International Trade (Part – II)

Total Questions: 50

1. A tariff: [U.P.R.O./A.R.O. (Mains) 2017]

Correct Answer: (b) reduces the volume of trade
Solution:Tariffs are taxes charged on the import of goods from foreign countries. While historically tariffs were used as a source of revenue for governments, they are now used mainly to protect domestic industries from foreign competition. Tariffs increase the prices of imported goods and leads to a contraction in the volume of trade. The overall effect is a reduction in imports, increased domestic production and higher consumer prices.

2. Duty-Draw-Back implies: [U.P.P.C.S. (Mains) 2011]

Correct Answer: (b) Refund of import duty to exporters
Solution:Duty drawback implies the refund of customs and excise duties paid on inputs or raw materials and service tax paid on the input services used in manufacture of export goods.

About Duty Drawback Scheme:

  • It is a trusted and time-tested scheme administered by CBIC to promote exports.
  • It rebates the incidence of Customs and Central Excise duties, chargeable on imported and excisable material, respectively, when used as inputs for goods to be exported.
  • The duty drawback provisions are described under the Customs Act, 1962.
    This WTO compliant scheme ensures that exports are zero-rated and do not carry the burden of the specified taxes.
  • It is a crucial program to help exporters offset some of the costs accrued during the export process, particularly in the supply or value chain.

3. What is/are the cause/s of slow progress of India's Paderexport? [U.P.P.C.S. (Mains) 2017]

Correct Answer: (d) All of the above
Solution:India has been struggling to raise its share of global export of merchandise to 2% (in 2022, it was at 1.8 percent). High price, foreign competition and low level of goods-all of these are the causes of slow progress of India's export. Some structural factors like low technological adaptability and absence of technology intensive foreign investment, high cost of labour and capital etc. are also curtailing India's exports.

4. The New Exim Policy announced in 1992, is for period of: [I.A.S. (Pre) 1995]

Correct Answer: (d) 5 years
Solution:The Exim Policy announced in 1992 was for the period of 5 years. The Foreign Trade Policy announced on 1ª April, 2015 was for the period 2015-20. FTP 2015-20 was to end on 31 March, 2020 but it was extended due to COVID-19 pandemic and volatile geo-political scenario till 31 March, 2023.

The new Foreign Trade Policy 2023 (unveiled on 31 March, 2023) broke the tradition of a policy lasting for five years and will instead adopt a 'long-term' focus. It is dynamic and has been kept open-ended to accommodate the emerging needs of the time.

5. Which of the following is not a part of the Exim Policy 2002-2007? [U.P.P.C.S. (Mains) 2002]

1. It aims to achieve a 10% share in global exports by 2007.

2. All those items in which India is self-sufficient are not allowed to import.

3. Electronic Hardware Technology Park related goods are allowed to sell freely in the domestic market.

Correct Answer: (d) All of the above
Solution:The Principal objective of the Exim Policy 2002-2007 was to facilitate sustained growth in exports to attain a share of at least one percent of global merchandise trade by 2007.

As per this policy, Electronic Hardware Technology Park (EHTP) unit were allowed to sell goods in Domestic Tariff Area (DTA) upto 50% of FOB value of exports, subject to fulfilment of positive Net Foreign Exchange (NFE) earnings as prescribed by the policy and payment of applicable duties.

The Foreign Trade Policy 2015-20 aimed to raise India's share in the world's exports from 2% to 3.5%. FTP 2015-20 was to end on 31 March, 2020 but it was extended due to COVID-19 pandemic and volatile geo-political scenario till 31 March, 2023. The new Foreign Trade Policy 2023 aims to increase India's overall exports to US$ 2 trillion by 2030, with equal contributions from the merchandise and services sector.

