Policy and Regulatory updates - Newspaper Summary

 The sources reveal that Policy and Regulatory Updates in India during October 2025 are characterized by a focus on stability in taxation, strategic intervention in social welfare, rapid adaptation to global technological trends (especially AI), and the continued struggle to harmonize domestic regulatory frameworks with international requirements, particularly in finance, infrastructure, and consumer safety.

Policy & Regulatory Updates (India)

1. Fiscal and Economic Policy Stability

Policy makers demonstrated a preference for consolidation and process efficiency in the indirect tax regime rather than immediate structural upheaval, while social safety net spending is under review due to environmental distress.

• GST Structure Stability: Central and state governments decided to retain the current Goods and Services Tax (GST) framework and rates. This decision was made to assess the impact of recent reforms on revenue collection growth.
  • Rate Overhaul: The GST Council had already approved a comprehensive overhaul on September 3, introducing two main slabs: a 5% merit rate for essentials and an 18% standard rate for most goods and services. The abolition of the 12% slab widened the gap between the merit and standard rates, meaning any future shift from 18% to 5% will require "very strong justification".
  • Petroleum Subsumption Deferred: Further structural changes, such as subsuming petroleum products (crude oil, natural gas, petrol, diesel, and jet fuel) under the GST framework, are unlikely soon. States derive about one-fifth of their total revenue from non-GST sources, making them hesitant to include high-revenue items like petroleum.
  • Focus on Efficiency: Policymakers' focus remains on fostering Centre-state fiscal relations and stepping up revenue buoyancy through process efficiency. A simplified GST return system is planned for roll-out starting November 1.
• Rural Employment Scheme Review (MGNREGA): The government is reassessing the budget for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).
  • Context: Worsening distress following widespread floods across states like Bihar, Uttar Pradesh, Himachal Pradesh, and Punjab has increased the demand for fallback employment.
  • Budgetary Pressure: The allocation for MGNREGA remained unchanged at ₹86,000 crore for FY25 and FY26. However, officials are evaluating if extra funds are needed, as actual expenditure reached ₹1.06 trillion in FY24. Demand for jobs under the scheme is rising as agricultural activity remains subdued in flood-hit regions.
• Finance Commission Extension: The tenure of the 16th Finance Commission has been extended by one month, until November 30.

2. Major Regulatory and Sector-Specific Initiatives

Key regulatory actions were announced in infrastructure, energy, consumer protection, and the promotion of strategic domestic manufacturing.

• Electric Vehicle (EV) Manufacturing Scheme: India's flagship scheme to promote electric car manufacturing, often called the ‘Tesla scheme,’ is likely to get an extension past its October 21 deadline.
  • Incentive Mechanism: The scheme offers manufacturers investing $500 million in the country a massive import duty cut on fully-built models (down to 15% from at least 70% on EVs priced over $35,000).
  • Lack of Interest: So far, no global automaker has shown interest in the incentive package. This highlights the challenge of converting policy ambition into firm investment commitments, although industry analysts still view India as a favorable EV investment destination.
• Toxic Food Packaging Ban (FSSAI): The Food Safety and Standards Authority of India (FSSAI) is working on sweeping amendments to its packaging rules to prohibit the use of harmful chemicals in materials that contact food.
  • Chemicals Targeted: The proposed rules specifically target the prohibition of poly- and perfluoroalkyl substances (PFAS), known as "forever chemicals," and bisphenol A (BPA), used in polycarbonate plastics and epoxy resins.
  • Alignment: This move aligns with regulatory actions taken in the US and European Union.
• Draft Electricity (Amendment) Bill 2025: The draft bill aims to boost renewable energy (RE) and competition in distribution.
  • Mandatory RPOs: It proposes mandatory Renewable Purchase Obligations (RPOs) for state discoms, fixed by the Union government, with penalties for shortfalls. RPOs currently account for 30% of power procured and could rise to 43% by FY30.
  • Increased Competition: The bill proposes allowing multiple distributors to share existing networks, scrapping the rule that forced them to build their own.
  • State Resistance: States are likely to resist the proposed elimination of cross-subsidy charges levied on industries, as these charges are crucial revenue components that offset losses from sectors like agriculture. Given that electricity is a concurrent subject, the bill could be ineffective if states do not accept its provisions.
• Railways’ Logistics Transformation: Indian Railways launched three initiatives to transition into a comprehensive logistics player offering door-to-door freight and parcel services.
  • Initiatives: This includes converting a goods shed into an integrated logistics hub (Sonik, Unnao), launching an assured transit container train service (Delhi to Kolkata), and starting a door-to-door parcel service (Mumbai and Kolkata). These services are projected to be 7.5% cheaper than roadways and reduce final delivery time by 30%.
• Nuclear Energy Policy: India needs about ₹19.3 trillion ($217 billion) to meet its target of installing 100 GW of nuclear power capacity by 2047.
  • Proposed Law Changes: A power ministry panel recommended that suppliers’ liability should be restricted to the contract value or operator’s liability (whichever is lower). It also recommended that private companies be allowed to acquire uranium mines overseas, independently or in partnership with state companies.

