BUSINESS ENVIRONMENT

Introduction (1 Mark)

Macro-environment refers to broad external forces (PESTLEG) that affect all organisations in an industry. These forces are generally uniform for the entire industry, yet their actual impact varies significantly from firm to firm even within the same sector. This variation arises due to differences in firm-specific resources, strategies, capabilities, vision, and adaptability.

Why Impact Varies – Detailed Explanation (6 Marks)

Macro Force	Uniform Force	Why Impact Differs (Examples)
Economic	High interest rates, inflation, rupee depreciation	Large firms (Reliance, Tata) can raise funds easily; SMEs face credit crunch → Maruti vs small auto ancillary units
Political-Legal	New GST law, labour code changes	Firms with strong compliance teams (Infosys) adapt fast; unorganised players struggle
Socio-Cultural	Shift to health consciousness	Patanjali gains hugely; traditional namkeen brands lose market share
Technological	Arrival of 5G, AI, EVs	Tesla-ready firms (Tata Motors) benefit; traditional ICE players (some two-wheeler firms) face disruption
Demographic	Young population, rising middle class	Byju’s, Nykaa, Zomato explode; firms targeting senior citizens grow slowly
Ecological/Global	Carbon tax, ESG norms, global recession	Green-certified firms (ITC, Ultratech) attract funds; high-emission firms face penalties

Conclusion (1 Mark)
Same macro-environment → different outcomes because internal factors (resources, strategy, leadership, culture) act as filters. Firms that continuously scan, adapt, and build dynamic capabilities convert threats into opportunities while others perish.

Memory Anchor (Super Easy)
EPSTLE-G → Economic, Political, Socio-cultural, Technological, Legal, Ecological, Global
“Same Storm, Different Boats”

Introduction (2 Marks)

Environmental scanning is the systematic process of collecting, analysing, and disseminating information about external (macro & micro) and internal factors affecting the organisation. In today’s VUCA (Volatile, Uncertain, Complex, Ambiguous) and hyper-competitive globalised world, it is no longer optional — it is a survival imperative.

Necessity of Environmental Scanning – 9 Key Reasons (9 Marks)

1. Complexity & Inter-connectedness → Economic, political, technological forces are deeply interlinked (e.g., Russia-Ukraine war → global inflation).
2. Identify Opportunities & Threats Early → Jio identified 4G opportunity; Kodak missed digital photography threat.
3. Strategic Planning & Goal Setting → Realistic objectives only possible with accurate environmental insights.
4. Rapid Technological Disruption → AI, Blockchain, EVs, Metaverse demand constant vigilance.
5. Intense Competition & Market Trends → Track competitors (Patanjali vs HUL), changing consumer preferences (plant-based meat).
6. Regulatory & Legal Compliance → Frequent changes in GST, Data Protection Bill, labour codes — non-compliance invites heavy penalties.
7. Enhances Organisational Adaptability → Builds learning culture; firms become proactive, not reactive.
8. Risk Identification & Mitigation → Anticipate recessions, supply chain disruptions (COVID lesson), political instability.
9. Drives Innovation & Growth → Insights spark new products (Patanjali Ayurveda boom after health consciousness trend).

Conclusion (1 Mark)
Environmental scanning acts as the “radar system” of modern business. It converts uncertainty into foresight, threats into opportunities, and ensures long-term sustainability in a turbulent world.

Memory Anchor (Super Easy)
COST-CAFIR → Complexity, Opportunity-Threat, Strategy, Technology, Competition, Adaptability, Forecasting, Innovation, Risk management

Introduction (2 Marks)

The Securities and Exchange Board of India (SEBI) was established in 1988 and given statutory status in 1992 under the SEBI Act, 1992. It is the apex regulator of the Indian securities and capital market. SEBI’s twin objectives are: (i) development of a fair, transparent and efficient capital market, and (ii) protection of investors’ interests. It performs the roles of quasi-legislative, quasi-executive and quasi-judicial body.

