Why in news?

• The ongoing US-Iran conflict and near-closure of the Strait of Hormuz has created severe logistical disruption for Indian trade.
• India's top export promotion body, the Federation of Indian Export Organisations (FIEO), has written to the ministries of Ports & Shipping and Commerce & Industry flagging two serious problems:
  • opportunistic pricing by foreign shipping lines and non-transparent detention and
  • demurrage charges by port authorities.
• The crisis has hit India's western ports — JNPT, Kandla, and Mundra — particularly hard.

What’s in Today’s Article?

• Understanding the Key Terms
• How the West Asia Crisis Triggered the Problem?
• The Problem of Opportunistic Pricing
• The Labour Shortage Problem
• What Exporters and Industry Are Demanding?
• The Bigger Picture

Understanding the Key Terms

• Detention charges – These are fees levied on exporters or importers when a shipping container is kept beyond the allowed free time outside the port — for example, at a factory or warehouse — before being returned to the shipping line.
• Demurrage charges – These are fees for keeping a container inside the port terminal beyond the permitted free period.
• War Risk Surcharge (WRS) is an additional freight charge levied by shipping lines when vessels pass through conflict zones — reflecting the higher insurance and operational risk.
• When these charges are applied non-transparently, inconsistently, or retroactively, they become a serious burden on exporters — especially during a crisis when they are already dealing with rising freight rates and port delays.

How the West Asia Crisis Triggered the Problem?

• The chain of events is straightforward. The near-closure of the Strait of Hormuz — through which a large share of India's trade with West Asia passes — disrupted shipping routes in March and April 2026.
• West Asia-bound containers that could not be delivered were diverted and temporarily stored at Indian western ports, primarily JNPT (Jawaharlal Nehru Port Trust).
• When the Iran-US ceasefire was announced in April 2026, these stranded shipments began flowing back into the system simultaneously.
• The sudden influx overwhelmed port capacity. JNPT, Kandla, and Mundra — which together form India's biggest container gateway — became severely congested.
• Container evacuation slowed, backlogs piled up, and costs began rising sharply.
• As of June 6, 2026, Mundra Port congestion continues to persist, with the Central Warehousing Corporation (CWC) warning traders of delays in container evacuation, rail transit, and onward dispatch.
• CWC also noted that container loading is being done based on operational accessibility rather than the standard First-In-First-Out (FIFO) basis — adding unpredictability for exporters.

The Problem of Opportunistic Pricing

• The Directorate General of Shipping (DGS) had issued an advisory, asking all stakeholders to "refrain from predatory, non-transparent and opportunistic pricing practices, including levy of exorbitant charges."
• However, FIEO's letter to the government stated bluntly that this advisory is not being followed on the ground.
• Exporters continue to report:
  • Unilateral and non-transparent imposition of detention and demurrage
  • War Risk Surcharge being applied inconsistently — with different shipping lines using different cut-off dates
  • WRS being levied even on cargo already discharged before the conflict began
  • Charges for basic port services like lift-on/lift-off having gone up several times
• The Transparency Problem
  • A particularly damaging issue is the format of invoices from foreign shipping lines.
  • Many lines are merging WRS within the overall ocean freight rather than showing it as a separate line item.
  • This prevents exporters from claiming relief under the government's RELIEF support framework being implemented by ECGC (Export Credit Guarantee Corporation of India).
  • FIEO has requested a uniform and transparent cut-off date for WRS applicability across all shipping lines, and standardised invoice formats that show WRS separately.

The Labour Shortage Problem

• Adding to port congestion is an acute shortage of trailer drivers at JNPT. This has seriously impeded the movement of import containers from terminals to Container Freight Stations (CFS).
• The Shipping Ministry confirmed there has been no strike, but acknowledged the driver shortage has caused delays.

What Exporters and Industry Are Demanding?

