Prelims Revision Series | Economy | Foreign Trade | 33

May 30, 2023

Consider the following statements :
Statement-I : The primary function of the District Export Promotion Committee (DEPC) is to prepare and implement district specific Export Action Plans.
Statement-II : DEPC is chaired by Collector/DM/DC of the District.
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-I
(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 Statement-II is incorrect
(D) Statement-I is incorrect Statement-II is correct

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Answer: (b)

Each District shall constitute a District Export Promotion Committee (DEPC) chaired by Collector/DM/DC of the District and co-chaired by designated DGFT Regional Authority with various other stakeholders as its members.
The primary function of the DEPC will be to prepare and implement district specific Export Action Plans in collaboration with all the relevant stakeholders at the Central, State and the District level.

Consider the following statements regarding Foreign Trade Policy 2023 :
FTP seeks to take India's exports to 2 trillion dollars by 2030.
2. FTP 2023 is a dynamic and open ended Policy.
Which of the statements given below is/are incorrect?

(A) 1 only
(B) 2 only
(C) Both 1 and 2
(D) Neither 1 nor 2

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Answer: (d)

Which of the following statement(s) is/are correct?
1. Towns of Export Excellence will have priority access to export promotion funds under the Market Access Initiative (MAI) scheme.
2. Four new towns viz. Faridabad, Mirzapur, Moradabad, and Varanasi have been designated as Towns of Export Excellence.
Select the answer using the codes given below:

(A) 1 only
(B) 2 only
(C) Both 1 and 2
(D) Neither 1 nor 2

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Answer: (c)

Which of the following statements is/are correct regarding Terms of Trade (ToT) Index?
1. It measures the relative prices of a country's exports and imports.
2. The most common method to measure ToT is the ratio of the export price index to the import price index.
Select the answer using the codes:

(A) 1 only
(B) 2 only
(C) Both 1 and 2
(D) Neither 1 nor 2

Show Answer

Answer: (c)

Terms of Trade (ToT) Index

It measures the relative prices of a country’s exports and imports.
The most common method to measure ToT is the Net Barter (or Commodity) Terms of Trade index, or the ratio of the export price index to the import price index.
When a country’s net barter terms of trade index increases, its exports become more expensive or its imports become cheaper.
According to World Bank, India’s ToT has risen from -80 in 2007 to 105 in 2020 indicating India’s exports becoming more expensive compared to imports.

Which of the following is/are correct w.r.t. Trade Openness?
1. Trade openness is measured as the sum of a country's exports and imports as a share of that country's GDP.
2. According to World Bank, India’s Trade Openness in 2021 was 45 per cent up from minus 10 per cent in 1960.
Select the answer using the codes given below:

(A) 1 only
(B) 2 only
(C) Both 1 and 2
(D) None

Show Answer

Answer: (c)

Trade Openness
Trade openness is measured as the sum of a country’s exports and imports as a share of that country’s GDP (in %).
According to World Bank, India’s Trade Openness in 2021 was 45(%) up from -10(%) in 1960. The highest ratio was achieved in 2012 at 56(%).

Which of the following is/are correct?
1 Advance Authorisation is issued to allow duty free import of input, which is physically incorporated in export product.
2. Advance Authorisation can be issued either to a manufacturer exporter or merchant exporter tied to supporting manufacturer.
Select the answer using the codes given below:

(A) 1 only
(B) 2 only
(C) Both 1 and 2
(D) Neither 1 nor 2

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Answer: (c)

Advance Authorisation is issued to allow duty free import of input, which is physically incorporated in export product (making normal allowance for wastage).

Which of the following are the pillars of India’s new Foreign Trade Policy:
1 Incentive to Remission.
2. Emerging Areas including streamlining SCOMET policy.
3. Export promotion through collaboration.
Which of the statements given is/are correct?