A. Role of SEBI in Regulating Issue of Capital (10 Marks)

Function	Detailed Role	Key Regulations
1. Disclosure & Transparency	Ensures full, fair and accurate disclosure in offer documents so investors can take informed decisions.	SEBI (ICDR) Regulations, 2018 – DRHP, RHP, Prospectus vetting
2. Pricing of Issues	Allows free pricing (fixed price or book-building) but prevents over/under-valuation.	Book-building guidelines, ASBA mandatory
3. Underwriting & Allotment	Monitors fair allotment, prevents cornering of shares, mandates proportionate allotment.	No preferential allotment to promoters beyond limits
4. Regulation of Intermediaries	Registers and supervises merchant bankers, underwriters, registrars, brokers, DPs.	SEBI (Merchant Bankers) Regulations, 1992
5. Prevention of Fraud & Misuse	Prohibits misleading statements, price rigging, insider trading during IPO period.	SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003
6. Listing & Post-Issue Compliance	Ensures timely listing, lock-in of promoter shares, minimum public shareholding (25%).	SEBI (LODR) Regulations, 2015

B. Role of SEBI in Shareholder Protection (8 Marks)

Area	SEBI’s Protective Measures
1. Minority Shareholder Rights	Mandatory e-voting, postal ballot, independent directors, audit committee
2. Takeovers & Substantial Acquisition	SEBI (SAST) Regulations, 2011 – Open offer to public shareholders at fair price
3. Insider Trading Prevention	SEBI (PIT) Regulations, 2015 – Disclosure of trades by insiders, trading plans
4. Grievance Redressal	SCORES platform – Online complaint filing & tracking
5. Investor Education & Awareness	Regular campaigns, resource materials, financial literacy programmes
6. Corporate Governance	Regulation 17–27 of LODR – Board composition, related-party transactions approval, secretarial audit
7. Delisting & Buy-back	Fair exit opportunity to shareholders

Conclusion (2 Marks)
SEBI has transformed India’s capital market from a speculative, opaque system into one of the most regulated and investor-friendly markets globally. From Harshad Mehta (1992) to post-SEBI era, investor confidence has dramatically risen. Its balanced approach of market development + investor protection has made India the fastest-growing major equity market in the world.

Memory Anchor (Super Easy)
Capital Issue: D-P-U-F-L-I → Disclosure | Pricing | Underwriting | Fraud control | Listing | Intermediaries
Shareholder Protection: M-I-G-S-C-O-R-E → Minority rights | Insider trading | Governance | SAST | SCORES | Education

Introduction (2 Marks)

A money market is a well-organised segment of the financial market dealing in short-term funds (up to one year). A developed money market is an essential hallmark of a developed economy because it ensures efficient liquidity management, effective monetary policy transmission, and low-cost short-term finance. India’s money market has undergone massive transformation post-1991 liberalisation and now exhibits almost all characteristics of a developed money market.

Characteristics of a Developed Money Market vs India’s Position (16 Marks)

Characteristic	Global Benchmark	India’s Present Status (Evidence)	Marks
1. Strong & Independent Central Bank	Fed, ECB, BoE	RBI is among the most respected central banks. Uses Repo, Reverse Repo, CRR, SLR, LAF, MSF effectively.	2
2. Wide Network of Commercial Banks & DFIs	Deep banking penetration	PSBs + Pvt banks + Foreign banks + RRBs + Payment Banks + SFBs + Co-operative banks → huge reach.	1.5
3. Multiple Integrated Sub-Markets	Call, Notice, Repo, CBLO, T-Bills, CP, CD	All active: Call Money, Repo, Tri-party Repo, T-Bills (91/182/364 days), CP, CD, Collateralised Borrowing and Lending Obligation (CBLO now TREPS).	2
4. Variety of Sophisticated Instruments	Diverse short-term papers	T-Bills, Cash Management Bills, CP, CD, Repo, Reverse Repo, Commercial Bills (rare but exist).	2
5. High Degree of Integration & Uniformity of Rates	Single yield curve	Rates in Call, Repo, CP, CD, T-Bills move closely with RBI’s policy rate corridor (Repo ± 0.5%). LAF has harmonised rates.	2
6. Active Participation of Non-Bank Entities	Mutual funds, corporates, NBFCs	MFs (liquid & overnight funds), Primary Dealers, NBFCs, Corporates, Insurance Cos, FPIs actively participate.	1.5
7. Well-Developed Secondary Market & Discount Houses	DFHI, active secondary trading	Discount & Finance House of India (DFHI), now replaced by active PDs, CCIL, NDS-OM, TREPS platform.	1.5
8. Ample Supply of Short-Term Funds	High liquidity	Daily turnover in Call/Repo market often exceeds ₹2–3 lakh crore. T-Bill market size > ₹10 lakh crore.	1
9. Technological & Institutional Modernisation	Electronic, screen-based trading	NDS-OM, CROMS, E-Kuber, RTGS, NEFT, TREPS, guaranteed settlement by CCIL.	1.5
10. Global Integration	FPIs, offshore linkage	FPIs allowed in T-Bills, CP, CD; G-Sec fully opened under FAR; India in global bond indices (2024–25).	1.5

