Daily Current Affairs 25 June 2026 – IAS Current Affairs

Current Affairs 25 June 2026 focuses on the Prelims-Mains perspective. Major events are :

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India And FDI Retention: Key Challenges And Solutions

Source: Indian Express
GS III: Investment Models

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Overview

1. News in Brief
2. Declining Trend in India’s Net FDI
3. China Plus One Strategy and India
4. Vietnam’s Success Story
5. Way Forward

Why in the News?

An article in the Indian Express highlights a concerning trend in India’s Foreign Direct Investment (FDI) performance.

News in Brief

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• India continues to attract significant foreign investment, but a large share of these inflows is not being retained, raising concerns about long-term investor commitment.
• The country faces increasing competition from economies such as Vietnam, which have integrated more effectively into global manufacturing and supply-chain networks.
• Experts emphasize the need for a predictable policy environment, stronger domestic supplier ecosystems, and greater investor confidence to improve FDI retention and support sustainable economic growth.

Declining Trend in India’s Net FDI

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• Increasing exits by foreign investors have weakened the country’s ability to retain foreign capital.
• Higher transfers of profits and capital abroad by foreign firms have weakened net FDI inflows.
• Increasing overseas expansion by Indian firms has led to greater outward investment flows.
• Global economic uncertainties, geopolitical tensions, and reduced investor confidence have adversely affected foreign investment retention.

Factors behind rising Investor Withdrawals

• Increasing foreign investor exits is a significant concern for India’s investment landscape.
• Global Factors
  • High global interest rates.
  • Slower growth in the global economy
  • Geopolitical tensions and conflicts
  • Disruptions in global supply chains.
• Domestic Factors
  • Regulatory and compliance uncertainties.
  • Lack of policy predictability.
  • Challenges in expanding and integrating manufacturing ecosystems.

Significance of Retaining FDI

• India’s persistent Current Account Deficit makes stable and long-term capital inflows essential.
• Sustained FDI helps support external sector stability and reduces pressure on the rupee.

China Plus One Strategy and India

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• A strategy adopted by multinational corporations to diversify production away from China and reduce supply-chain risks.
• Expected benefits for India
  • Greater manufacturing investment
  • Increased exports
  • Integration into global production networks.
• Reality – India has benefited, but gains have been smaller than expected.
• Reasons
  • India remains limited integration into Global Value Chains (GVCs) compared to East Asian economies.
    • Sectors dominated by Global Value Chains include electronics, electrical machinery, mechanical equipment, and automobiles.
    • China continues to dominate these sectors due to
      • Dense supplier networks
      • Large manufacturing ecosystems
      • Strong component manufacturing base.
  • India has made notable advances in Electronics through incentive schemes.
    • Attracted global firms such as Apple and Samsung.
    • Achieved significant growth in electronic assembly.
  • But assembly alone is not sufficient for long-term competitiveness.
    • Challenges remain in developing domestic supplier networks, component manufacturing, and local production ecosystems.

Vietnam’s Success Story

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• Vietnam’s success in Global Production Networks lies in its
  • Strong integration into global value chains
  • Export-oriented manufacturing ecosystem.
  • Well-developed supplier networks.
  • Greater participation in multinational production chains.
• Compared to India the difference lies not in market size but in the degree of integration into global production systems.

Way Forward

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• Ensure a predictable policy environment through stable environment through stable regulations, reduced policy uncertainty, and efficient approval processes.
• Strengthen investor confidence by improving ease of doing business, contract enforcement, and transparent governance.
• Deepen integration into global value chains by enhancing manufacturing capabilities, component production, and logistics infrastructure.
• Develop robust domestic supplier networks through greater MSME participation, industrial cluster development, and increased local value addition.

Key Takeaways

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UPSC Prelims Practice Question

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Consider the following statements

1. 1. Net FDI is always equal to Gross FDI.
   2. FDI is generally considered more stable than Portfolio Investment.
   3. Greater integration into global value chains can help improve FDI retention in India.

