September 2025

Highlights of this Issue

GST Council approves rate rationalisation

The 56th GST Council meeting simplified the tax structure to two main slabs (5% and 18%) with a 40% demerit rate, while cutting rates on several items.

Supreme Court stays provisions under the Waqf (Amendment) Act, 2025

The Court has stayed provisions related to establishing proof of practice of Islam, treatment of government property as waqf, and non-Muslin representation in Waqf Council and Boards.

Draft rules on occupational health and safety released for comments

The draft rules specify responsibilities of employers regarding provision of safe working conditions and welfare facilities for employees.

Draft bill to promote and regulate civilian drones released for comments

The Bill mandates registration of all unmanned aircraft systems with the Director General of Civil Aviation.  It provides for airspace to be separated into different zones, prohibiting drone operations in certain areas.

National policy on geothermal energy notified

The policy aims to facilitate joint ventures for geothermal projects, provide concessional loans, and develop a single-window regulatory mechanism.

Comments invited on the draft rules for telecommunication user identification

The draft rules propose mandatory biometric verification, a biometric identity verification system, and stricter rules for SIM transfers.

Amendment to interception rules notified

The amendments add that the Union Home Secretary may also issue an order for interception requested by a state government beyond its territorial jurisdiction.

Shania Ali (shania@prsindia.org)

Current account deficit at 0.2% of GDP in the first quarter of 2025-26

India recorded a current account deficit of USD 2.4 billion (0.2% of GDP) in the first quarter (April-June) of 2025-26, lower than USD 8.6 billion (0.9% of GDP) in the corresponding quarter of 2024-25.[1]  In the fourth quarter (January-March) of 2024-25, India recorded a current account surplus of USD 13.4 billion (1.3% of GDP).

Capital account registered a net inflow of USD 7.7 billion in the first quarter of 2025-26 as compared to a net outflow of USD 5.4 billion in the fourth quarter of 2024-25.  Foreign exchange reserves increased by USD 4.5 billion in the first quarter of 2025-26.  In the corresponding quarter of 2024-25, foreign exchange reserves increased by USD 5.2 billion.  

Table 1: Balance of payments, Q1 2025-26 (USD billion)

	Q1 2024-25	Q4 2024-25	Q1 2025-26
a. Exports	111.2	116.3	113.1
b. Imports	175.0	175.8	181.6
c. Trade balance	-63.8	-59.5	-68.5
d. Net services	39.7	53.3	47.9
e. Other transfers	15.4	19.6	18.2
f. Current account	-8.7	13.4	-2.4
g. Capital account	13.1	-5.4	7.7
h. Errors and omissions	0.8	0.8	-0.8
i. Change in reserves	5.2	8.8	4.5

Sources: RBI; PRS.

 

Shania Ali (shania@prsindia.org)

GST Council approves rate rationalisation and measures for ease of compliance

The GST Council approved rationalisation of GST rates and process reforms aimed at facilitating trade.[2]  The current four-tiered tax rate structure has been rationalised into a two-rate structure (5% and 18%), with a special “demerit rate” of 40% for select goods and services. GST on essential items such as groceries, consumer non-durables (shampoos, soap bars, and toothbrushes), consumer durables (TVs, air conditioners, and small cars and motorcycles), agricultural goods, labour-intensive goods, medicines and medical equipment, and renewable energy devices has been reduced. 

All individual life and health insurance policies have been exempted from GST.  The GST Council also approved risk-based provisional refunds arising out of inverted duty structures.  An inverted duty structure arises when the tax rate on inputs such as raw materials used in production is higher than the tax rate on finished goods, leading to unutilised input tax credit.  Registration for small and low-risk businesses has been simplified, and Goods and Services Tax Appellate Tribunal would be operationalised by end of September 2025.  The changes in GST rates of goods and services have become effective from September 22, 2025. 

SEBI approves amendments on various subjects

The Securities and Exchange Board of India (SEBI) approved amendments to: (i) minimum public offers (MPO) and minimum public shareholding (MPS) requirements under Securities Contracts (Regulation) Rules of 1957, and (ii) provisions on Related Party Transactions (RPT) under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and associated circulars. [3],[4],[5]  Key changes are:

• MPO and MPS requirements:  MPO refers to the minimum portion of shares a company must offer to the public at the time of listing.  MPS refers to the minimum level of public shareholding that must be maintained post-listing.  SEBI has introduced revised market capitalisation thresholds.  It has lowered MPO requirements for very large issuers.  MPS timelines have also been eased, allowing up to 10 years for some large companies to reach 25% public shareholding, instead of five years previously.  The 35% retail quota in IPOs will remain unchanged.