• The industry's demands are clear and practical. As per them, during a crisis, relief measures should be announced — not additional charges.
• Also, more storage space is needed so that cargo can be unloaded and moved without accumulating detention charges due to port-side delays that are beyond exporters' control.
• A single point of contact comprising the Road, Shipping, Commerce, and Customs ministries is needed to coordinate crisis response.
• They called for making the entire port clearance system paperless to eliminate delays that compound during a crisis.

The Bigger Picture

• This crisis exposes a structural vulnerability in India's export logistics — one that geopolitical disruptions can quickly turn into a financial crisis for exporters.
• India's western ports are critically dependent on Gulf shipping routes. When those routes are disrupted, the entire export supply chain seizes up.
• There are no domestic shipping lines of sufficient scale to provide an alternative. Foreign shipping lines — which dominate India's container trade — have little regulatory accountability during a crisis.
• The DGS advisory has no enforcement mechanism.
• The result is that Indian exporters — already facing high freight rates — also bear the cost of port congestion, arbitrary surcharges, and a system that has no single crisis management authority.

Why in news?

Following Chief Justice Surya Kant's controversial remark comparing some unemployed youth to "cockroaches", protesters and the satirical Cockroach Janta Party (CJP) have adopted the insect as a symbol of dissent.

While CJP is currently a youth pressure group and not a registered political party, its founder has not ruled out seeking registration in the future.

However, even if the group registers as a political party, the Election Commission is unlikely to allot the cockroach as an election symbol, as symbols must comply with specific EC guidelines regarding acceptability and public perception.

What’s in Today’s Article?

• Election Symbols in India: What the Rules Say
• What Symbols Are Allowed by the Election Commission?
• Can a New Political Party Choose Any Election Symbol
• Why a Cockroach Is Unlikely to Become an Election Symbol?

Election Symbols in India: What the Rules Say

• Allocation of Election Symbols - The Election Commission (EC) allocates election symbols under the Election Symbols (Reservation and Allotment) Order, 1968. These symbols help voters identify parties and candidates on the ballot.
• Reserved Symbols for Recognised Parties - Recognised national and state parties are allotted their exclusive reserved symbols. For example, the BJP uses the lotus, while the Congress uses the hand symbol.
• Free Symbols for Others - Unrecognised political parties and independent candidates are allotted symbols from the EC's list of "free symbols". These are not permanently reserved for any party.
• No Guaranteed Choice - Candidates and unrecognised parties may request a preferred symbol from the free-symbol list, but the Election Commission is not obligated to grant their choice.

What Symbols Are Allowed by the Election Commission?

• The Election Commission's list of free symbols includes a wide range of simple and easily identifiable images drawn from everyday life.
• These cover categories such as fruits, vegetables, household appliances, farm tools, sports equipment, and food items.
• Diverse Range of Free Symbols - The latest EC list, released in May 2025, contains 184 free symbols, including items such as air-conditioners, balloons, door bells, dustbins, frying pans, jackfruits, and grapes.
• Everyday Objects and Food Items - The list also features common household objects like immersion rods, latches, mixers, toothbrushes, and TV remotes, along with various fruits, vegetables, cakes, and toffees to ensure easy voter recognition.

Can a New Political Party Choose Any Election Symbol?

• Free Symbols Are the Usual Option - In most cases, new or unrecognised political parties must choose from the Election Commission's approved list of free symbols, which contains over 100 options.
• How Symbol Allotment Works - Parties can indicate their preferred symbols, but the final decision rests with the Election Commission.
• If Multiple Parties Want the Same Symbol - When more than one party seeks the same symbol, allotment may be decided on a first-come-first-served basis or through a draw of lots.
• EC Has the Final Say - Even if a party requests a particular symbol, the Election Commission can allot a different free symbol if the preferred one is unavailable.

Why a Cockroach Is Unlikely to Become an Election Symbol?

