UPSC Prelims Practice Questions — Tariffs to carbon, the new rules shaping India’s trade

Q1. In which year was the EU's Carbon Border Adjustment Mechanism first proposed as part of the bloc's climate package?

  • A. 2019
  • B. 2021
  • C. 2023
  • D. 2025

Q2. The EU's CBAM, which entered its definitive phase on 1 January 2026, is most significant as which one of the following?

  • A. The world's first carbon border tax on imports
  • B. The world's first emissions trading system
  • C. The first carbon tax mandated under the Paris Agreement
  • D. The EU's first domestic carbon tax on industry

Q3. In its definitive phase, the EU's CBAM currently applies to how many sectors of goods?

  • A. Four
  • B. Five
  • C. Six
  • D. Eight

Q4. Which one of the following EU institutions is responsible for administering and operationalising the Carbon Border Adjustment Mechanism?

  • A. The European Commission
  • B. The European Central Bank
  • C. The European Environment Agency
  • D. The European Court of Justice

Q5. India's Carbon Credit Trading Scheme (CCTS), a key domestic response to carbon-pricing pressures such as CBAM, is administered by which one of the following bodies?

  • A. Bureau of Energy Efficiency (BEE)
  • B. Central Electricity Regulatory Commission (CERC)
  • C. Securities and Exchange Board of India (SEBI)
  • D. Central Pollution Control Board (CPCB)

Q6. India's Carbon Credit Trading Scheme (CCTS) evolved primarily from which earlier flagship energy-efficiency mechanism?

  • A. The Perform, Achieve and Trade (PAT) scheme
  • B. The UJALA scheme
  • C. The FAME scheme
  • D. The UDAY scheme

Q7. The 1992 Rio Declaration on Environment and Development, which enshrines the principle of Common but Differentiated Responsibilities, comprises how many principles?

  • A. 17
  • B. 21
  • C. 27
  • D. 30

Q8. In the India-EU Free Trade Agreement whose negotiations concluded in January 2026, which one of the following remained the single biggest unresolved concern for India's carbon-intensive exporters, with no country-specific exemption granted?

  • A. The EU's Carbon Border Adjustment Mechanism (CBAM)
  • B. The EU Deforestation Regulation
  • C. The EU's Common Agricultural Policy subsidies
  • D. The EU's data-localisation norms