• Related party transactions (RPTs):  The amendments revise thresholds for determining material RPTs undertaken by listed entities and their subsidiaries.  They also provide relaxation in the information to be furnished to the Audit Committee and shareholders for the approval of RPTs.  Amendments provide for codifying validity periods for omnibus approvals by shareholders.  Omnibus approvals, in the context of RPTs, are standing approvals granted for a class of transactions that are repetitive or cannot be foreseen at the time of approval.  Through these, companies may avoid the need for seeking individual approvals for each transaction.  Amendments also clarify applicability of RPT provisions for certain kinds of transactions.

SEBI approves introduction of SWAGAT-FI framework

The Securities and Exchange Board of India (SEBI) approved the introduction of the Single Window Automatic & Generalised Access for Trusted Foreign Investors (SWAGAT-FI) framework.³  The framework will enable a unified registration process across multiple investment routes for these investors, and minimise repeated compliance requirements.  Foreign investors eligible under this framework include central banks, sovereign wealth funds, multilateral agencies, and certain Public Retail Funds.  The framework is planned to be fully implemented within six months.

 

Shrusti Singh (shrusti@prsindia.org)

SC stays certain provisions of Waqf (Amendment) Act, 2025

A two-judge bench of the Supreme Court passed an interim order staying certain provisions of the Waqf (Amendment) Act, 2025.[6]  The Court rejected the appeal for a complete stay on the Amendment Act.  It issued the following directions in the ruling:

• Declaration of waqf:  According to the Amendment Act, only a person practicing Islam for at least five years may declare a waqf.  The Court ruled that this part of the Amendment Act will remain stayed until the state government frames its rules.  The rules will have to provide for a mechanism to identify if someone has been practising Islam for a certain number of years.  The Court observed that in the absence of any procedure, this provision cannot be given effect.  

• Government property as waqf:  The Amendment Act states that in case of uncertainty about ownership of a government property identified as waqf, the state government will appoint an officer to conduct an inquiry and ascertain ownership.  The Act provides that the property will cease to be waqf until the officer submits the report.  The Supreme Court observed that this provision is arbitrary and has put a stay on it.

• Membership in the Central Waqf Council:  The Supreme Court directed that the Council should not consist of more than four non-Muslim members out of 22 members.  The Court has also directed that the Waqf Boards should not have more than three non-Muslim members out of 11. 

• In addition, the Supreme Court recommended that the Chief Executive Officer of the Board be appointed from amongst the Muslim community. 

SC directs Election Commission to accept Aadhar Card as identify proof in Bihar

A two-judge bench of the Supreme Court directed the Election Commission to accept Aadhar Card as a proof of identity for preparing the revised voter list of Bihar.[7]  The Special Intensive Revision (SIR) exercise was held in Bihar to ensure that names of all eligible citizens are included in the electoral roll of the state.[8] 

The Court observed that under Section 23(4) of the Representation of People Act, 1950, Aadhar Card is one of the documents enumerated for identification purposes.  However, the Court clarified that the authorities will be entitled to verify the authenticity of the Aadhar Card by seeking further proof.  

 

Vaishali Dhariwal (vaishali@prsindia.org)

Draft rules on occupational health and safety released for comments

The Ministry of Labour and Employment released seven draft rules for public consultation.[9]^,[10]^,[11]^,[12]^,[13]^,[14]^,[15]  These are issued under the Occupational Safety, Health and Working Conditions Code, 2020.[16]  These draft rules apply to: (i) dock workers, (ii) mine workers, (iii) motor transport workers, (iv) plantation workers, (v) beedi workers, (vi) construction workers, and (vii) factory workers.

The draft rules specify responsibilities of employers regarding provision of safe working conditions and welfare facilities for employees.  These include: (i) appointment of welfare officers, (ii) maintaining first aid and medical appliances, (iii) providing creche facilities, canteen facilities, bathing and washing facilities, latrine, and urine facilities, (iv) ensuring availability of potable drinking water, and (v) ensuring protection against breathing harmful substances.

