Indian Industries & Trade

Total Questions: 65

51. Consider the following countries: [2018-1]

1. Australia

2. Canada

3. China

4. India

5. Japan

6. USA

Which of the above are among the 'free-trade partners' of ASEAN?

(a) 1, 2, 4 & 5
(b) 3, 4, 5 & 6
(c) 1, 3, 4 & 5
(d) 2, 3, 4 & 6

Correct Answer: (c) 1, 3, 4 & 5

Solution:1,3,4 and 5 RCEP about ASEAN plus its free trade partners which includes: China, India, Japan, Korea, Australia and New Zealand.

Canada (#2) and USA (#6) is definitely not there, so A, B and D are remove(d) Thus by elimination, we are left with answer (C).

52. Consider the following statements : [2018-1]

1. The quantity of imported edible oils is more than the domestic production of edible oils in the last five years.

2. The Government does not impose any customs duty on all the imported edible oils a special case.

Which of the statements given above is/are correct ?

(a) 1 only
(b) 2 only
(c) Both 1 & 2
(d) Neither 1 nor 2

Correct Answer: (a) 1 only

Solution:First statement is right as per ICAR report. If we look at the budget documents of last three year, Government does impose custom duty on imported edible oils, so, #2 is a hyperbole wrong statement.

53. Consider the following statements [2019-1]

1. Coal sector was nationalized by the Government of India under Indira Gandhi.

2. Now, coal blocks are allocated on lottery basis.

3. Till recently, India imported coal to meet the shortages of domestic supply, but now india is self-sufficient in coal production.

Which one of the following statements given above is/are correct?

(a) 1 only
(b) 2 & 3 only
(c) 3 only
(d) 1,2 & 3

Correct Answer: (a) 1 only

Solution:1973: Coal Mines Nationalization Act-Coal India and other CPSEs took over private coal mining companies. They will dig coal, sell it to thermal power plants & other industries. (Indira Gandhi was PM at that time.) So, #1 is right. Answer could be A or D.

2015: Coal Mines Special Provision Act: It opens up commercial coal mining for both private and public entities, and thus ends the monopoly of Coal India.

Presently, coal blocks are allotted on the basis of auction. #2 is wrong. Thus Answer A: 1 only.

54. With reference to Foreign Direct Investment in India, which one of the following is considered its major characteristics?

(a) It is the investment through capital instruments essentially in a listed company.
(b) It is largely non-debt creating capital flow.
(c) It is the investment which involves debt-servicing.
(d) It is the investment made by foreign institutional investors in the Government securities.

Correct Answer: (b) It is largely non-debt creating capital flow.

Solution:FDI is more than 10% equity investment by a foreign entity into an Indian company.

That means debt/borrowing/loans are not the words we associate with FDI and therefore option c and d are wrong.

Walmart has invested billions of dollars worth FDI into Flipkart which is still an unlisted company (Unlisted company means its shares are not listed in stock exchange such as BSE NSE.) Therefore, A, is also wrong. So, Answer should be b.

55. With reference to the international trade of India at present, which of the following statements is/are correct? [2020-1]

1. India's merchandise exports are less than its merchandise imports.

2. India's imports of iron and steel, chemicals, fertilisers and machinery have decreased in recent years.

3. India's exports of services are more than its imports of services.

4. India suffers from an overall trade/current account deficit. Select the correct answer using the code given below:

(a) 1 & 2 only
(b) 2 & 4 only
(c) 3 only
(d) 1 & 4 only

Correct Answer: (d) 1 & 4 only

Solution:Continuously, we are suffering from current account deficits so for statement #4 is correct. Option a and c are eliminated since they don't contain #4.

Further India's Merchandise/ goods export is less than its goods imports. So, #1 is correct. Hence the answer should bed.

For further datasets, you may refer to Economic Survey 2019-20 Volume 2: page 104.

56. With reference to Trade-Related Investment Measures (TRIMS), which of the following statements is/are correct? [2020-1]

1. Quantitative restrictions on imports by foreign investors are prohibited.

2. They apply to investment measures related to trade in both goods and services.

3. They are not concerned with the regulation of foreign investment.

Select the correct answer using the code given below:

(a) 1 & 2 only
(b) 2 only
(c) 1 & 3 only
(d) 1, 2 & 3

Correct Answer: (c) 1 & 3 only

Solution:As per the official page of WTO: The Agreement is not concerned with the regulation of foreign investment. So, #3 is right.

The coverage of the Agreement is defined in Article 1, which states that the Agreement applies to investment measures related to trade in goods only.

