UPSC Prelims Practice Questions — Trading smart
Q1. On the Indian side, the negotiation and signing of the India–New Zealand Free Trade Agreement was led by which one of the following?
- A. The Department of Commerce, Ministry of Commerce and Industry
- B. The Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry
- C. The Department of Revenue, Ministry of Finance, Government of India
- D. The Economic Diplomacy Division, Ministry of External Affairs, Government of India
Q2. With reference to the India–New Zealand Free Trade Agreement, consider the following:
1. New Zealand eliminates duties on 100% of tariff lines, giving zero-duty access to all Indian exports from the date of entry into force.
2. Standard cargo is to be cleared within 24 hours, while express shipments and perishable goods are to be cleared within 48 hours.
3. A Temporary Employment Entry Visa pathway is opened for Indian professionals with a quota of 5,000 visas at any given time and stay of up to three years.
4. Negotiations were announced in March 2025 and concluded in about nine months, making it the fastest FTA concluded by India.
Which of the above is/are correctly identified?
- New Zealand eliminates duties on 100% of tariff lines, giving zero-duty access to all Indian exports from the date of entry into force.
- Standard cargo is to be cleared within 24 hours, while express shipments and perishable goods are to be cleared within 48 hours.
- A Temporary Employment Entry Visa pathway is opened for Indian professionals with a quota of 5,000 visas at any given time and stay of up to three years.
- Negotiations were announced in March 2025 and concluded in about nine months, making it the fastest FTA concluded by India.
- A. 1, 2 and 3
- B. 2, 3 and 4
- C. 1, 3 and 4
- D. 1 and 2 only
Q3. As per official accounts of India's trade partnerships for 2025-26, India's nine free trade agreements together span how many partner countries?
Q4. Which one of the following is the first trade agreement signed by India to incorporate commitments directly linked to investment inflows and job creation?
- A. India–United Arab Emirates Comprehensive Economic Partnership Agreement, 2022
- B. India–Australia Economic Cooperation and Trade Agreement, 2022
- C. India–EFTA Trade and Economic Partnership Agreement, 2024
- D. India–United Kingdom Comprehensive Economic and Trade Agreement, 2025
Q5. Consider the following statements about categories of trade agreements:
1. In a Preferential Trade Agreement, partners exchange tariff concessions on an agreed list of products rather than on substantially all trade.
2. Under WTO rules, a free trade area must eliminate duties and other restrictive regulations of commerce on substantially all the trade between the constituent territories.
3. A Comprehensive Economic Partnership Agreement necessarily covers only trade in goods and excludes services, investment and digital trade.
4. The India–EFTA agreement is styled a Trade and Economic Partnership Agreement and, unlike an FTA, entirely dispenses with tariff concessions on goods.
Which of the statements given above is/are correct?
- In a Preferential Trade Agreement, partners exchange tariff concessions on an agreed list of products rather than on substantially all trade.
- Under WTO rules, a free trade area must eliminate duties and other restrictive regulations of commerce on substantially all the trade between the constituent territories.
- A Comprehensive Economic Partnership Agreement necessarily covers only trade in goods and excludes services, investment and digital trade.
- The India–EFTA agreement is styled a Trade and Economic Partnership Agreement and, unlike an FTA, entirely dispenses with tariff concessions on goods.
- A. 1 and 2
- B. 2 and 3
- C. 1, 2 and 4
- D. 3 and 4
Q6. Certificates of Origin, which exporters require to claim preferential duty under India's trade agreements, are issued and verified through an Open API facility on a platform operated by which one of the following?
- A. The Central Board of Indirect Taxes and Customs, through the ICEGATE portal
- B. The Directorate General of Foreign Trade, through the Trade Connect e-Platform
- C. The Directorate General of Trade Remedies, under the Department of Commerce
- D. The Export Inspection Council, under the Ministry of Commerce and Industry
Q7. Consider the following statements comparing the revised MSME classification criteria effective from 1 April 2025 with the criteria they replaced:
1. Investment limits were raised to 2.5 times and turnover limits to 2 times their earlier levels.
2. For a medium enterprise the investment ceiling moved from Rs 50 crore to Rs 125 crore and the turnover ceiling from Rs 250 crore to Rs 500 crore.
3. The credit guarantee cover for micro and small enterprises was raised from Rs 10 crore to Rs 20 crore.
Which of the statements given above is/are correct?
- Investment limits were raised to 2.5 times and turnover limits to 2 times their earlier levels.
- For a medium enterprise the investment ceiling moved from Rs 50 crore to Rs 125 crore and the turnover ceiling from Rs 250 crore to Rs 500 crore.
- The credit guarantee cover for micro and small enterprises was raised from Rs 10 crore to Rs 20 crore.