3. Financial, Judicial, and Climate Governance Frameworks

Policy discussions highlighted efforts to streamline financial claims, judicial processes, and the long-term need for comprehensive climate legislation.

• Unclaimed Financial Assets Campaign: The government launched a nationwide campaign on October 4 to help people trace and claim ₹1 trillion in unclaimed financial assets (including bank deposits, insurance payouts, mutual funds, and 1.72 billion unclaimed shares).
  • Simplification Proposal: The Supreme Court accepted a petition calling for a centralized, Aadhaar-linked, e-KYC portal to consolidate all financial assets, potentially leveraging the existing Account Aggregator (AA) framework.
• Provident Fund (EPFO) Rules: The Central Board of Trustees proposed major changes to simplify partial PF withdrawals by grouping the current 13 complex conditions into three broad categories (marriage/illness/education, housing, and special circumstances).
  • Increased Restriction: However, access to the full final settlement after leaving a job will become harder, as the waiting period is proposed to rise from two months to 12 months. This change is intended to discourage high withdrawals that defeat the purpose of long-term retirement savings.
• PMLA and IBC Coordination (ED): The Directorate of Enforcement (ED) is taking steps to coordinate its actions under the Prevention of Money Laundering Act (PMLA) with the Insolvency and Bankruptcy Code (IBC) to aid the revival of bankrupt companies.
  • Restitution Example: The ED successfully restored 354 seized flats and commercial units of a bankrupt real estate developer, worth ₹175 crore, to the successful acquirer, resolving legal complexities and benefiting 213 innocent homebuyers.
  • Legal Conflict: While IBC proceedings are time-bound, ED’s asset attachments under PMLA often add another layer of legal proceedings, which can be contested by other parties.
• Climate Finance Architecture: India lacks the necessary unified institutional and financial architecture to achieve its ambitious climate goals, which require over $1.5 trillion by 2030.
  • Policy Gaps: The sources advocate for enacting a framework climate law, complemented by a dedicated budget code and a National Climate Finance Authority. This would institutionalize cooperative federalism, mandate climate budgeting, and ensure transparent Public Financial Management (PFM) to attract and track funds.
  • Need for Alignment: Currently, climate spending is diffused across hundreds of schemes, making tracking total expenditure difficult. Aligning policy (such as Finance Commission devolution) with climate metrics is crucial.

4. Trade and International Policy

India is actively negotiating to secure better market access, while navigating global trade tensions.

• India-EU Free Trade Agreement (FTA): Following the 14th round of India-EU trade negotiations on October 10, hopes have been raised that an India-EU FTA is likely by December. This would grant Indian exporters duty-free access to Europe’s estimated $25 trillion economy.
• US Tariff Risks: US President Donald Trump’s tariff hikes pose fresh risks to India’s export outlook. For instance, specialized steel maker Goodluck India is investing heavily in domestic defence manufacturing (₹400 crore) to diversify its revenue base amid global trade uncertainties fueled by the US tariff war.
• Sugar Export Policy: Sugar producers are demanding a timely export policy from the government by December. This clarity is necessary to manage inventories and cut holding costs, especially since production is expected to jump 15–18% in the 2025-26 season. Exports fell short of the allotted 1 million tonnes quota in the previous season because domestic prices were often higher than net global export realizations.