Select the correct answer using the code below

a) 1 only

b) 1 and 2 only

c) 2 and 3 only

d)1, 2 and 3

Answer: c) 2 and 3 only

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India’s Permanent Membership in the UNSC: Challenges And Way Forward

Source: Indian Express
GS II: Important International Institutions, agencies and fora- their structure and mandate

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Overview

1. News in Brief
2. India’s Merits for Permanent Membership in UNSC
3. Need for UNSC Reforms
4. G4 Initiative
5. Significance of  India’s Permanent Membership

Why in the News?

An article titled  “India’s rise merits a seat at the UNSC” has renewed the debate on reforming the Unites Nations Security Council (UNSC) and strengthening India’s claim for permanent membership in line with changing global realities.

News in Brief

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• Economic strength, demographic significance, and military capabilities make India  a key stakeholder in global governance.
• India’s contributions to UN peacekeeping, multilateralism, climate action, and global development reinforce its credentials for a permanent seat.
• UNSC reform  is increasingly viewed as necessary to reflect contemporary geopolitical realities and ensure equitable representation of developing countries and the Global South.

India’s Merits for Permanent Membership in the UNSC

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• Demographic and Democratic Strength
  • India is the world’s largest democracy.
  • Represents nearly one-sixth of the global population
  • Reflects contemporary global realities better than the current UNSC structure.
• Economic and Strategic Power
  • India is among the world’s largest economies.
  • Major influence on global trade, technology, energy and development.
  • Possesses one of the largest armed forces and a credible nuclear triad.
• Commitment to Global Peace
  • India is one of the largest contributors to UN peacekeeping missions.
  • Strong advocate of multilateralism, rule-based order, and peaceful conflict resolution.
• Leadership in Global Governance
  • Co-founder of the International Solar Alliance (ISA).
  • Promotes climate action, digital governance, and maritime security.
  • Highlighted Global South concerns during its G20 Presidency under the theme “Vasudhaiva Kutumbakam” (The World is One Family).

Need for UNSC Reform

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• Underrepresentation of Asia
  • Asia accounts for nearly 60% of the world’s population.
  • Only China is a permanent member from Asia.
• Representation Deficit
  • Current UNSC structure does not adequately represent developing countries.
  • Many emerging powers lack permanent representation.
• Legitimacy concerns
  • Greater representation would improve credibility, legitimacy, and effectiveness of UNSC decisions.

Challenges

• Veto Power
  • Permanent members possess veto power.
  • Any amendment requires their approval
• Consensus-Based Decision Making
  • Many UNSC outcomes require unanimity
  • Even non-permanent members can delay decisions through consensus processes.
• Political Resistance
  • Existing permanent members may be reluctant to support reforms that could alter the current balance of power within the UNSC.

G4 Initiative

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• Members 
  • India
  • Japan
  • Germany
  • Brazil
• Support each other’s bid for permanent membership in the United Nations Security Council (UNSC) and advocate comprehensive UNSC reforms.
• Objectives
  • Expand the UNSC to reflect contemporary global realities.
  • Increase representation of developing countries and emerging powers.
  • Enhance representation from Asia, Africa, and Latin America.
  • Make global governance more democratic, representative, and effective.

Significance of India’s Permanent Membership

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• It would make the UNSC more representative of contemporary geopolitical realities.
• Enhances representation of the Global South
• Strengthens stability in Asia.
• Improve legitimacy of UNSC decisions.
• Makes global governance more democratic and inclusive.
• As a leading voice of the Global South and  a proponent of Vishwamitra (Friend of the World) ideals, India is well-positioned to address emerging global governance.

Key Takeaways

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UPSC Prelims Practice Question

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Consider the following statements

1. 1. India is among the largest contributors to UN  Peacekeeping Operations.
   2. India is a member of the G4 group advocating UNSC reforms.
   3. Asia currently has only one permanent member in the UNSC.