- A. 1 only
- B. 1 and 2 only
- C. 2 and 3 only
- D. 1, 2 and 3
Q8. With reference to the Export Promotion Mission, consider the following:
1. It carries a total outlay of Rs 25,060 crore for the period FY 2025-26 to FY 2030-31.
2. It operates through two integrated sub-schemes, Niryat Protsahan and Niryat Disha.
3. Niryat Protsahan is confined exclusively to interest subvention and provides no support for export factoring or collateral guarantees for export credit.
4. Its benefits are available only to first-time exporters classified as medium enterprises, all other exporters being excluded.
Which of the above is/are NOT correct?
- It carries a total outlay of Rs 25,060 crore for the period FY 2025-26 to FY 2030-31.
- It operates through two integrated sub-schemes, Niryat Protsahan and Niryat Disha.
- Niryat Protsahan is confined exclusively to interest subvention and provides no support for export factoring or collateral guarantees for export credit.
- Its benefits are available only to first-time exporters classified as medium enterprises, all other exporters being excluded.
- A. 1 and 2
- B. 2 and 3
- C. 1, 3 and 4
- D. 3 and 4
Q9. With reference to United States tariffs on Indian goods and the India–US trade understanding, consider the following:
1. At its peak the additional US duty on affected Indian goods stood at 50%, comprising a 25% reciprocal tariff and a further 25% levy linked to India's purchases of Russian oil.
2. Under the February 2026 understanding, tariffs on Indian goods were reduced from the 50% peak to 18%.
3. Indian exports worth about USD 31 billion had tariffs cut from 50% to zero under that understanding.
4. India's average monthly merchandise exports to the United States fell to about USD 6.5 billion during the six months the 50% duty was in force, from about USD 8.1 billion in the preceding six months.
Which of the above is/are correctly identified?
- At its peak the additional US duty on affected Indian goods stood at 50%, comprising a 25% reciprocal tariff and a further 25% levy linked to India's purchases of Russian oil.
- Under the February 2026 understanding, tariffs on Indian goods were reduced from the 50% peak to 18%.
- Indian exports worth about USD 31 billion had tariffs cut from 50% to zero under that understanding.
- India's average monthly merchandise exports to the United States fell to about USD 6.5 billion during the six months the 50% duty was in force, from about USD 8.1 billion in the preceding six months.
- A. 1 and 3
- B. 2, 3 and 4
- C. 1, 2 and 4
- D. 1, 2 and 3
Q10. With reference to the European Free Trade Association (EFTA) and the India–EFTA TEPA, consider the following:
1. EFTA's member States are Iceland, Liechtenstein, Norway and Switzerland.
2. TEPA was signed on 10 March 2024 and entered into force on 1 October 2024.
3. The EFTA States aim to raise foreign direct investment into India by USD 100 billion over 15 years, in a first tranche of USD 50 billion within 10 years and a further USD 50 billion in the succeeding 5 years.
4. The agreement aims to facilitate the generation of one million direct jobs in the EFTA States arising from Indian investment inflows.
Which of the above is/are correctly identified?
- EFTA's member States are Iceland, Liechtenstein, Norway and Switzerland.
- TEPA was signed on 10 March 2024 and entered into force on 1 October 2024.
- The EFTA States aim to raise foreign direct investment into India by USD 100 billion over 15 years, in a first tranche of USD 50 billion within 10 years and a further USD 50 billion in the succeeding 5 years.
- The agreement aims to facilitate the generation of one million direct jobs in the EFTA States arising from Indian investment inflows.
- A. 1 and 3
- B. 2 and 4
- C. 1, 2 and 3
- D. 3 and 4
Q11. Under the WTO's Transparency Mechanism, regional trade agreements notified under GATT Article XXIV and GATS Article V are examined by which one of the following bodies?
- A. The Trade Policy Review Body
- B. The Council for Trade in Goods
- C. The Committee on Trade and Development
- D. The Committee on Regional Trade Agreements
Q12. With reference to New Zealand's economic profile and its trade with India, consider the following:
1. New Zealand is a party to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
2. Dairy products such as milk powder and butter, along with meat and wood, dominate New Zealand's merchandise exports.
3. China and Australia are among the leading destinations for New Zealand's merchandise exports.
4. India–New Zealand merchandise trade declined from about USD 1.3 billion in 2023-24 to about USD 873 million in 2024-25.
Which of the above is/are correctly identified?
- New Zealand is a party to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
- Dairy products such as milk powder and butter, along with meat and wood, dominate New Zealand's merchandise exports.
- China and Australia are among the leading destinations for New Zealand's merchandise exports.
- India–New Zealand merchandise trade declined from about USD 1.3 billion in 2023-24 to about USD 873 million in 2024-25.
- A. 1 and 4
- B. 1, 2 and 3
- C. 2, 3 and 4
- D. 3 and 4 only