UPSC Prelims Practice Questions — INDIA-UAE JOINT MILITARY EXERCISE MOUNTAIN GUARDIAN 2026 COMMENCES IN UTTARAKHAND

Q1. Consider the following facts about India–UAE army cooperation: an MoU on Defence Cooperation was signed in June 2003; the first army-to-army exercise was held in Rajasthan's desert in January 2024; its second edition, held in Abu Dhabi in December 2025, trained for an urban setting; a Framework for the Strategic Defence Partnership was signed at summit level in May 2026; and an exercise focused on mountain warfare began in Uttarakhand in October 2026. Which of the following inferences can be drawn from the above?

  1. Signing a defence cooperation MoU did not, by itself, translate into early army-to-army field training.
  2. The gap between successive army exercises has become shorter since 2024.
  3. The 2003 MoU had to be renegotiated before the first army exercise could be held.
  4. The army exercises have successively covered different operational terrains.
  • A. 1 and 3 only
  • B. 1, 2, 3 and 4
  • C. 1, 2 and 4 only
  • D. 2, 3 and 4 only

Q2. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. The UAE's membership of the I2U2 grouping binds it in a mutual defence alliance with the United States.
  2. The UAE is a key partner in the India–Middle East–Europe Economic Corridor (IMEC), a planned connectivity corridor linking India towards Europe through West Asia.
  • A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  • B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  • C. Statement-I is correct, but Statement-II is incorrect
  • D. Statement-I is incorrect, but Statement-II is correct

Q3. Consider the following statements regarding economic indicators of India–UAE relations: Which of the statements given above is/are correct?

  1. The figure of about US$25 bn of FDI from the UAE measures a stock built up over many years, whereas the figure of about US$101 bn of merchandise trade measures a flow within a single financial year.
  2. A rise in the UAE's cumulative FDI in India, by itself, raises the value of India–UAE merchandise trade in that year.
  • A. 1 only
  • B. 2 only
  • C. Both 1 and 2
  • D. Neither 1 nor 2

Q4. With reference to the Local Currency Settlement System (LCSS) framework agreed between the Reserve Bank of India and the Central Bank of the UAE, consider the following statements: Which of the statements given above is/are correct?

  1. It enables exporters and importers to invoice and pay in their respective domestic currencies.
  2. It covers all current account transactions, but only those capital account transactions that are permitted.
  3. It is expected to help develop a direct INR–AED foreign exchange market.
  • A. 1 and 3 only
  • B. 1, 2 and 3
  • C. 1 and 2 only
  • D. 2 and 3 only

Q5. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. Settling India–UAE trade directly in rupees and dirhams can lower transaction costs for traders.
  2. Direct invoicing and payment in the two domestic currencies avoids conversion through a third currency such as the US dollar.
  • A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  • B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  • C. Statement-I is correct, but Statement-II is incorrect
  • D. Statement-I is incorrect, but Statement-II is correct

Q6. Under the India–UAE Local Currency Settlement System, an Indian exporter invoices a UAE importer in Indian rupees. Which of the following best describes the effect on currency risk?

  • A. The importer avoids exchange-rate risk on the payable, while the exporter must obtain dirhams.
  • B. The payment must still pass through US dollars before the exporter finally receives rupees.
  • C. Neither party deals with any currency conversion, since no foreign exchange is involved at all.
  • D. The exporter avoids exchange-rate risk on the receivable, while the importer must obtain rupees.