• EC's Ban on Animal Symbols - The Election Commission largely stopped allotting animals as election symbols in the 1990s following concerns raised by animal welfare activists about the misuse and mistreatment of animals during election campaigns.
• Background to the Decision - The move was influenced by incidents such as the 1989 Tamil Nadu Assembly election, when roosters used as a party symbol were reportedly subjected to cruelty during campaign activities.
• Existing Exceptions - Some parties that received animal symbols before the ban continue to retain them. The most prominent example is the Bahujan Samaj Party (BSP), which still uses the elephant as its reserved symbol.
• Cockroach Symbol Unlikely - Given the Election Commission's long-standing policy against allotting animal symbols, a cockroach is unlikely to be approved as an election symbol for any new political party or candidate.

Context:

• Myanmar's President U Min Aung Hlaing visited India from May 30 to June 3, 2026 — his first visit in his capacity as President.
• Before arriving in New Delhi for talks, he stopped at the Mahabodhi Temple in Bodh Gaya — a deliberate civilisational signal.
• This article argues that India's decision to engage the Myanmar military government — despite its controversial 2021 coup — is driven by geography, strategic necessity, and the inescapable reality of China.

Why India Chose Engagement Over Isolation?

• The world's democracies largely turned their backs on Myanmar after the February 2021 coup that ousted Aung San Suu Kyi's elected government. Western nations imposed sanctions and sought to isolate the military junta.
• India chose a different path. Foreign Secretary Vikram Misri stated plainly that India's policy is "not intended to be a commentary on the internal political arrangements" in Myanmar.
• This was realpolitik dressed as pragmatism — and there are three compelling reasons behind it.
  • Geography first. Myanmar shares a 1,643 km border with four of India's northeastern states — Arunachal Pradesh, Nagaland, Manipur, and Mizoram. An unstable or hostile Myanmar is a direct security threat to India's most sensitive and fragile border region.
  • Act East and Neighbourhood First. Myanmar is India's only land bridge to Southeast Asia. Without a stable, cooperative Myanmar, India's ambitions to integrate its northeast with the ASEAN economies remain geographically stranded.
  • The China factor. Since the coup, Beijing has aggressively stepped into the vacuum left by Western withdrawal — providing infrastructure financing, arms supplies, and diplomatic cover to Naypyidaw. For India to disengage entirely would be to hand China a free pass in its own backyard.

The Infrastructure Stakes: Two Corridors, Two Delays

• Two connectivity projects dominated the Modi-Hlaing agenda, and both tell a story of ambition delayed by conflict.
• The Kaladan Multi-Modal Transit Transport Project
  • This project connects Kolkata to Sittwe (Rakhine State) by sea, then follows the Kaladan River inland to Paletwa, before linking by road to Zorinpui in Mizoram.
  • The sea and river components are operational — the first cargo shipment reached Sittwe in May 2023.
  • But the critical 109 km Paletwa-Zorinpui road through mountainous, flood-prone Chin State remains incomplete. Full operationalisation is now targeted for 2027.
• India-Myanmar-Thailand Trilateral Highway
  • This carries an even grander vision: linking Moreh in Manipur to Mae Sot in Thailand through roughly 1,360 km of Myanmar, with planned extensions to Cambodia, Lao PDR, and Vietnam.
  • Once complete, it could transform India's landlocked northeast into a true gateway to Southeast Asia. It was supposed to be finished by 2019. It still is not.
  • The reason for both delays is the same: Myanmar's internal armed conflict. Armed groups control large stretches of territory along both corridors, making construction dangerous and unpredictable.

Beyond Infrastructure: Trade, Security, and People

• The summit covered significant ground beyond connectivity.
• Trade stood at $1.95 billion in 2025-26. Both sides agreed to increase it through a rupee-kyat settlement mechanism — reducing dependence on dollar transactions. Discussions also covered critical minerals and rare-earth cooperation — an area of growing strategic importance for India.
• Security was equally significant. President Hlaing reiterated Myanmar's assurance that its territory would not be used against India's interests — a crucial pledge given the long presence of Indian insurgent groups and cybercrime networks in Myanmar's border regions.
• Cybercrime and trafficking have emerged as a new bilateral concern. More than 2,400 Indian nationals have been rescued from scam centres in Myanmar through bilateral cooperation over the past 18 months — though many remain trapped.
• Education received attention too. India announced an increase in Mekong-Ganga ICCR scholarships for Myanmar students from 36 to 100 annually from 2026 — a soft power investment in the bilateral relationship.

