Foundational Training Programme

Indian Economic Service

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Problem Statement 1

Formulating India’s Strategy on Chinese Investments

China is India’s largest trading partner, with trade flows skewed heavily in China’s favour. In
2023-24, India imported $101 billion worth of merchandise from China, constituting 15% of
India's imports, making China the largest source of India's merchandise imports. The most
significant components of these imports were electrical machinery, electronic integrated
circuits, organic chemicals, plastic articles, etc. In contrast, India's exports to China totalled
around $16.6 billion, making it India's fourth-largest export destination. While India ranks
as China's 13th largest trading partner and 6th largest export destination, the trade
imbalance is significant.

Despite the robust trade, FDI flows between the countries tend to be low. As of June 2024,
China ranks 22nd among India's foreign direct investment (FDI) sources. It constitutes a
modest 0.37% share (or $2.5 billion) of India's total FDI equity inflows from April 2000 to
June 2024. The FDI from China to India has fluctuated over the past decade, peaking at
around $705 million in 2015 and around $279 million in 2021.

One reason for the significant decline in FDI could be India's FDI policy mandating
government approval for all sectors for FDI applications from countries sharing land
borders with India. This policy was issued in April 2020 following the Sino-India Border
tensions. Additionally, India banned over 200 Chinese mobile apps like TikTok, WeChat, and
Alibaba's UC browser. Telecom equipment vendors such as Huawei and ZTE have also not
met the “trusted vendors” status, ruling out their products from being deployed in Indian
5G networks. The Indian government rejected a major investment proposal from electric
vehicle maker BYD in response to the tensions. The strained relations since then slowed
the exchange of capital, technology and talent despite exploding demand for electric
vehicles, semiconductors and artificial intelligence.

Recently, there has been progress in restoring normalcy after years of border tensions. The
Ministry of External Affairs spokesperson announced that "the last phase of disengagement
was agreed upon between India and China" and "a verification patrolling has commenced
on mutually agreed terms in Demchok and Depsang". He also reiterated that, during the
sidelines of the 16th BRICS Summit in Kazan, it was agreed that relevant dialogue
mechanisms would be used to 'stabilise and rebuild bilateral relations. Even the Economic
Survey 2024-25 argued that “getting FDI from China could help India improve its

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participation in global supply chains through exports”. In the past, India maintained that
until the border standoff is resolved, there cannot be business as usual with China. Thus, a
move towards trust-building seems to have begun.

The PMO recognises the complex dimensions of the relationship between India and China.
Strategic and national security concerns exist, and both nations compete for the global
market. At the same time, India could benefit from investments, economic opportunities,
technology transfers and meeting long-term goals such as green transition. Given the
recent border developments, the Prime Minister's Office (PMO) is eager to reassess its
economic strategy toward China, focusing on technology investments and trade. In line
with this, the PMO has appointed you as an officer on special duty to develop the strategy
and roadmap. The strategy document will be presented to the Cabinet for consideration.

Considerations

●​ You might have to pursue negotiations and discussions with different ministries and
departments to understand their interests and concerns.
●​ You can initiate, revise, and withdraw policies, provided you can recommend
strategies for managing these initiatives.
●​ You might have to pursue negotiations and discussions with state governments and
other stakeholders (e.g. industry), both through informal and constitutionally valid
means.
●​ You may rely on data published by government bodies like the Ministry of
Commerce and Industry, MeitY, etc. and some by institutions such as Global Trade
Research Initiative, WTO, UNCTAD, Niti Aayog, etc.
●​ IMPORTANT: Before designing any scheme, you have to also decide on the
important metric(s) that will guide your policy approach.

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 Problem Statement 2

Increasing Women’s Labour Force Participation

The labour force participation rate (LFPR) is a measure of the proportion of a country's
working-age population that engages actively in the labour market, either by working or
looking for work. It is calculated by expressing the number of persons in the labour force as
a percentage of the working-age population. The labour force is the sum of the number of
persons employed and the number of persons unemployed.

India's female LFPR, i.e. the share of working-age women who report either being
employed or being available for work, has historically remained low. As per World Bank
estimates, it was 19% in 2020. This implies that four out of five women in India above the
age of 15 were neither working nor seeking work. Male LFPR in 2020 was almost 4 times at
75.8%.

Recent surveys indicate that India's Female Labour Force Participation Rate (FLFPR) has
improved. The Economic Survey 2024–25 reports that the FLFPR rose to 41.7% in 2023–24,
with rural areas driving much of this increase. Currently, seven States or Union Territories
report an FLFPR above 40%, while 21 States fall in the 30–40% range. However, three States
continue to report FLFPR levels below 20%, highlighting persistent regional disparities. It is
worth noting that part of the increase in FLFPR may be attributed to improved
measurement in the Periodic Labour Force Survey (PLFS) 2023–24, which better captures
women engaged in unpaid or informal work, particularly in rural areas.