Meaning, the TRIMs Agreement does not apply to services. So, #2 is wrong. So, Answer should be (c).

57. Consider the following: [2021-1]

1. Foreign currency convertible bonds

2. Foreign institutional investment with certain conditions

3. Global depository receipts

4. Non-resident external deposits

Which of the above can be included in Foreign Direct Investments?

(a) 1,2 & 3
(b) 3 only
(c) 2 & 4
(d) 1 & 4

Correct Answer: (a) 1,2 & 3

Solution:

Instrument	Explanation	FDI or NOT?
1. Foreign Currency Convertible Bonds	Previously in 2020, UPSC had asked a similar question on FDI. FDI is associated with equity investment and FDI word is not associated with debt investment. converted to Equity (Shares) so, #1 should be right. I also cross checked with RBI Circular of 2012 and it's correct. →B and C eliminated.	YES
2. Foreign Institutional investment with certain conditions	Foreign Institutional investment (FII) is Separate category, also known as "FPI. It is not Yes FDI by default. But here it says 'with certain conditions.... So, #2 may be right. I also cross checked with RBI Circular of 2012: if FPI invest in convertible debentures, then it's counted as FDI subject to certain X% limit so, #2 is correct..	YES
3. Global depository receipts (GDR)	If Indian company issued GDR foreigns indirectly invest in Indian shares so #3 could be FDI. Now just to cross check whether GDR is indeed FDI?- I checked with the RBI circular. Depository Receipts (DRs) such as ADR and GDR are treated as FDI- says RBI Circular of 2012.	YES
Non resident external deposit (in Indian banks)	Indian bank may give such deposits as loans (debt) so #4 Cannot be termed as FDI so #4 shd be wrong. Some may argue what if such NRI using that bank account to invest in Indian shares then it could become FDI. But it's birbalkhichdi logic.	NO

58. With reference to the expenditure made by an organisation or a company, which of the following statements is/are correct? [2022-1]

1. Acquiring new technology, is capital expenditure.

2. Debt financing is considered capital expenditure, while equity financing is considered revenue expenditure.

Select the correct answer using the code given below:

(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Correct Answer: (a) 1 only

Solution:Statement 1 is correct: Capital expenditures deals with creation for acquisition of tangible or non-tangible assets new technology is a non-tangible asset. Statement 2 is wrong: Equity financial is not revenue expenditure. It is also a capital expenditure.

59. With reference to the "Tea Board" in India, consider the following statements: [2022-1]

1. The Tea Board is a statutory body.

2. It is a regulatory body attached to the Ministry of Agriculture and Farmers Welfare.

3. The Tea Board's Head Office is situated in Bengaluru.

4. The Board has overseas offices at Dubai and Moscow.

Which of the statements given above are correct?

(a) 1 and 3
(b) 2 and 4
(c) 3 and 4
(d) 1 and 4

Correct Answer: (d) 1 and 4

Solution:Statements 2 and 3 are wrong: It is a Statutory body under Ministry of Commerce with Head Office at Kolkata. So (a), (b) and (d) are eliminated. Therefore by elimination the answer is (d).

60. Consider the following statements: [2023-1]

Statement-I: Switzerland is one of the leading exporters of gold in terms of value.

Statement-II: Switzerland has the second largest gold reserves in the world.

Which one of the following is correct in respect of the above statements?

(a) Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-1.
(b) Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I.
(c) Statement-I is correct but Statement-II is incorrect.
(d) Statement-1 is incorrect but Statement-II is correct.

Correct Answer: (c) Statement-I is correct but Statement-II is incorrect.

Solution:Russia, Australia, South Africa, USA, Canada, China are among the top producers of gold. The ranking differ depending on which website you consult. But no, where it is given that Switzerland is the second largest producer of coal.

Thus, Statement 2 is wrong and by elimination of options accordingly, we arrive at the correct answer (c).

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Indian Industries & Trade

51. Consider the following countries: [2018-1]

52. Consider the following statements : [2018-1]

53. Consider the following statements [2019-1]

54. With reference to Foreign Direct Investment in India, which one of the following is considered its major characteristics?

55. With reference to the international trade of India at present, which of the following statements is/are correct? [2020-1]

56. With reference to Trade-Related Investment Measures (TRIMS), which of the following statements is/are correct? [2020-1]

57. Consider the following: [2021-1]

58. With reference to the expenditure made by an organisation or a company, which of the following statements is/are correct? [2022-1]

59. With reference to the "Tea Board" in India, consider the following statements: [2022-1]

60. Consider the following statements: [2023-1]

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