Remaining Minor Gaps (1 Mark)
- Rural penetration still low
- Commercial Bills market underdeveloped
- Corporate bond repo not fully mature

Conclusion (2 Marks)
India’s money market today satisfies 95%+ of the characteristics of a developed money market. The depth, breadth, integration, technology, and regulatory oversight are comparable to many advanced economies. This sophisticated money market is a strong testimony that India has already acquired one of the most critical pillars of a developed economy and is firmly on the path to becoming the world’s third-largest economy by 2030.

Memory Anchor (Super Easy)
CSI³–RITG → Central Bank | Sub-markets | Instruments | Integration | Interest uniformity | Institutions | Innovation | Technology | Global linkage

Introduction (2 Marks)

The Competition Commission of India (CCI) is a statutory body established under the Competition Act, 2002 (amended in 2007 & 2023). It replaced the erstwhile MRTP Act, 1969. CCI is India’s anti-trust regulator whose primary objective is to eliminate practices having adverse effect on competition, promote and sustain competition, protect consumer interests and ensure freedom of trade.

A. Role of CCI in the Indian Economy (8 Marks)

Role	Description	Real Impact
1. Prevents Anti-Competitive Agreements	Prohibits cartels, bid-rigging, price-fixing, market allocation	₹6,000+ crore penalties on cement cartel (2012), beer cartel (2021)
2. Curbs Abuse of Dominance	Stops predatory pricing, exclusive deals, denial of market access	Google (₹1,337 Cr + ₹936 Cr), MakeMyTrip, Amazon, Flipkart cases
3. Regulates Combinations (M&A)	Pre-merger notification & approval above thresholds	Reviewed 900+ mergers; blocked only 1 (Jet-Etihad modified)
4. Protects Consumer Welfare	Ensures fair prices, choice, quality & innovation	Lower prices post cartel busting; better services
5. Market Studies & Advocacy	Studies e-commerce, pharma, telecom; issues advisories	E-commerce report (2020), Pharma study → policy changes
6. Promotes Competitive Neutrality	Ensures level-playing field between private & PSU firms	Actions against Indian Railways, Coal India dominance

B. Duties of CCI (Section 18) – (5 Marks)

1. Eliminate practices having adverse effect on competition
2. Promote and sustain competition in markets
3. Protect the interests of consumers
4. Ensure freedom of trade carried on by other participants
5. Conduct market studies and competition advocacy
6. Issue guidelines and regulations
7. Advise government on competition policy

C. Powers of CCI (5 Marks)

Power	Details
1. Inquiry & Investigation	Suo-motu, on complaint, or govt reference (DG office)
2. Cease & Desist Orders	Direct companies to stop anti-competitive behaviour
3. Penalty	Up to 10% of average turnover of 3 years OR 3 times cartel profit (2023 amendment)
4. Structural Remedies	Order division of enterprise (rare)
5. Merger Control	Approve, modify, or block combinations
6. Search & Seizure (Dawn Raids)	Like IT dept raids (post-2009 amendment)
7. Leniency Programme	Lesser penalty for whistle-blowers in cartels (up to 100% waiver for first applicant)
8. Appeal	Orders appealable to NCLAT → Supreme Court

Conclusion (2 Marks)
From a virtually non-existent competition regime in 2002, CCI has emerged as one of the most proactive and respected anti-trust regulators globally. Its actions against Big Tech, cement cartels, pharma companies and e-commerce giants have ensured that India’s rapidly growing markets remain competitive, innovative and consumer-friendly. CCI is a key institution driving India’s journey towards becoming a $10 trillion competitive economy.