Select the correct answer using the code below

a)  1 only

b)1 and 2 only

c) 1 and 3 only

d) 1,2 and 3

Answer: d) 1,2 and 3

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The New FCRA Rules: Key Changes And Significance

Source: Indian Express
GS II: Government Policies and Interventions

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Overview

1. News in Brief
2. Key Changes to FCRA Rules
3. Significance of the Amendment

Why in the News?

The Ministry of Home Affairs (MHA) has notified significant changes to the Foreign Contribution (Regulation) Rules (FCRA), 2011.

News in Brief

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• The amendments tighten regulatory oversight of NGOs and associations receiving foreign contributions.
• The revised rules place greater scrutiny on foreign-funded religious organisations and activities.
• They introduced safeguards to prevent the use of foreign funds for activities related to religious conversion.

Key Changes to FCRA Rules

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• Purpose-based Registration
  • Earlier, Organizations broadly specified the nature of their activities.
  • Now- Organisations must select activities from a government-approved list.
  • Significance- Improves transparency, enables closer monitoring of foreign-funded activities and ensures foreign funds are linked to clearly defined objectives.
• Shift from Programme-based to Activity-based Regulation
  • Earlier – Organisations could identify broad categories such as Religious, educational, cultural, economic, and social.
  • New – Organisations must choose specific approved activities linked to their registered purpose.
  • Significance – Reduces flexibility in utilising foreign funds and enhances accountability.
• Geographical Restrictions
  • Earlier, Foreign contribution utilisation was not necessarily tied to specific States or Union Territories.
  • Now – Organisations must indicate the geographical area of operation.
  • Significance – Facilitates location-specific monitoring.
• Expanded definition of “Key Functionary”
  • The amendments broaden the category of persons whose details must be disclosed.
  • Includes – Members of Executive Committee/Governing Council, Office bearers, Directors, Trustees, other persons responsible for management.
  • Significance – Increases transparency in organisational governance.
• Stricter Compliance and Disclosure Requirements
  • Increased reporting obligations.
  • Tighten rules for the release and utilisation of foreign funds.
  • Mandate detailed activity-wise disclosures in annual returns.
• Focus on Religious conversion
  • Earlier – The 2011 Rules referred generally to religious activities.
  • New – The amendments specifically identify activities linked to religious conversion as a separate category requiring heightened scrutiny.
• Penalty Framework
  • Violations involving the receipt or utilisation of foreign contributions may attract substantial financial penalties.
  • Exceeding the prescribed limit on administrative expenses can result in enhanced penalties.
  • Use of foreign contributions for impermissible purposes may lead to stricter penal action.
  • Acceptance or utilisation of foreign contributions for unauthorised purposes or in unapproved areas may attract higher penalties and regulatory action.

Government’s Objectives

• Prevent misuse of foreign contributions
• Ensure compliance with FCRA provisions
• Improve accountability of foreign-funded organizations.

Concerns and Criticisms

• The amendments may increase regulatory burdens.
• Religious and charitable organizations may face greater scrutiny.
• Concerns regarding freedom of religion and association may arise.

Significance of the Amendment

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• Strengthens monitoring of foreign-funded organizations.
• Improves transparency and accountability
• Enhances government oversight of religious activities receiving foreign funds.
• Seeks to prevent diversion or misuse of foreign contributions.
• Reflects a more compliance-driven FCRA frameworks.

Key Takeaways

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UPSC Prelims Practice Question

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Consider the following statements

1. 1. Article 25 guarantees freedom to profess, practice and propagate religion.
   2. The FCRA is administered by the Election Commission of India.
   3. All organizations receiving foreign funds require FCRA  registration or prior permission.

Which of the above statements are correct?

a) 1 and 2 only

b) 2 and 3 only

c) 1 and 3 only

d) 1,2 and 3

Answer: c) 1 and 3 only

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