6. The duration of the New Foreign Trade Policy of the Government of India is: [U.P.P.C.S. (Mains) 2006]

Correct Answer: (c) 2004-2009
Solution:The duration of Foreign Trade Policy of the Government of India during the question period was 2004-09. FTP 2015-20 was to end on 31 March, 2020 but it was extended due to COVID-19 pandemic and volatile geo-political scenario till 31 March, 2023. The new Foreign Trade Policy 2023 (unveiled on 31 March, 2023) broke the tradition of a policy lasting for five years and will instead adopt a long-term focus. It dynamic and has been kept open-ended to accommodate the emerging needs of the time.

7. Consider the following statements about the recent [U.P.P.C.S. (Mains) 2005]

Foreign Trade Policy:

1. The Policy relates to the period 2005-10.

2. Its major objective is to double the India's share of global merchandise trade by the end-year of the policy. 3. It emphasizes on economic development and not on employment generation.

Which of the above given statements is/are correct?

Correct Answer: (b) only 2
Solution:The Foreign Trade Policy 2004-09 of the Union Government was announced in August 2004. Its main objective was to double the India's share of global merchandise trade by the end year of the policy. It emphasized on economic development as well as on generation of employment.

The Foreign Trade Policy announced on 1* April 2015 was for the period of 2015-20. The main objective of that policy was to raise India's share in world's exports from 2 percent to 3.5 percent.

FTP 2015-20 was to end on 31 March, 2020 but it was extended due to COVID-19 pandemic and volatile geo- political scenario till 31 March, 2023. The new Foreign Trade Policy 2023 aims to increase India's overall exports to USS 2 trillion by 2030, with equal contributions from the merchandise and services sector.

8. The objective of the new Foreign Trade Policy is to increase India's share in the World Trade by 2009 to: [U.P.P.C.S. (Mains) 2007]

Correct Answer: (c) 1.50%
Solution:The objective of the Foreign Trade Policy 2004-09 was to increase India's share in the world trade by 2009 to 1.5 percent. Hence, option (c) was the correct answer with reference to question period. The Foreign Trade Policy 2015- 20 aimed to increase India's share in the world exports from 2% to 3.5% by the end of 2019-20.

FTP 2015-20 was to end on 31 March, 2020 but it was extended due to COVID-19 pan- demic and volatile geo-political scenario till 31 March, 2023. The new Foreign Trade Policy 2023 aims to increase India's overall exports to US$ 2 trillion by 2030, with equal contributions from the merchandise and services sector.

9. India's Trade Policy (2009-14) seeks to: [R.A.S./R.T.S.(Pre) 2013]

1. double the country's share of global trade by 2020.

2. achieve a growth of 25 percent per annum in exports. 3. double Indian exports of goods and services by 2014.

Choose the correct statements:

Correct Answer: (c) 1 and 3
Solution:India's Foreign Trade Policy 2009-14 was announced in August, 2009 by the then Minister of Commerce, Anand Sharma. The main objectives were to:

Double the country's share of global trade by 2020, double the Indian exports of goods and services by 2014, annual export growth of 15 percent with an annual export target of US$ 200 billion by 2011 and about 25 percent annual growth in remaining three years (till the year 2014).

10. The registered exporters, whose export performance in several years is of high quality, are known as: [U.P.P.C.S. (Mains) 2011]

Correct Answer: (c) Star Trading Houses
Solution:Registered exporters were earlier classified in ascending or- der into Export House, Trading House, Star Trading House and Super Star Trading House on the basis of their previous years' export performance.

Hence, it is clear that the registered exporters with high standard export performance in many years are known as Star Trading Houses. As per the Foreign Trade Policy 2023, export performance thresholds for recognition of exporters as 'Status Holders' are as follows:

Status CategoryExport Performance Threshold (in US$ million)
One Star Export House3
Two Star Export House15
Three Star Export House50
Four Star Export House200
Five Star Export House800

Note: For granting status, an export performance would be necessary in all the three preceding financial years (and in all the two preceding financial years for Gems and Jewellery sector).