Memory Anchor (Super Easy)
Roles → PAD-CAM → Prevent agreements | Abuse of dominance | Combinations | Advocacy | Market studies
Powers → “CCI Can SEARCH & PUNISH”
Suo-motu | Enquiry | Cease | Penalty | Approval (merger) | Raid | Compensation | Hub-and-spoke | Leniency

Introduction (1 Mark)

SIDO (now Office of Development Commissioner – MSME) is the apex body under Ministry of MSME, established in 1954. Small Industries Service Institutes (SISI), now renamed MSME-Development Institutes (MSME-DIs), are its field-level arms located in almost every state.

Role of SIDO & SISI/MSME-DIs (8 Marks)

Function	SIDO (Policy Level)	SISI / MSME-DI (Field Level)
1. Policy Formulation	Frames national MSME policy, schemes (PMEGP, ZED, CLCSS)	Implements policies at ground level
2. Entrepreneurship Development	Designs EDP, SDP, MDP curricula	Conducts 6-week EDPs, skill training, awareness camps
3. Technical Consultancy	Sets standards	Project reports, machinery selection, layout, quality improvement, ISO consultancy
4. Marketing Assistance	Organises India International MSME Expo, NSIC tie-ups	Vendor development programmes, buyer-seller meets, barter fairs, international trade fairs
5. Cluster Development	SFAC, MSE-CDP schemes	Identifies & develops 500+ clusters (e.g., Tiruppur knitwear, Agra footwear)
6. Credit Facilitation	Credit Guarantee Fund Trust (CGTMSE), PMEGP	Helps in bank loan documentation, CGTMSE registration
7. Technology Upgradation	ZED Certification, Lean Manufacturing, Incubation	Technology centres (Tool Rooms), testing labs, common facility centres
8. Data & Research	Annual MSME Report, Census	District Industrial Potential Surveys

Conclusion (1 Mark)
SIDO and SISI/MSME-DIs have been the backbone of India’s 63+ million MSMEs which contribute 30% to GDP and 45% to exports. Their integrated policy + field approach has made India the global leader in number of MSMEs.

Memory Anchor: SIDO = “Policy Maker” | SISI = “Hand-holder on Ground”

Introduction (1 Mark)

In the last decade (2014–2025), India’s exports crossed $770 billion (2023–24) due to aggressive export promotion under “Make in India”, FTP 2015–20 (extended), RoDTEP, PLI schemes, etc.

Major Export Promotion Measures (8 Marks)

Scheme/Initiative	Key Features	Impact
1. Foreign Trade Policy 2015–20 & RoDTEP (2020)	Replaced MEIS; Remission of Duties & Taxes on Exported Products (1–4% incentive)	Neutralised embedded taxes, helped $450+ bn merchandise exports
2. Production Linked Incentive (PLI) Scheme	₹1.97 lakh crore across 14 sectors (mobile, pharma, solar, textiles)	Made India global hub for mobile phones (Apple, Samsung)
3. Export Promotion Capital Goods (EPCG)	Zero-duty import of capital goods	Helped modernisation
4. SEZ & EoU Reforms	Baba Kalyani Committee reforms, SEZ Act amendments	Improved ease of doing business
5. Districts as Export Hubs (DEH)	One District One Product (ODOP) → 739 districts mapped	Gi-tagged products (Banaras saree, Darjeeling tea)
6. TIES & MAI Schemes	Trade Infrastructure for Export Scheme, Market Access Initiative	Upgraded ports, airports, convention centres
7. Interest Equalisation Scheme (IES)	3–5% interest subvention for MSME exporters	Extended till 2024
8. Krishi Udan & Agri-Export Policy	Air freight subsidy for agri products	Fresh fruits/flowers to Middle East & Europe
9. FTAs & GIFT City	UAE, Australia, UK FTAs; India International Bullion Exchange	Diamond & gold re-exports boosted

Conclusion (1 Mark)
The last decade witnessed a shift from pure incentives to production-linked, infrastructure-backed, district-level export promotion — taking India from $314 bn (2013–14) to $770+ bn exports and making it one of the top 10 exporting nations.