Comments are invited until November 6, 2025.  

 

Transport

Atri Prasad Rout (atri@prsindia.org)

Draft Bill to promote and regulate civilian drones released for public feedback

The Ministry of Civil Aviation released the draft Civil Drone (Promotion and Regulation) Bill, 2025 for public feedback.[17]  The Bill provides a framework for promotion and regulation of civilian unmanned aircraft systems.  Key features of the Bill include:

• Regulation of UAS:  The Bill defines unmanned aircrafts as aircrafts weighing up to 500 kilogram that are either autonomous or operated remotely.  An unmanned aircraft system (UAS) includes the aircraft, associated remote pilot stations, and control links.  Persons owning a UAS must register it with the Directorate General of Civil Aviation (DGCA).  Assembling or manufacturing of UAS will require a certificate from DGCA.  All systems must incorporate mandatory safety and security features as specified by the central government.  A person operating a UAS must have remote pilot training and possess a certificate issued by DGCA or an authorized officer.

• Airspace management:  The central government will publish an airspace map segregating airspace into red, yellow, and green zones.  In the red zone, UAS operations will require permission from the central government.  Central and state governments and agencies authorised by them, will have the power to notify red zones.  Authorities may also declare a temporary red zone over an area.  Operations in yellow zone will require permission from the concerned air traffic control authority. The Bill does not specify any mandatory airspace permissions for green zones.

• Liability and compensation: Violations of airspace restrictions and misuse of systems will be cognisable offences.  Operation of a UAS will require coverage under a third-party insurance policy.  Claims for compensation related to UAS accidents will be adjudicated by the Motor Accident Claim Tribunals.  Appeals against the award of a Tribunal will lie before the High Court. 

• Emergency powers: In interest of security and sovereignty, the central government may cancel or suspend certificates, prohibit UAS operations, and direct delivery of UAS to the government for public service.

Cabinet approves schemes to promote shipbuilding

The Union Cabinet approved multiple initiatives aiming to promote domestic capacity in shipbuilding and maritime trade.[18]  These initiatives are expected to: (i) expand domestic shipbuilding capacity to 4.5 million gross tonnage per annum, (ii) attract investments worth Rs 4.5 lakh crore in the maritime sector, and (iii) generate 30 lakh jobs.  The Shipbuilding Financial Assistance Scheme, approved in 2015, has been extended until March 31, 2036.  The financial outlay for this scheme is Rs 24,736 crore.  To provide long term financing to the sector, the Maritime Development Fund has been allocated Rs 25,000 crore.  This comprises of an investment fund of worth Rs 20,000 crore and an interest incentivisation fund of Rs 5,000 crore to help reduce the effective cost of debt.  Further, Rs 19,989 crore has been approved for the Shipbuilding Development Scheme to support mega shipbuilding clusters, infrastructure expansion, and provide insurance.

 

Communication

Ayush Stephen Toppo (ayush@prsindia.org)

Comments invited on the draft rules for telecommunication user identification

The Department of Telecommunication has invited comments on the draft Telecommunications (User Identification) Rules, 2025.[19]  These Rules seek to create a biometric-based identification framework for telecom users.  Key features include: 

• Mandatory biometric verification:  The draft Rules mandate new telecom users to undergo biometric verification.  Users with Aadhaar must undergo Aadhaar authentication.  Users without Aadhaar, or unable to complete Aadhaar authentication, will follow an alternate digital KYC process.  Under both processes, a live photograph or any other specified biological attributes, and user details will be stored in the subscriber databases.  For digital KYC, a user will submit documents relating to proof of identity and proof of address.  In case of business users, identification of the authorised representative, and of each of the end users of that connection will be required.  However, exemption for verification of each end-user may be sought by the businesses.  Telecom entities are required to act against false or forged documents used during enrolment and inform the government.  The entities must initiate a police complaint or file an FIR in such cases.

• Biometric based identity verification system:  Every authorised entity providing telecommunication services will individually or collectively create and maintain a biometric based identity verification system (BIVS).  This system will contain live photographs or any other biological attributes specified by the central government on the portal.  User information stored in BIVS will be shared across authorised telecom entities for real-time verification.