(A) 1 and 3 only
(B) 2 and 3 only
(C) 1 and 2 only
(D) 1, 2 and 3 only

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Answer: (d)

FTP 2023 has the following 4 pillars:

(i)Incentive to Remission,

(ii)Export promotion through collaboration – Exporters, States, Districts, Indian Missions,

(iii)Ease of doing business, reduction in transaction cost and e-initiatives and

(iv)Emerging Areas – E-Commerce Developing Districts as Export Hubs and streamlining SCOMET policy.

Consider the following statements :
1 FTAs are arrangements between two or more countries that primarily agree to reduce but not eliminate customs tariff.
2. FTAs can also cover other areas such as intellectual property rights.
Select the correct statement(s) using the code given below:

(A) 1 only
(B) 2 only
(C) Both 1 and 2
(D) Neither 1 nor 2

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Answer: (b)

FTAs are arrangements between two or more countries or trading blocs that primarily agree to reduce or eliminate customs tariff and non tariff barriers on substantial trade between them.
FTAs, normally cover trade in goods (such as agricultural or industrial products) or trade in services (such as banking, construction, trading etc.).
FTAs can also cover other areas such as intellectual property rights (IPRs), investment, government procurement and competition policy, etc.

Which of the following is/are correct?
1 In a Preferential Trade Agreement there is a negative list on which duty is not reduced or eliminated.
2. In an FTA there is a positive list of products on which duty is to be reduced.
Select the answer using the codes given below:

(A) 1 only
(B) 2 only
(C) Both 1 and 2
(D) Neither 1 nor 2

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Answer: (d)

The key difference between an FTA and a PTA is that-
while in a PTA there is a positive list of products on which duty is to be reduced; in an FTA there is a negative list on which duty is not reduced or eliminated.

With reference to IBSA, consider the following:
1. Bangladesh.
2. South Africa.
3. India.
4. Brazil.
Which of the above are the members of IBSA?

(A) 1, 2 and 3 only
(B) 2, 3 and 4 only
(C) 1, 2 and 4 only
(D) 1, 3 and 4 only

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Answer: (b)

Consider the following statements:
1 Dumping refers to a practice when the export price of a product is less than the cost of production in the home country.
2. Union Ministry of Finance is the nodal agency responsible for investigating the cases of dumping in India.
Which of the above given statement(s) is/are correct?

(A) 1 only
(B) 2 only
(C) Both 1 and 2
(D) Neither 1 nor 2

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Answer: (a)

The DGTR provides a level playing field to the domestic industry against the adverse impact of the unfair trade practices like dumping and actionable subsidies from any exporting country, by using trade remedial methods under the relevant framework of the WTO arrangements, the Customs Tariff Act & Rules and other relevant laws.
The Directorate General of Trade Remedies (DGTR) (earlier known as Directorate General of Anti-Dumping & Allied Duties) is an attached office of the Department of Commerce, Ministry of Commerce & Industry

The new foreign trade policy 2023 is valid till?

(A) 2027
(B) 2030
(C) 2025
(D) None

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Answer: (d)

Which of the following is/are correct?
1 India and Australia have an Economic Cooperation and Trade Agreement.
2. This is the first trade agreement of India with a developed country after more than a decade.
Which of the above given statement(s) is/are correct?

(A) 1 only
(B) 2 only
(C) 1 and 2
(D) None

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Answer: (c)

Which of the following is/are correct?
1 Importer -Exporter Code (IEC) is a key business identification number which is mandatory for Exports or Imports.
2. Importer -Exporter Code can be obtained from the Ministry of External Affairs.
Which of the above given statement(s) is/are correct?

(A) 1 only
(B) 2 only
(C) 1 and 2 only
(D) None

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Answer: (a)

Consider the following statements:
1 In 2021-22, India's foreign trade stood at USD 1.43 trillion.
Electronic goods, rice, drugs and pharmaceuticals, ceramic products and glassware and spices contribute significantly to India’s exports.
Which of the above given statement(s) is/are incorrect?

(A) 1 only
(B) 2 only
(C) Both 1 and 2
(D) Neither 1 nor 2

Show Answer

Answer: (d)