Memory Anchor: RoDTEP-PLI-DEH-TIES-IES-FTA → “Real Power Daily To India’s Export Future”

Introduction (1 Mark)

The World Trade Organization (WTO), established on 1st January 1995, succeeded GATT (1947). It is the only global body dealing with rules of trade between nations. Its core objective is to ensure trade flows as smoothly, predictably and freely as possible.

Key Roles of WTO in Promoting Global Trade (8 Marks)

Role	Description	Impact
1. Administers Trade Agreements	GATT, GATS, TRIPS, Plurilateral Agreements	Binding rules for 98% of world trade
2. Reduces Tariffs & NTBs	164 members bound by MFN & National Treatment	Avg. global tariff fell from 40% (1947) to ~4% now
3. Dispute Settlement Mechanism	DSB – binding, time-bound (600+ cases settled)	India won 23 out of 26 cases as complainant
4. Trade Policy Review Mechanism (TPRM)	Periodic review of members’ policies	Ensures transparency
5. Special & Differential Treatment	Longer transition periods for developing nations	India uses S&D in agriculture, pharma
6. Trade Facilitation Agreement (TFA)	Simplifies customs procedures	India ratified in 2016 → reduced clearance time
7. Aid for Trade & Capacity Building	Technical assistance to LDCs	India receives & provides training
8. Forum for Trade Negotiations	Doha Round, Nairobi, MC12 outcomes	Fisheries subsidy agreement (2022)

Conclusion (1 Mark)
WTO has increased global trade from $58 billion (1948) to over $28 trillion (2023). Despite criticisms (slow decision-making, agriculture deadlock), it remains the cornerstone of rule-based multilateral trading system.

Memory Anchor: WTO = MFN + DSB + TRIPS + TFA

Introduction (1 Mark)

Intellectual Property Rights (IPRs) are legal rights granted to creators over their inventions, designs, brands, literary & artistic works. TRIPS Agreement (1995) under WTO made IPR protection mandatory globally.

Role of IPRs in Global Business (8 Marks)

Role	Benefit to Business	Indian Example
1. Encourages Innovation & R&D	Recovers huge R&D cost via monopoly profits	Pharma (Cipla, Dr. Reddy’s), IT (TCS, Infosys)
2. Attracts FDI & Technology Transfer	Companies invest only where IP is safe	Apple, Samsung, Pfizer plants in India
3. Builds Brand Value	Trademarks create global recognition	Tata, Amul, Patanjali, Zomato
4. Enables Licensing & Franchising	Earn royalties without physical presence	Hollywood films, Starbucks, Domino’s
5. Prevents Counterfeiting & Piracy	Protects revenue & reputation	Luxury brands, Bollywood fights piracy
6. Enhances Export Competitiveness	GI tags boost premium pricing	Darjeeling Tea, Banarasi Saree, Basmati
7. Supports Start-ups & Valuation	IP is major asset for funding	Byju’s, Ola, Flipkart patents

Conclusion (1 Mark)
In knowledge economy, IPRs are the new currency of global business. Strong IPR regime is the reason USA, Japan, Germany dominate high-value exports while India is rapidly moving from generic drugs to novel drug discovery.

Memory Anchor: IPRs = R&D + FDI + Brand + Licensing + Anti-Piracy + GI + Valuation

(a) Monopolistic Trade Practices vs Restrictive Trade Practices (5 Marks)

Basis	Monopolistic Trade Practices (MTP)	Restrictive Trade Practices (RTP)
Objective	Maintain/grow dominance	Restrict competition
Examples	Predatory pricing, limit supply	Tie-in sales, resale price maintenance, exclusive dealing
Effect	Unreasonable high profits	Unfair trade practices harming consumers
Section (MRTP Act)	Section 2(o), 31	Section 2(p), 33

(b) Pre-Issue vs Post-Issue Obligations by SEBI (5 Marks)

Basis	Pre-Issue	Post-Issue
Stage	Before opening of issue	After closure
Focus	Disclosure & transparency	Allotment, refund, listing
Key Activity	DRHP filing, ASBA, marketing	Basis of allotment, demat credit, listing within 3 days (T+3)