The Larger Reckoning

• By receiving Hlaing as Myanmar's President, India has signalled a measured acceptance of political reality — not an endorsement of the military government, but a recognition that meaningful engagement requires working with whoever holds power.
• For Myanmar, the choice of India for Hlaing's first major bilateral visit abroad as head of state is itself telling.
• It signals a deliberate effort to cultivate a relationship that can provide diplomatic and economic counterweight to overwhelming dependence on China.
• For India, the calculus is rooted in geography, security, and the historical lesson that disengagement rarely produces better outcomes than engagement.
• Pragmatic engagement, however uncomfortable, may increasingly define how the region deals with Myanmar.

Conclusion

• India's Myanmar policy is not about comfort — it is about calculus. In a neighbourhood where China fills every vacuum, New Delhi's choice to engage is less an endorsement of the junta and more a refusal to be strategically outmanoeuvred on its own border.

Context

• The emergence of Mythos-class AI models marks a transition from human-assisted security analysis to autonomous cyber operations.
• These systems can identify zero-day vulnerabilities, plan attacks, and exploit weaknesses at unprecedented speed.
• For India, which operates one of the world's largest digital public infrastructure (DPI) ecosystems, this transformation presents both opportunities and significant security risks.
• Protecting critical systems now requires stronger institutions, faster technological adaptation, and strategic international cooperation.

The Growing National Security Challenge

• AI as a Strategic Technology
  • AI has evolved from a tool of economic growth into a critical national security asset.
  • Countries leading in frontier AI development possess significant advantages in cybersecurity, intelligence, and defence.
  • As advanced AI capabilities spread, they may also become accessible to hostile states, criminal organisations, and non-state actors, increasing global cyber risks.
• The Emergence of an Algorithmic Arms Race
  • Cybersecurity is increasingly becoming an algorithmic arms race.
  • Success depends on the ability to identify, exploit, and patch vulnerabilities faster than adversaries.
  • Nations unable to keep pace with technological advancements risk strategic disadvantages.

Why Mythos-Class AI Matters?

• Discovery of Zero-Day Vulnerabilities
  • A zero-day exploit is a software flaw unknown to developers and therefore unpatched.
  • Advanced AI systems can discover such vulnerabilities at a scale previously impossible for human experts.
  • By dramatically reducing the cost and time required for vulnerability discovery, these systems increase the likelihood of large-scale cyberattacks.
• Autonomous Attack Chaining
  • One of the most concerning capabilities of Mythos-class models is their ability to combine multiple low-severity vulnerabilities into a single destructive attack.
  • Vulnerabilities that may appear insignificant individually can be linked into sophisticated attack pathways capable of causing widespread disruption.
• Democratisation of Cyber Capabilities
  • Historically, advanced cyber operations were limited to governments and highly skilled experts.
  • AI significantly lowers the barrier to entry by enabling even moderately skilled users to develop functional exploits.
  • This empowers ransomware groups, hackers, and other malicious actors, expanding the range of potential threats.
• Increasing Autonomy
  • Advanced AI systems are capable of long-horizon planning, autonomous execution, and adaptive problem-solving.
  • Such capabilities raise concerns about systems operating with limited human oversight, making cyber threats more difficult to predict and control.

India's Preparedness Gap

• Strengths of India's Digital Ecosystem
  • India has built a globally recognized DPI through platforms such as UPI, Aadhaar, and the Account Aggregator framework.
  • These innovations have transformed governance, financial inclusion, and digital service delivery.
• Dependence on Legacy Systems
  • Despite these achievements, many public institutions continue to rely on legacy systems, outdated software environments, and ageing technological infrastructure.
  • Such systems are often more vulnerable to sophisticated cyberattacks and require extensive modernisation.
• Workforce and Response Challenges
  • India faces a cybersecurity workforce shortage of more than 6,00,000 professionals.
  • At the same time, many institutions operate with slow patch cycles, often taking months to address vulnerabilities.
  • This creates a dangerous mismatch between machine-speed attacks and human-speed responses.