Despite the recent changes, India's FLFPR is still lower than the global average (47%). The
gender gap in rural LFPR and urban LFPR has declined, but the gap is still substantial and is
higher than in countries with comparable income levels. Prof Ashwini Deshpande's analysis
finds that the FLFPR increase is driven by "unpaid and low-productivity work".

Despite the positive trends, the Prime Minister understands the significance of women
entering the job market. He has instructed the Ministry of Labour to formulate possible
policy solutions. The PM and the Ministry also recognise the potential multiplier effect of
women's employment. It can play a crucial role in creating more jobs (in general), which
can possibly help India on its path to becoming “Viksit Bharat”.

The Ministry aims to increase female labour force participation to ensure meaningful and
equitable economic participation for women in India. For the same, it has appointed you as

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an officer on special duty. You have to prepare a strategy document, which will be
presented to the Cabinet in the upcoming Cabinet meeting for consideration.

Considerations

●​ You can review, reprioritize or overhaul the entire expenditure that the government
allocates to the Labour and Employment ministry.
●​ You can start or close down ministries, departments, programs, and projects
provided you can recommend how to manage such initiatives. Since the Prime
Minister’s office is personally involved, you may also expect cooperation from other
ministries.
●​ You can revisit the policies recommended or followed by relevant government
bodies
●​ You may rely on data published by government bodies like NITI Aayog, NSSO,
Census, etc. and some by independent bodies such as IndiaSpend, CMIE, etc.
●​ Be aware that this is not just a market problem. There are some elements of societal
failure. Your policy solution can explore methods (government interventions) to
address these societal failures.

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 Problem Statement 3

Improving Urban Infrastructure in India

Cities are engines of growth. They foster businesses, create jobs, and generate revenue that
propels a country's progress. Often seen as hubs of innovation, cities facilitate the rapid
exchange of ideas. The co-location of diverse firms further stimulates innovation and
creativity. Some studies highlight how cities enhance labour market pooling, allowing
people to move more easily between firms and thereby see an increase in wages and
professional development. Additionally, cities are melting pots of culture and languages,
bringing together people of different languages, traditions, and identities. In doing so, they
often help individuals transcend traditional social barriers, such as caste and religion,
fostering inclusivity and creative expression.

Worldwide, more than half of the population lives in cities and contributes over 80% to the
global GDP. Almost 85% of the United States' GDP was generated by cities, while major
European cities contributed 60% of the region's economic output. In the Indian context,
cities like Mumbai, Bengaluru, and Delhi are the economic hubs that significantly benefit
the entire country. Mumbai is the most significant contributor, with a GDP contribution of
$310 billion, followed by Delhi with $293 billion, Kolkata with $150 billion, and Bangalore
with $110 billion.

While Indian cities make a substantial contribution (>60%) to India's GDP, it's crucial to
acknowledge that they are not yet on par with their global counterparts. Indian cities see a
significant amount of inward migration. One in three Indians in a city is a migrant, although
intra-state. Despite this, most Indian cities struggle to attract top-notch global talent.

The problem is compounded by the crumbling infrastructure of these cities. Air pollution,
traffic congestion, poor-quality roads, worsening law and order, inadequate sewage system
design, and insufficient public utilities all plague Indian cities..

Recognising the importance of local governance, the Indian Constitution, through the 74th
amendment, has provided for the devolution of funds, functions, and functionaries.
However, this has not played out as envisaged. The Smart Cities initiative laid out a broad
vision for Indian cities. However, its success has been limited.

The Prime Minister's Office (PMO) recognises the crucial role urbanisation and cities play.
Leveraging India's cities' potential as growth multipliers is crucial to achieving the
government's economic and social goals. In line with this, the PMO has appointed you as an

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officer on special duty to develop a strategy for improving urban infrastructure. The
strategy document will be presented to the Cabinet for consideration and review.

Considerations
●​ You can review, reprioritise, or overhaul the entire expenditure that the
Government allocates to the concerned ministries.
●​ You can start or close down ministries, departments, programs, and projects,
provided you can recommend how to manage such initiatives. Since the Prime
Minister's office is personally involved, you may also expect cooperation from other
ministries.
●​ You can revisit the policies recommended or followed by relevant government
bodies.
●​ You might have to pursue negotiations and discussions with State Governments and
Urban Local Bodies (ULB), both through informal and constitutionally valid means.
●​ You may need to consider tools that the Union Government can utilise to encourage
states and ULBs to adopt the proposals.
●​ You may rely on data published by government bodies, such as NITI Aayog, NSSO,
and Census, as well as some independent bodies, including IndiaSpend and CMIE.

Team Details

Group A Group B Group C