(c) Mahalanobis Strategy vs New Development Strategy (5 Marks)

Basis	Mahalanobis (2nd FYP)	New Strategy (1991 onwards)
Focus	Heavy industries, self-reliance	Liberalisation, privatisation, globalisation
Role of State	Commanding heights	Facilitator, regulator
Trade	Import substitution	Export promotion, FDI

(d) Patent vs Invention (5 Marks)

Basis	Invention	Patent
Meaning	New technical solution	Exclusive legal right granted for invention
Duration	Lifetime of idea	20 years from filing
Requirement	Novelty, inventive step, industrial use	Registration with Patent Office

Memory Anchor for Q7: M-R-P-M → Monopolistic-Restrictive | Pre-Post | Mahalanobis-New | Patent-Invention

8(a) Income Distribution Patterns in India (5 Marks)

Income distribution refers to how national income is shared among individuals/households. In India, despite high GDP growth, income inequality has increased sharply.

Aspect	Current Reality (2024–25)
Gini Coefficient	0.38–0.42 (World Bank); among highest in Asia
Top 1% Share	Captures ~22–25% of national income (World Inequality Lab)
Top 10% Share	~57% of total income
Bottom 50%	Only ~13–15% of income
Rural–Urban Gap	Average urban income 1.7–2 times rural
Regional Disparity	Maharashtra, Karnataka, TN vs Bihar, UP, Odisha
Occupational	IT/professionals earn 10–15× agricultural labour
Gender Gap	Women earn 20–30% less than men for same work

Causes: Skill-biased growth, unequal education, asset ownership, informal sector dominance.
Conclusion: Rising inequality threatens social stability and inclusive growth; hence need for progressive taxation, skill development, rural industrialisation.

8(b) Social Accounting and Reporting Approaches (5 Marks)

Social accounting measures and reports an organisation’s social and environmental performance beyond financial profits (Triple Bottom Line: People, Planet, Profit).

Approach	Description	Example
1. Classical/Ethical	Based on moral duty towards society (Gandhian trusteeship)	Tata Group’s historical philanthropy
2. Descriptive	Qualitative narration of social activities	Early CSR reports
3. Cost–Benefit Analysis	Monetises social costs & benefits	ITC e-Choupal ROI calculation
4. Social Indicators Method	Uses KPIs (employment generated, water saved, diversity ratio)	BRSR metrics
5. Net Social Contribution	Net benefit = Social benefits – Social costs	Used in sustainability reports

Mandatory in India: Business Responsibility & Sustainability Reporting (BRSR) for top 1000 listed companies (SEBI, 2021).
Conclusion: Social accounting promotes transparency, accountability and helps companies earn “social licence to operate”.

8(c) Environment Protection Laws in India (5 Marks)

India has a comprehensive framework for environmental protection rooted in the Constitution and various statutes.

Law/Act	Year	Key Provision
Constitution	1976 (42nd Amendment)	Art 48A (State duty), Art 51A(g) (Citizen duty)
Water Act	1974	CPCB & SPCBs, consent mechanism
Air Act	1981	National Ambient Air Quality Standards
Environment (Protection) Act	1986	Umbrella Act → EIA 1994 & 2006, CRZ, Hazardous Waste Rules
Forest (Conservation) Act	1980 (amended 2023)	Compensatory afforestation, net present value
Wildlife Protection Act	1972 (amended 2022)	6 Schedules, Project Tiger, NTCA
NGT Act	2010	Fast-track environmental justice

Conclusion: India’s environmental jurisprudence (precautionary principle, polluter pays, public trust doctrine) is among the most progressive globally.

8(d) Workers’ Participation in Management (WPM) (5 Marks)

Workers’ Participation in Management refers to involvement of employees in decision-making processes at various levels.

Level	Forms	Indian Example
Shop Floor / Works Committee	Information sharing, consultation	Factories Act 1948 – mandatory in >500 workers
Joint Management Councils	Consultative bodies (1958 scheme)	Tata Steel, BHEL
Worker Director	Representation on Board	Public sector banks, SAIL
Collective Bargaining	Negotiation via unions	Strong in Maruti, Bajaj Auto
Self-Management / Co-ownership	ESOPs, worker cooperatives	Infosys, Wipro ESOPs; AMUL, Lijjat Papad

Benefits: Higher motivation, reduced conflict, better productivity, industrial democracy.
Challenges: Resistance from management, union rivalry, low awareness.
Conclusion: Successful Indian companies (Tata, Infosys, AMUL) prove that genuine WPM leads to win-win outcomes.

