Content

1. AI and a gathering storm of unchecked power
2. Keeping India’s carbon money at home

AI and a gathering storm of unchecked power

Why in News ?

• Growing global concern over unregulated expansion, militarisation, and corporate dominance of Artificial Intelligence (AI), especially after its use in warfare, surveillance systems, and calls for stronger global regulatory frameworks.

Relevance

• GS Paper II (Governance / Polity / International Relations)
  • Need for AI regulation → rule of law, accountability, privacy (link with EU Artificial Intelligence Act)
  • Global governance gaps → fragmentation, need for multilateral norms (UN, G20)
  • Corporate power vs democratic oversight → Big Tech influence on policy
• GS Paper III (Science & Technology / Security / Economy)
  • AI in warfare → autonomous weapons, algorithmic decision-making
  • AI arms race → US–China competition, strategic instability
  • Economic concentration → data monopolies, digital capitalism, “data colonialism”

Practice Question  

Q. “Artificial Intelligence is reshaping power structures in governance, economy, and warfare, raising concerns of unchecked concentration and ethical risks.” Critically examine the need for global and national AI regulatory frameworks. (250 words)

Static Background & Basics

• Artificial Intelligence (AI) refers to computational systems capable of performing cognitive tasks like learning, reasoning, pattern recognition, and decision-making, increasingly embedded across governance, defence, economy, and social systems, reshaping state capacity and human interaction.
• Global AI governance remains fragmented, with the EU Artificial Intelligence Act (2024) emerging as the first comprehensive risk-based legal framework, categorising AI systems into prohibited, high-risk, limited-risk, and minimal-risk categories to safeguard rights and safety.

Key Global Developments (Value Addition)

• The EU AI Act operationalises strict requirements such as human oversight, transparency, algorithmic accountability, and data quality standards, signalling the “Brussels Effect” where European regulations influence global technology norms and corporate compliance behaviour.
• Over 200 global experts and policymakers have demanded “AI red lines” to prevent catastrophic risks such as autonomous weapons, deepfake impersonation, and large-scale misinformation, highlighting urgency for global governance mechanisms.
• The US defence ecosystem has increasingly integrated AI into warfare systems, including target identification and battlefield analytics, indicating a shift toward algorithm-driven military operations and intensifying the global AI arms race.

Governance & Legal Concerns

• The absence of binding legal frameworks allows private corporations to self-regulate AI ethics, shifting accountability from democratic institutions to profit-driven entities, undermining constitutional principles such as rule of law, transparency, and public oversight.
• Regulatory fragmentation across jurisdictions creates legal grey zones and enforcement gaps, enabling cross-border misuse of AI technologies and weakening global governance coherence, particularly in data flows, surveillance, and cyber operations.

Security & Strategic Implications

• AI is redefining hard power in the 21st century, shifting warfare from human-centric to algorithm-driven decision systems, enhancing speed and precision but raising concerns about opacity, unintended escalation, and reduced human control in lethal operations.
• Integration of AI into defence systems has triggered an AI arms race among major powers, particularly the US, China, and EU, with implications for global strategic stability, deterrence doctrines, and balance of power.
• AI-enabled warfare challenges traditional International Humanitarian Law (IHL) frameworks, as autonomous systems complicate attribution of responsibility, proportionality assessments, and civilian protection norms during armed conflict.

Economic & Technological Implications

• AI-driven productivity gains may significantly enhance economic growth, but also risk market concentration and monopolisation by Big Tech firms, leading to unequal distribution of wealth, data colonialism, and reduced competition in digital economies.
• The control of data, algorithms, and computing infrastructure is emerging as a strategic economic resource, influencing global trade patterns, innovation ecosystems, and technological sovereignty of nations.

Social & Ethical Concerns

• Algorithmic bias embedded in AI systems can reinforce systemic discrimination based on race, gender, or socio-economic status, affecting outcomes in policing, hiring, credit access, and welfare delivery mechanisms.
• AI training using copyrighted material raises intellectual property disputes and ethical concerns, impacting authors, artists, and knowledge economies, while also questioning fairness in data extraction and usage.
• Increasing reliance on AI risks erosion of human agency, creativity, and moral responsibility, raising deeper philosophical questions about autonomy, identity, and the human-machine relationship in modern societies.

Environmental Concerns

• AI systems, especially large-scale models, require massive computational infrastructure, resulting in high energy consumption, water usage, and carbon emissions, posing challenges to climate commitments and sustainable development goals.

India’s Position

• India currently adopts a light-touch, innovation-first regulatory approach, emphasising growth through Digital Public Infrastructure (DPI) while relying on non-binding AI governance guidelines rather than comprehensive legislation.
• Absence of a robust statutory framework exposes India to risks in surveillance, data misuse, and algorithmic bias, while also limiting its ability to shape global AI governance standards effectively.

Challenges

• Balancing innovation with regulation in a rapidly evolving technological landscape remains complex, especially amid global competition and domestic development priorities.
• Ensuring transparency, explainability, and accountability in complex AI systems is technically demanding and requires institutional capacity building.
• Geopolitical competition and divergent regulatory approaches hinder global consensus on AI governance, limiting effective multilateral cooperation.

Way Forward

• Enact a comprehensive AI regulatory framework grounded in constitutional values, ensuring accountability, transparency, privacy protection, and ethical deployment across sectors.
• Promote multilateral AI governance frameworks through platforms like G20, UN, and Global South coalitions to harmonise standards and prevent regulatory fragmentation.
• Strengthen indigenous AI ecosystem, research capabilities, and public digital infrastructure to reduce dependency on foreign technology corporations and enhance strategic autonomy.
• Institutionalise human-in-the-loop systems in critical domains such as defence, healthcare, and governance to maintain accountability and ethical oversight.

