A Shirt in the Market

UPSC GS3 — International trade and equity:

Why poorer countries face disadvantage in global trade:

1. Terms of trade: Developing countries export primary commodities (cotton, coffee, tea, minerals) whose prices are volatile and often declining; import manufactured goods whose prices rise → deteriorating terms of trade over time
2. Tariff barriers: Developed countries impose tariffs on processed goods (e.g., Indian cotton is allowed duty-free but Indian cotton shirts face tariffs) — discourages industrialisation in developing countries
3. Agricultural subsidies: USA and EU heavily subsidise their farmers ($100+ billion/year combined) → their farm exports are artificially cheap → undercut Indian and African farmers in global markets
4. Intellectual property: Brands, patents, and trademarks owned by Northern companies; Generic drug production restricted (TRIPS agreement) until flexibilities used

WTO and inequalities:

• WTO (World Trade Organisation): Governs international trade rules; 166 members; India is a founding member
• India has successfully argued for: Special and differential treatment for developing countries; flexibilities in TRIPS for medicines; protection for food security programs (public stockholding)
• Doha Development Round (2001–present): Ongoing agricultural subsidy negotiations; largely stalled; India has blocked agreements it sees as against its farmers' interests
• MSP and WTO: India's MSP-based procurement is contested by some WTO members as trade-distorting subsidy; India argues food security exemption

Fair Trade movement:

• Alternative trade system that guarantees farmers and workers in developing countries a minimum fair price
• Fairtrade certified products: Coffee, cocoa, tea, cotton, bananas
• Premium paid to farmer cooperatives for community development
• Critiques: Higher prices borne by consumers; doesn't address structural inequalities; market share is tiny

[Additional] India-UK FTA — Textile Impact and India's FTA Landscape (GS3 — International Trade / GS2 — External Affairs):

India-UK FTA — key timeline:

India-UK trade statistics:

Textiles and garments — the core gain for India:

This directly addresses the chapter's point about developed countries imposing tariffs on processed goods from developing countries — the India-UK FTA eliminates this barrier for garments.

India's sectors benefiting most:

What the UK gets from India (key concessions):

India's protected sensitive sectors (excluded from duty elimination): dairy, cereals, millets, pulses, apples, gold, jewellery, lab-grown diamonds.

India's FTA landscape (2025-26):

UPSC synthesis: India-UK FTA = GS3 International Trade. Key exam facts: FTA concluded = May 6, 2025 = signed = July 24, 2025 (Chequers); bilateral trade = USD 23.16 billion (FY 2024-25); India gets zero duty on 99% of tariff lines; India opens 89.5% of its tariff lines to UK; garment duty = 9.5–12% → zero covering 1,143 textile categories; India gets 10–12% price advantage over China/Vietnam; Scotch whisky = 150% → 75% → 40% (Year 10); India-EU FTA = concluded January 26, 2026; India-GCC FTA = negotiations launched February 24, 2026; GCC = India's largest trading partner bloc = USD 178.56 billion. Prelims trap: The FTA was concluded on May 6, 2025 but signed on July 24, 2025 — these are two different events (conclusion = end of negotiations; signing = formal ceremony; ratification = still pending); garment duty eliminated = 9.5–12% (NOT 25% or 30% — common wrong options); India-UK DTAA is a separate and older agreement (1993) — the 2025 FTA is NOT a DTAA; India's sensitive sectors (dairy, cereals, pulses) are excluded from tariff elimination (India negotiated protection for agriculture).

[Additional] Four Labour Codes — Key Provisions and UPSC-Tested Details (GS3 — Labour / GS2 — Social Justice):

Four Labour Codes — consolidation summary:

Implementation status: All four Codes' major provisions became effective nationwide November 21, 2025 (Central Government notification). States must frame their own rules for full operationalization — most states had published draft rules by early 2026.

Code on Wages, 2019 — key provisions:

Code on Industrial Relations (IR Code), 2020 — key provisions:

"Hire and Fire" controversy: By raising the threshold from 100 → 300 workers, employers with up to 299 workers can retrench without prior government approval. Trade unions argue this enables easier dismissal in the vast majority of Indian industrial establishments. Industry groups argue it improves ease of doing business and attracts manufacturing investment.

Code on Social Security, 2020 — gig workers (landmark):

OSH Code, 2020 — key thresholds:

UPSC synthesis: Four Labour Codes = GS3 + GS2. Key exam facts: Code on Wages = August 8, 2019 = 4 laws consolidated = National Floor Wage; IR Code + SS Code + OSH Code = September 28, 2020 = 3+9+13 laws = total 29 laws; nationwide implementation = November 21, 2025; IR Code raises retrenchment threshold = 100 → 300 workers; SS Code = first definition of gig workers and platform workers = aggregator contribution = 1–2% of annual turnover; OSH Code factory threshold = 10 workers (with power); Code on Wages covers ALL workers in organised AND unorganised sectors. Prelims trap: Total central labour laws consolidated = 29 (NOT 44 — 44 was the initial figure of laws considered for rationalisation; the four codes actually consolidate 29); gig workers are first covered under SS Code 2020 (NOT Code on Wages — wages code covers all workers but gig worker social security is specifically under SS Code); IR Code retrenchment threshold = 300 workers (NOT 100 — 100 was the old threshold; it is now 300); Code on Wages assent = August 8, 2019 (the other three codes all have September 28, 2020 — do not mix them up); OSH Code factory threshold with power = 10 workers (same as old Factories Act threshold — this has NOT changed, but compliance procedures have been simplified).