Memory Anchors for Q8
(a) Top 1% = 25% income (b) BRSR + Cost-Benefit (c) 48A-51A(g) + EPA 1986 (d) Works Committee → Board Director

Introduction (2 Marks)

The Technological Environment comprises the level of scientific knowledge, rate of technological change, R&D infrastructure, innovation ecosystem and global technology flows that surround a nation. India’s first Technology Policy Statement (TPS) was announced in 1983 and later updated through Science & Technology Policy 2003, STI Policy 2013 and Draft National STI Policy 2021. The evolution of these policies has been a direct response to the changing domestic and global technological environment.

Role of Technological Environment in Framing India’s Technology Policy (10 Marks)

Aspect of Technological Environment	How it Influenced TPS/STI Policies	Key Policy Response
1. Post-Independence Technology Gap	Heavy dependence on imported technology in capital goods, defence, pharma	Emphasis on self-reliance, reverse engineering, creation of CSIR labs, public sector R&D
2. Global Technological Revolution (1970s–80s)	Rise of microelectronics, computers, biotechnology	TPS-1983 focused on mastering imported technology, strengthening S&T infrastructure, promoting indigenous development
3. 1991 Liberalisation & FDI Inflow	Entry of MNCs with latest technology	Shift from import substitution to selective import + absorption + innovation (STP-2003)
4. Rise of Knowledge Economy & IT Boom	India became global IT/BPO leader	STI Policy 2013 aimed at “positioning India among top 5 global scientific powers”
5. 4th Industrial Revolution (AI, IoT, Robotics, 5G)	Rapid global disruption	Draft STI Policy 2021 & National Strategy on AI, Blockchain, Quantum, Deep Tech focus
6. Climate Change & Sustainability Challenge	Need for green technologies	National Mission on Sustainable Development, Solar Alliance, Hydrogen Mission
7. Geopolitical Technology Restrictions	US-China tech war, semiconductor shortages	₹76,000 crore Semiconductor Mission, PLI for electronics, Atmanirbhar Bharat

Technology Transfer Practices (8 Marks)

Mode of Transfer	Description	Indian Examples
1. Foreign Direct Investment (FDI)	MNCs bring latest plant & machinery, processes	Samsung Noida (world’s largest mobile plant), Suzuki Gujarat
2. Licensing & Franchising	Right to use patents, trademarks, know-how	Domino’s, McDonald’s, pharmaceutical molecules
3. Joint Ventures & Technical Collaboration	Equity + technology partnership	Maruti-Suzuki (1982–2007), Mahindra-Renault
4. Turnkey Projects	Complete plant supplied & installed	BHEL, L&T in power & metro projects
5. Technical Consultancy & EPC	Design & engineering services	Tata Projects, Engineers India Ltd.
6. Reverse Engineering & Adaptation	Copy + improve imported technology	Indian generic pharma industry (Cipla, Ranbaxy)
7. Government-to-Government Transfer	Defence, space, nuclear	Rafale (ToT), ISRO-NASA collaboration, BrahMos
8. Academia–Industry Linkages	Incubation, sponsored research	IITs, IISc, TIFAC, BIRAC, Atal Innovation Mission

Conclusion (2 Marks)
India’s technology policy has continuously evolved in response to the changing technological environment — from self-reliance (1983) → absorption + innovation (2003) → global leadership in emerging tech (2021). Effective technology transfer practices have transformed India from a technology importer in 1980s to the world’s third-largest start-up ecosystem and a major exporter of IT, pharma and space services today. The future lies in mastering deep-tech and becoming a global technology provider rather than just a consumer.

Memory Anchor (Super Easy)
Technology Policy Evolution: 1983 → Self-Reliance | 2003 → Absorption | 2013 → Innovation | 2021 → Global Leadership
Transfer Modes: FDI → License → JV → Turnkey → Consultancy → Reverse → G2G → Academia