Policy Recommendations

• Establish an India AI Safety Institute (IASI)
  • A dedicated IASI should be created to evaluate frontier AI systems, test them against Indian threat scenarios, and coordinate with international safety organisations.
  • Such an institution would strengthen domestic AI safety evaluation and risk-assessment capabilities.
• Strengthen International Cooperation
  • India should pursue a Defensive AI Quad involving the United States, the United Kingdom, and Japan.
  • This partnership could facilitate intelligence sharing, joint research, and access to advanced defensive technologies.
• Develop an AI Accountability Framework
  • A comprehensive AI accountability framework should require developers of highly capable AI systems to disclose capability assessments, risks, and known harms.
  • Such regulations would enhance transparency while promoting responsible innovation.
• Modernise Cybersecurity Infrastructure
  • The government should establish a large-scale cybersecurity upgradation fund to modernize critical infrastructure and reduce dependence on obsolete technologies.
  • Simultaneously, India should invest in sovereign defensive AI models capable of real-time monitoring, anomaly detection, and automated threat containment.
• Promote Global Governance
  • India can play a leading role in advocating international norms governing the release of advanced AI systems, particularly those possessing offensive cyber capabilities.
  • Global cooperation will be essential to manage emerging risks effectively.

Conclusion

• The challenge is no longer limited to preventing isolated cyberattacks but adapting to a world where intelligent systems can discover and exploit vulnerabilities at machine speed.
• India's future cybersecurity resilience depends on closing its preparedness gap through institutional reforms, infrastructure modernisation, international partnerships, and investment in defensive AI.
• In an era defined by rapidly evolving technological competition, preparedness is no longer optional but a strategic necessity.

Why in the News?

• India's fertiliser subsidy burden is likely to double to nearly Rs. 3.4 lakh crore in 2026-27 due to surging global prices caused by the West Asia conflict and the closure of the Strait of Hormuz.

What’s in Today’s Article?

• About Fertilisers (Basics, India’s Dependence, Subsidy Mechanism, etc.)
• News Summary (Causes of Surge, Fiscal Implications, Govt Response, Significance, etc.)

About Fertilisers and India's Dependence

• Fertilisers are essential agricultural inputs that supply nutrients, primarily nitrogen (N), phosphorus (P), and potassium (K), to crops, supporting higher yields and food security. India's agriculture is heavily dependent on fertilisers, particularly:

• Urea: The most widely used nitrogen-based fertiliser, primarily used for crops like rice, wheat, and sugarcane.
• Di-Ammonium Phosphate (DAP): A phosphate-based fertiliser.
• Muriate of Potash (MOP): A potassium-based fertiliser.
• Nitrogen-Phosphorus-Potassium (NPK) Complex Fertilisers: Multi-nutrient fertilisers.

• India is one of the largest importers of fertilisers in the world. Major exporters include China, Russia, Morocco and Gulf nations (Oman, Qatar, Saudi Arabia, UAE, Bahrain)
• Before the West Asia war, the Gulf nations accounted for around 40% of India's urea imports.

Fertiliser Subsidy Regime in India

• The Indian government heavily subsidises fertilisers to make them affordable for farmers and maintain food security. The subsidy system operates under two main frameworks:
• Urea Subsidy

• Urea is sold at a fixed Maximum Retail Price (MRP) of around Rs. 268 per 45-kg bag.
• The difference between the production/import cost and the MRP is borne by the government as a subsidy.

• Nutrient-Based Subsidy (NBS) Scheme

• Launched in April 2010 for non-urea fertilisers (DAP, MOP, complex fertilisers).
• The government provides a fixed subsidy per kg of nutrient content (N, P, K, and Sulphur).
• Manufacturers can fix the MRP based on market conditions.

• Direct Benefit Transfer (DBT)

• Since 2018, fertiliser subsidy has been routed through the DBT mechanism.
• Sales are recorded through PoS (Point of Sale) machines at retail outlets.
• Subsidy is released to companies based on actual sales to farmers.

