Industrial decarbonisation (e.g., cleaner steel production)
    • Renewable energy expansion
    • Hydrogen and low-carbon technologies
    • Worker transition and social protection
  • Such investments would strengthen India’s long-term climate and economic resilience.

Conclusion

• While CBAM presents challenges for developing economies, it also offers opportunities for strategic adaptation.
• By leveraging the provisions of the India–EU FTA and CBAM’s legal framework, India can transform a potential disadvantage into a policy advantage.
• The combined use of CCTS and IBAM enables India to maintain control over carbon revenues, protect its exporters, and actively participate in the global green transition.
• Ultimately, IBAM-ing the CBAM reflects a broader vision: engaging with a carbon-constrained world on equitable terms while preserving national sovereignty and developmental priorities.

Context

• The influence of Artificial Intelligence (AI) now extends across economic systems, governance, warfare, and everyday human interaction, however, alongside its transformative potential lies a growing sense of unease.
• Developments involving companies such as Palantir Technologies and OpenAI reveal that AI is not merely a technological tool but a mechanism of power, one that raises urgent ethical, political, and social concerns.
• Therefore, it is important to examine the implications of AI’s expansion, focusing on militarisation, regulatory failures, corporate accountability, and the urgent need for global governance.

AI and the Shift Toward Hard Power

• The Ideological Transformation
  • A significant shift in thinking about AI is reflected in the ideas of Alexander C. Karp, who argues that democratic societies can no longer rely solely on moral authority.
  • Instead, hard power driven by software will determine global dominance.
  • This perspective signals a departure from traditional democratic ideals, placing technological superiority at the centre of geopolitical strategy.
• AI in Warfare
  • The use of AI in military operations illustrates this shift vividly. Systems like Palantir’s defence platforms are increasingly involved in identifying and selecting targets.
  • Such developments raise serious ethical concerns, particularly when civilian casualties are involved.
  • The delegation of life-and-death decisions to algorithms introduces ambiguity in accountability and challenges established norms of international law.

The Alarming Absence of Regulation

• Warnings from Within the Industry
  • Even leaders within the AI industry, such as Sam Altman, have expressed concern over the pace of technological advancement.
  • OpenAI’s policy document highlights that AI is evolving faster than society’s ability to adapt, calling for proactive and forward-looking governance.
• Limitations of Current Policy Approaches
  • Governments have largely failed to implement comprehensive policies, relying instead on vague or voluntary guidelines.
  • This gap between innovation and regulation creates a dangerous environment where powerful technologies operate without sufficient oversight.

Corporate Self-Regulation and Its Limits

• Ethical Frameworks by Tech Companies
  • In response to regulatory gaps, companies like Anthropic have developed internal ethical guidelines, such as Claude’s Constitution.
  • These frameworks aim to ensure that AI systems behave safely and ethically by restricting harmful outputs.
• Why Self-Regulation Falls Short?
  • While these efforts may appear responsible, they ultimately lack transparency and accountability.
  • Private corporations are not democratically accountable, and their priorities may conflict with public interest.
  • Moreover, such guidelines can be altered, ignored, or overridden, raising doubts about their effectiveness.

From Warfare to Surveillance

• Expansion of Surveillance Technologies
  • Technologies developed by companies like Palantir have reportedly been used for profiling and tracking individuals, particularly in immigration enforcement and predictive policing.
• Risks to Civil Liberties
  • Their widespread use raises serious concerns about privacy violations, racial profiling, and the erosion of civil liberties.
  • While some applications, such as pandemic contact tracing, have demonstrated public benefit, the broader trend points toward increasing state surveillance.

The Myth of Technological Inevitability

• The TINA Narrative
  • A growing acceptance of AI’s unchecked expansion reflects a broader belief that technological progress is inevitable.
  • This idea echoes the famous assertion by Margaret Thatcher that “there is no alternative.”
• Critique of Deterministic Thinking
  • As noted by Cory Doctorow, such narratives obscure the fact that technological developments are shaped by human choices.
  • Accepting them as inevitable discourages critical debate and limits the possibility of alternative futures.

The Need for Global Regulation and Collective Action

• Emerging International Efforts
  • Regulatory initiatives such as the European Union’s AI Act and policy proposals from countries like Brazil demonstrate that governance is both possible and necessary.
  • Leaders such as Luiz Inácio Lula da Silva have emphasised the importance of protecting human rights, data privacy, and national interests.
• India and the Global South’s Role
  • Countries like India, which currently follow a relatively soft regulatory approach, have an opportunity to take a more proactive stance.
  • By strengthening legal frameworks and participating in global cooperation, they can help shape a more equitable AI ecosystem.

Conclusion

• While AI offers unprecedented opportunities, its unchecked expansion threatens to undermine democratic accountability, civil liberties, and global equality.
• The growing reliance on corporate self-regulation and the persistence of weak governance frameworks highlight the urgency of collective action.
• Societies must reject the illusion of inevitability and actively shape the trajectory of technological development.
• Through robust regulation, international cooperation, and public engagement, it is possible to ensure that AI serves humanity rather than dominates it.