• Connection transfers:  The Rules mandate re-verification in cases, such as SIM replacement, mobile number portability, and on government directions.  Transfer of telecom services will only be permitted between blood relatives or legal heirs, subject to identity re-verification.  In case of a business connection, the end-user may be changed if the authorised representative of the business informs the telecom entity immediately, and the identification of the new user is done within seven days of such change.

• Obligations of users:  Users must not provide incorrect details.  They must not resell or transfer connections except when permitted under the Rules.

Comments are invited until October 19, 2025.

Amendments to interception Rules notified

The Department of Telecommunication has notified the Telecommunications (Procedures and Safeguards for Lawful Interception of Messages) Amendment Rules, 2025.[20]  It seeks to amend the Telecommunications (Procedures and Safeguards for Lawful Interception of Messages) Rules, 2024.[21]  The 2024 Rules provides for interception of messages or class of messages over telecom network by authorised agencies.  Key amendments include: 

• Powers to issue interception orders:  Under the 2024 Rules, orders for interception may be issued by: (i) Union Home Secretary in the case of the central government, or (ii) Secretary in-charge of the home department in case of a state government.  The amendments add that the Union Home Secretary may also issue order for interception requested by a state government beyond its territorial jurisdiction.  Request for such an order will be made by the Secretary in-charge of a state home department.

• Number of nodal officers for processing interception orders:  Previously, the 2024 Rules required each authorised agency to designate two nodal officers to process interception orders.  The amendments instead require one or more nodal officers to be designated.  

 

Power

Ayush Stephen Toppo (ayush@prsindia.org)

National policy on geothermal energy notified

The Ministry of New and Renewable Energy has notified the National Policy on Geothermal Energy.[22]  The policy aims to facilitate the exploration, development, and utilisation of geothermal energy in the country.  It covers both power generation and direct-use applications such as ground source heat pumps, cold storage, and district heating.  Key features of the policy include: 

• Support for project development:  The Ministry will prioritise the conversion of abandoned oil and gas wells, and production facilities into geothermal plants.  It aims to facilitate joint ventures between oil, gas, and mineral companies to develop such projects.  The Ministry may issue detailed guidelines for implementation of geothermal projects in the country.  The central government will also explore mechanisms to share geological risks with developers. 

• Regulatory mechanism:  State governments will designate nodal agencies to provide clearances and land leases through a single-window mechanism.  State governments may allocate geothermal sites for exploration for three years with a provision for an extension of two years.  An additional two-year extension may be considered for geothermal projects in high altitude areas.  Sites may be allocated for development for power generation or direct-use applications for up to thirty years.

• Financial support:  The Ministry provides financial support to geothermal research projects under its Renewable Energy Research and Technology Development Programme.  The central government also allows 100% FDI in renewables.  As per the new policy, the central government aims to explore measures such as concessional loans, import duty exemptions on geothermal equipment, and property tax exemptions for geothermal users.

• Capacity building: The Ministry may establish Centres of Excellence in Geothermal Energy for technical support, capacity building, and implementation of geothermal projects.  It also aims to promote technology collaborations with leading countries in the geothermal sector. 

Rules on energy storage system amended

The Ministry of Power has notified the Electricity (Amendment) Rules, 2025.[23]  The 2005 Rules provide for the regulation of energy storage systems (ESS).[24]  ESS refers to a system that store electricity from a renewable energy source that can be used later.[25]  Key changes include:

• Eligible entities:  Previously, the 2005 Rules allowed specified entities to develop, own, lease, or operate ESS.  These include: (i) electricity generation companies, (ii) transmission or distribution licensees, and (iii) independent energy storage service providers.  The amendments add end-use consumers to this list, clarifying that they may also develop, own, lease, or operate ESS.

• Sale of energy storage services:  Previously, owners or developers of ESS could sell energy storage services to: (i) a utility engaged in generation, transmission, and distribution, and (ii) a Load Despatch Centre.  The amendments expand the list to include consumers or any other persons.

 

Jahanvi Choudhary (jahanvi@prsindia.org)

Comments invited on the draft Indian Statistical Institute Bill, 2025

The Ministry of Statistics and Programme Implementation invited comments on the Indian Statistical Institute Bill, 2025.[26]  The draft Bill aims to replace the Indian Statistical Institute Act, 1959.[27]  The draft Bill recognises the institute as a statutory body.