News Summary

• According to top government sources, India's fertiliser subsidy burden is likely to reach Rs. 3.4 lakh crore in 2026-27, an almost 100% increase compared to the Budget estimate of Rs. 1.7 lakh crore.
• The cost of a fertiliser sack has surged from around Rs. 2,900 post-COVID to around Rs. 4,500 now, while the government continues to sell it at a subsidised price of around Rs. 300 per sack.

Causes of the Surge

• Global Supply Crunch
  • The West Asia conflict and the closure of the Strait of Hormuz, a critical waterway, have caused massive disruptions:

• India's latest urea purchases were at a cost-plus-freight price of $935-$959 per tonne.
• This is more than double the year-ago figure of $410-$420 per tonne.
• Global suppliers, including China, are holding on to their stock due to the Iran war.

• China's Export Ban
  • In mid-March 2026, China banned the export of fertilisers to secure domestic supplies, removing a critical source of supply for India.

Shift to Russia and Alternative Sources

• Given the supply crunch, the government is exploring alternative sources:

• India's urea imports from Russia rose to 13.99 LMT from 9.23 LMT.
• Imports from China surged to 21.24 LMT in the first 11 months of 2025-26 from just 0.99 LMT in all of 2024-25 (before the ban).
• The government is now planning to tap Russia to meet more of its import requirements.

Fiscal Implications

• Subsidy Spending Trends

• 2024-25: Rs. 1.73 lakh crore on fertiliser subsidy.
• 2025-26 (Revised Estimate): Raised to Rs. 1.86 lakh crore from initial Rs. 1.68 lakh crore.
• 2025-26 (Actual): Rs. 2.11 lakh crore, Rs. 24,920 crore more than the revised estimate, 22% higher than 2024-25.
• 2026-27 (Budget Estimate): Rs. 1.71 lakh crore, likely to balloon to Rs. 3.4 lakh crore.

• April 2026 Expenditure
  • The Controller General of Accounts data shows the Centre spent Rs. 22,033 crore as subsidy in April 2026 for urea and nutrient-based fertilisers, roughly 13% of the full-year estimate in just one month.
• Pressure on Fiscal Deficit
  • The fiscal pressure from the fertiliser subsidy is compounded by:
    • Rs. 1.23 lakh crore lost in revenue foregone due to the Rs. 10 per litre excise duty cut on fuel.
    • Under-recoveries of public sector oil marketing companies (OMCs), earlier Rs. 1,000 crore a day, now around Rs. 650 crore.
  • April 2026 fiscal deficit surged to a 26-month high of Rs. 3.62 lakh crore, accounting for 21.4% of the entire 2026-27 target.

• The "3 Fs" Challenge
  • Finance Minister Nirmala Sitharaman highlighted the "3 Fs" that require focus amid rupee pressure:

• Fertiliser: heavily imported, surging prices.
• Fuel: crude oil dependence, elevated global prices.
• Foreign exchange to buy gold: a significant import bill.

• All three items must be paid for in foreign currency, putting pressure on the rupee.

Concerns Over Diversion

• Current Stock Position
  • Despite the price pressures, the government has stated that the overall stock position is "comfortable" for the kharif season:

• Kharif fertiliser requirement (2026): 383.9 LMT
• Current stocks: 197.56 LMT (51% of requirement)
• Usual stock level: About 33%, so current stocks are significantly higher
• Farmer purchases so far: 86.65 LMT (just under 23% of total requirement)
• Government Response
  • The government has instructed states to:
    • Provide fertiliser based on the actual requirement plus a reasonable buffer.
    • Strengthen monitoring at retail outlets.
    • Use PoS data to track unusual purchase patterns.

Significance and Implications

• For Farmers

• Continued subsidised access to fertilisers despite the global price surge.
• Risk of supply disruptions if imports are not secured.
• Need for soil health awareness and balanced fertiliser use.

• For Government Finances

• Massive fiscal burden affecting other priorities.
• Pressure on fiscal deficit targets.
• Trade-offs with other welfare and capital expenditure.

