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?

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).
The Association of Southeast Asian Nations (ASEAN) is a key regional organisation that promotes economic cooperation, political dialogue, and security collaboration among Southeast Asian countries. Established in 1967 with the signing of the Bangkok Declaration by Indonesia, Malaysia, the Philippines, Singapore, and Thailand, ASEAN has grown into a dynamic grouping of 11 members, including Brunei, Vietnam, Myanmar, Laos, Cambodia, and most recently, Timor-Leste.
Guided by the motto “One Vision, One Identity, One Community,” ASEAN plays a central role in shaping the strategic and economic landscape of the Indo-Pacific region. With its strong economic potential, strategic location, and emphasis on regional peace and stability, ASEAN has emerged as an influential power in global affairs and a vital partner for India..

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 ?

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.
Strategic interventions to achieve self-sufficiency in this sector:
• Crop retention and diversification.
• Horizontal expansion: This strategy seeks to bring more land under cultivation for specific oilseeds.
• Vertical expansion: It focuses on enhancing the yield of existing oilseed cultivation. This can be achieved through improved farming practices, better-quality seeds, and advanced production technologies.
• Developing a dynamic trade policy for balanced growth.
• Broadening the scope of the National Mission on Edible Oils, etc.

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?

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?

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:

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:

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?

Correct Answer: (a) 1,2 & 3
Solution:
Instrument Explanation FDI or NOT?
1. Foreign Currency Convertible BondsPreviously 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 conditionsForeign 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:

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.
Government expenditure is classified in two ways: capital expenditure and revenue expenditure.
When government incurs expenditure to create assets such as school and hospital buildings, roads bridges, canals, railway lines etc., or reduce its liability such as repayment of loan etc., such expenditure is known as capital expenditure.
But when government incurs expenditure that neither creates any asset nor reduces any liability, such expenditure is known as revenue expenditure. For Example, payment of salaries to government employees, maintenance of public property, providing free education and health services to people, etc constitute revenue expenditure. These do not create any public asset.

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?

Correct Answer: (d) 1 and 4
Solution:

• The Tea Board is a statutory body set up under section 4 of the Tea Act, 1953 was constituted on 1st April 1954. So, statement 1 is correct.
• The present Tea Board is functioning as a statutory body of the Central Government under the Ministry of Commerce. So, statement 2 is not correct.
• The head office of the Tea Board is in Kolkata. Currently, the Tea Board has two overseas offices located at Dubai and Moscow. Its functions include rendering financial and technical assistance for the cultivation, manufacture and marketing of tea, export promotion, aiding Research and Development activities for augmentation of tea production and improvement of tea quality. So, statement 3 is not correct and statement 4 is correct.
Functions of the Tea Board
• Promote the cultivation and processing: The Tea Board provides financial assistance to tea growers for planting, replanting, and irrigation. It also provides technical assistance to tea factories for improving their processing methods.
• Promoting tea consumption: The Tea Board conducts marketing campaigns to promote tea consumption in India and abroad. It also participates in trade fairs and exhibitions to showcase Indian tea.
• Regulating tea trade: The Tea Board regulates the export and import of tea. It also sets standards for tea quality.
• Research and development: The Tea Board conducts research and development on all aspects of tea cultivation, processing, and marketing.

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?

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).
About World Gold Council (WGC)
• It is a nonprofit association of the world’s leading gold producers.
• A market development organization for the gold industry, the WGC includes 33 members and many members are gold mining companies.
• It was formed in 1987 by some of the world’s foremost-thinking mining companies to promote the use of and demand for gold through marketing, research, and lobbying.
• Headquarters: London, UK.
• It aims to maximize the industry’s potential growth by monitoring and defending existing gold consumption.
• It achieves this by setting up gold standards, proposing policies, ensuring fairness and sustainability in the gold mining industry, and promoting the usage and demand for gold for individuals, industries, and institutions.
• The WGC is also the global authority on gold, and they offer comprehensive analyses of the industry.
• The most famous publications are quarterly reports on the gold market and gold demand trends analyzed by both sector and geographical location.