• Creation of Board of Governance:  The draft Bill revises the composition, term of offices, and functions of the executive body. It establishes a Board of Governance as the principle executive body at these institutes.

• The Board will have 12 members, including: (i) chairperson, (ii) representatives from Ministries of Statistics, Finance, and Department of Science and Technology, (iii) experts from statistical fields, (iv) director, (v) dean, (vi) head of centres, and (vii) registrar of the institute.  The term of office of members of the Board will be of three years, compared to current term of two years.

• The Board will be responsible for: (i) creating academic, administrative, and technical posts, (ii) specifying regulations for fees and financial accountability, and (iii) reviewing the performance of the institute and the faculty.

• Funds of the institute:  The institute will maintain a fund, which will consist of grants from the Central government, fees and charges, and any other money received by the institute and revenue generated.  It will also create a corpus fund for long term sustainability.

Comments are invited until October 24, 2025.

Cabinet approves expansion of UG and PG seats in medical colleges

The Union Cabinet approved the third phase of the Centrally Sponsored Scheme to upgrade central and state government colleges, postgraduate institutes, and government hospitals.[28]  The scheme has a total outlay of Rs 15,035 crore for the financial year 2025-26 to 2028-29.  Of this, the central share is Rs 10,303 crore, with the states contributing Rs 4,731 crore.  The scheme targets to add 5,023 undergraduate seats and 5,000 postgraduate seats by 2028-29.  There is a ceiling cost of Rs 1.5 crore per seat.  

Guidelines released on co-location of anganwadi centres with schools

The Ministry of Education and the Ministry of Women and Child Development jointly released guidelines for co-location of anganwadi centres with schools. [29]^,[30]  This is released as per the recommendations of the National Education Policy, 2020.  The guidelines specify two models for co-location of anganwadis:

Vaishali Dhariwal (vaishali@prsindia.org)

Cabinet approves scheme to promote recycling of critical minerals

The Union Cabinet approved an incentive scheme for promotion of critical minerals recycling under the National Critical Mineral Mission.[31]  The scheme will have a financial outlay of Rs 1,500 crore and will run for six years from FY 2025-26 to FY 2030-31.  Key features include: 

• Eligibility requirements:  Beneficiaries under the scheme will include large, established recyclers and small and new recyclers.  One-third of the scheme outlay has been reserved for start-ups.  The scheme will apply to investments in new units, capacity expansion, modernisation, and diversification of existing units.  Recycling facilities must be authorised by Central or State Pollution Control Boards, as well as registered under the applicable Extended Producer Responsibility Rules, to be considered for receiving benefits.  Eligible feedstock for recycling includes e-waste, lithium-ion battery scrap, and other scrap such as catalytic converters from end-of-life vehicles.

• Incentives under the scheme:  The scheme will provide 20% capital expenditure subsidy on plant, machinery, equipment, and utilities, given production starts within the specified timeframe.  An operational expenditure subsidy will be offered on incremental sales over the base year (2025-26).  Of the eligible operational expenditure subsidy, 40% will be paid in the second year, and the remaining 60% will be paid in the fifth year, upon achieving threshold incremental sales.  The total incentive is capped at Rs 50 crore for large entities and Rs 25 crore for small entities.

 

Commerce and Industry

India and Israel sign Bilateral Investment Agreement

Shania Ali (shania@prsindia.org)

India and Israel signed a Bilateral Investment Agreement to facilitate growth of trade and mutual investments.[32]  The Agreement includes provisions to safeguard investments against expropriation, ensure transparency, enable smooth transfers and compensation for losses, and an independent dispute resolution mechanism through arbitration.

India and Australia sign Mutual Recognition Arrangement for organic products

Jahanvi Choudhary (jahanvi@prsindia.org)

India and Australia signed a Mutual Recognition Arrangement for organic products.[33]  This arrangement was signed under the India-Australia Economic Cooperation and Trade Agreement.  Under the arrangement, both countries will recognise each other’s organic standards and certification systems.  The organic products covered under the agreement include: (i) unprocessed plant products, excluding seaweed, aquatic plants, and greenhouse crops, (ii) processed food composed of one or more ingredients of plant origin, and (iii) organic wine.  As of financial year 2024-25, India’s organic export to Australia is USD 8.96 million.