• For India's External Sector

• A higher import bill puts pressure on the current account deficit.
• Foreign exchange outflows are affecting the rupee.
• Need to diversify import sources.

• For Agricultural Policy

• Long-term concerns about fertiliser subsidy sustainability.
• Need for promoting organic and natural farming.
• Importance of soil health management.
• Push for nano fertilisers and precision agriculture.

Why in News?

• To strengthen foreign currency inflows and improve external sector liquidity, the RBI has introduced a special dispensation allowing banks to mobilise fresh FCNR(B) deposits with maturities of 3–5 years until September 2026.
• Additionally, banks can swap these deposits with the RBI at concessional terms, effectively eliminating the cost of hedging foreign exchange risk.
• Experts estimate that the move could potentially attract $50–70 billion in foreign capital, although its success will depend largely on the interest rates offered by banks.

What’s in Today’s Article?

• What are FCNR(B) Deposits?
• Reasons Behind Introducing New Facility
• Reasons for FCNR(B) Deposits Currently Being Less Attractive
• Working of RBI’s New Swap Facility
• Additional Regulatory Relaxations
• Trends in NRI Deposits During FY26
• Conclusion

What are FCNR(B) Deposits?

• Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits are fixed-term deposits maintained by:
  • Non-Resident Indians (NRIs)
  • Overseas Citizens of India (OCIs)
  • Persons of Indian Origin (PIOs)
• Key features:
  • Deposits are held in foreign currencies such as the US Dollar (USD), Pound Sterling (GBP), Euro (EUR), Japanese Yen (JPY), Australian Dollar (AUD), and Canadian Dollar (CAD).
  • Such deposits protect depositors from exchange-rate fluctuations.
  • Interest earned is exempt from income tax in India for eligible non-residents.
  • Interest rates are linked to international benchmark rates.

Reasons Behind Introducing New Facility:

• Sharp decline in FCNR(B) inflows:
  • FCNR(B) inflows fell by 86% in FY26, and fresh inflows dropped to $946 million from $7.1 billion in FY25.
  • Outstanding FCNR(B) deposits stood at $33.8 billion at the end of March FY26.
  • The decline reflects - expiry of earlier regulatory incentives, lower returns compared to overseas deposit options, and strong competition from US dollar deposits abroad.
• RBI’s objective:
  • To boost foreign currency inflows.
  • Strengthen forex reserves and external sector resilience.
  • Provide banks with a cheaper source of overseas funding.
  • Enhance liquidity without significantly increasing borrowing costs.

Reasons for FCNR(B) Deposits Currently Being Less Attractive:

• Lower interest rates offered by Indian banks:
  • For example, SBI offers 3.35% [3–4 years FCNR(B) rate], HDFC bank offers 3.65%, and ICICI bank offers 3.0%.
  • In contrast, SBI offers about 6.3% on comparable domestic fixed deposits. HDFC and ICICI offer around 6.5% on rupee deposits.
• Competition from overseas markets:
  • US dollar deposits abroad provide higher returns.
  • For example, Merrick bank offers ~4.2% annualised percentage yield (APY), Morgan Stanley offers ~4.3% APY, and SBI's US Certificate of Deposit (CD) offers ~3.85%.
  • Therefore, unless Indian banks raise FCNR(B) rates by around 100 basis points (1%), NRIs may have little incentive to transfer funds to India.

Working of RBI’s New Swap Facility:

• Concessional hedging support: The RBI has allowed banks to swap FCNR(B) deposits with the central bank at concessional terms.
• Mechanism:
  • Banks sell US dollars to the RBI and simultaneously agree to buy them back at maturity.
  • Swap transactions will occur at the same exchange rate in both legs.
  • The swap is undertaken at par, removing exchange-rate risk.
• Operational conditions:
  • Facility available for deposits mobilised up to September 30, 2026.
  • The swap window remains open until October 16, 2026.
  • Banks may access the facility once every week.
  • Minimum transaction size: $1 million.
  • Settlement is based on the FBIL Reference Rate.
• Significance: The arrangement transfers most of the hedging burden from banks to the RBI, reducing costs and enabling banks to offer more competitive FCNR(B) rates without hurting profitability.