Prelims Pointers

• EU AI Act (2024) → First comprehensive AI regulation with risk-based classification.
• AI concerns → Bias, privacy violations, job displacement, security risks.
• AI warfare → Algorithm-based targeting and decision systems.

Mains Enrichment

Intro Options

• “Artificial Intelligence is emerging as the defining force shaping power, governance, and human agency in the 21st century.”
• “From economic productivity to warfare, AI is transforming the very foundations of modern societies.”

Conclusion Frameworks

• “A human-centric, rights-based regulatory approach is essential to ensure AI strengthens democratic values rather than undermines them.”
• “Global cooperation and ethical governance will determine whether AI becomes a tool of progress or a source of systemic risk.”

Keeping India’s carbon money at home

Why in News ?

• The Carbon Border Adjustment Mechanism (CBAM) became operational from January 1, 2026, raising concerns for Indian exports amid India–EU FTA negotiations and debates on climate justice, trade fairness, and carbon pricing sovereignty.

Relevance

• GS Paper II (International Relations)
  • India–EU trade relations and FTA negotiations
  • Climate diplomacy → equity vs protectionism
  • Role of WTO and global trade norms
• GS Paper III (Environment)
  • Climate mitigation tools → carbon pricing, emissions trading
  • Equity concerns → CBDR principle vs unilateral measures

Practice Question

Q. “The Carbon Border Adjustment Mechanism (CBAM) marks the convergence of climate policy and trade protectionism.” Analyse its implications for India’s economy, climate justice concerns, and policy sovereignty. Suggest a strategic response. (250 words)

Static Background & Basics

• CBAM is a carbon tariff mechanism imposed by the European Union to equalise carbon costs between domestic producers (under ETS) and imports, targeting sectors like steel, cement, aluminium, fertilisers, and electricity.
• It operates alongside the EU Emissions Trading System (ETS), where European industries receive free allowances (phased out 2026–2034), effectively lowering their carbon cost compared to foreign producers.

Trade & Legal Implications

• CBAM raises concerns under General Agreement on Tariffs and Trade, as differential treatment may act as disguised protectionism, favouring EU industries through subsidies and phased carbon pricing advantages.
• India–EU FTA (2026) does not grant exemptions but includes Annex 14-A, enabling technical dialogue and Most-Favoured-Nation (MFN)-type flexibility, creating limited scope for negotiating carbon price recognition.

Economic Impact on India

• Indian exporters face full CBAM liability without equivalent subsidies, reducing competitiveness in key sectors like steel and aluminium, which are energy-intensive and export-oriented.
• CBAM could increase export costs, reduce margins, and potentially divert trade flows, affecting India’s integration into global value chains and green trade regimes.

Climate Justice & Sovereignty Concerns

• CBAM shifts part of Europe’s decarbonisation burden onto developing countries, while retaining carbon revenues within the EU, raising concerns of climate inequity and carbon colonialism.
• It undermines policy sovereignty, as countries like India cannot control carbon pricing applied to their exports, risking transition from rule-maker to rule-taker in global climate governance.

India’s Institutional Response

• India has launched the Carbon Credit Trading Scheme (CCTS), creating a domestic carbon market through tradable certificates covering key sectors like steel and power.
• Under CBAM Article 9, EU allows deduction of carbon price already paid domestically, providing a legal pathway for recognising India’s carbon pricing system.

Strategic Policy Option: IBAM

• Proposal for an India Border Adjustment Mechanism (IBAM) involves imposing a domestic carbon charge on exports, ensuring revenue retention within India instead of transferring it to the EU.
• IBAM must be aligned with CBAM rules via FTA Annex 14-A negotiations, ensuring recognition under Article 9 to avoid double carbon taxation.

Advantages of IBAM Strategy

• Enables retention of carbon revenues within India, supporting domestic green transition rather than financing EU climate policies.
• Provides fiscal space for industrial decarbonisation, including green hydrogen, renewable energy integration, and low-carbon manufacturing technologies.
• Strengthens India’s negotiating position in global climate governance, shifting from passive compliance to strategic engagement.

Challenges & Risks

• Designing IBAM requires robust MRV systems (Measurement, Reporting, Verification) to ensure credibility and compliance with international trade rules.
• Risk of trade retaliation or disputes at WTO if perceived as protectionist or inconsistent with global trade norms.
• Domestic industry may face short-term cost escalation, requiring transitional support and policy clarity.

Way Forward

• Leverage FTA Annex 14-A to secure recognition of CCTS and IBAM under CBAM Article 9, ensuring no net additional burden on Indian exporters.
• Strengthen domestic carbon markets through transparent pricing, credible MRV systems, and sectoral coverage expansion.
• Use IBAM revenues for ring-fenced green transition fund, financing decarbonisation, worker reskilling, and clean technology adoption.
• Advocate for climate justice in multilateral forums (WTO, UNFCCC), ensuring equitable carbon transition frameworks for developing countries.

Prelims Pointers

• CBAM → EU carbon tariff on imports.
• ETS → EU carbon market with tradable emission allowances.
• CCTS (India, 2023) → Domestic carbon credit trading mechanism.

Mains Enrichment

Intro Options

• “Carbon Border Adjustment Mechanisms represent the intersection of climate policy and global trade politics.”
• “CBAM reflects a shift towards carbon-linked trade regimes, redefining competitiveness in a decarbonising world.”

Conclusion Frameworks

• “Balancing climate ambition with trade equity requires cooperative frameworks that respect developmental asymmetries.”
• “India’s strategic response must ensure climate action without compromising economic sovereignty or export competitiveness.”