Additional Regulatory Relaxations:

• To encourage mobilisation of foreign currency deposits, RBI has also exempted these deposits from:
  • Cash Reserve Ratio (CRR): Portion of deposits banks must maintain with RBI as cash reserves.
  • Statutory Liquidity Ratio (SLR): Portion of deposits maintained in liquid assets such as cash, gold, or government securities.
• These exemptions improve banks’ deployable resources and lower the cost of raising FCNR(B) funds.

Trends in NRI Deposits During FY26:

• Overall NRI deposit flows: Total NRI deposit inflows declined to $14.41 billion from $16.16 billion in FY25.
• NRI deposits comprise: FCNR(B) deposits, Non-Resident External (NRE) accounts, and Non-Resident Ordinary (NRO) accounts.
• Shift towards rupee deposits:
  • Despite the fall in FCNR(B) inflows, NRIs increasingly preferred rupee-denominated deposits.
  • NRE deposits: Outstanding balances increased by $7.94 billion. Total outstanding reached $98.56 billion.
  • NRO deposits: Increased by $5.53 billion. Outstanding balances reached $33.33 billion.
  • Consequently, total outstanding NRI deposits rose marginally from $164.68 billion to $165.65 billion.

Conclusion:

• The RBI’s FCNR(B) deposit scheme represents a targeted external-sector intervention aimed at attracting foreign currency resources and strengthening financial stability.
• The success of the initiative will ultimately depend on whether lenders can offer sufficiently attractive returns to compete with global dollar deposit markets and revive NRI participation.

About Project 18 Programme:

• Project 18 (P-18) Indian Navy’s Next-Generation Destroyer (NGD) programme.
• It is overseen by the Indian Navy’s Warship Design Bureau (WDB) in collaboration with Mazagon Dock Shipbuilders Limited (MDL) and Garden Reach Shipbuilders & Engineers (GRSE).
• Conceived as a successor to the Visakhapatnam-class (P-15B) destroyers, the P-18 class will be a fleet of advanced, multi-role stealth destroyers.
• Features:
  • With an estimated displacement exceeding 13,000 tonnes, the P-18 will rank among the largest destroyers ever operated by the Indian Navy.
  • Under international classification, warships above 10,000 tonnes fall into the cruiser category — a segment that India currently does not possess. Project 18 will mark India’s entry into this class of warships.
  • They will use an advanced electric propulsion system powered by gas turbines and diesel generators.
  • It is also expected to incorporate extensive automation throughout the ship, reducing crew requirements by an estimated 25 to 30 percent compared to existing platforms.
  • Each ship will feature 114 vertical launch systems capable of firing a range of India’s homegrown missiles, such as:
    • BrahMos and BrahMos Next Generation
    • Long-Range Land-Attack Cruise Missiles (LR-LACM)
    • Precision-Guided Long-Range Surface-to-Air Missiles (PGLRSAM)
    • Short-Range Surface-to-Air Missiles (SRSAM)
    • Supersonic Missile-Assisted Release of Torpedo (SMART)
  • The ships will be able to carry unmanned underwater vehicles and kamikaze drones, used for surveillance, detecting mines, and attacking submarines.
  • Advanced radar systems will give the ships 360-degree awareness and the ability to detect threats up to 500 kilometres away.

About Shiveluch Volcano:

• It is one of the largest and most active volcanoes located on Russia’s Kamchatka Peninsula, one of the most intense volcanic regions in the world.
• It is a stratovolcano—a steep-sloped volcano composed of alternating layers of solidified ash, hardened lava, and volcanic rocks.
• The summit is truncated by a broad 9-km-wide caldera. The lava dome complex was constructed within the large open caldera.
• Many lava domes occur on the outer flanks.
• Frequent collapses of the dome complex have produced debris avalanches; the resulting deposits cover much of the caldera floor.