UPSC Prelims Practice Questions — BHAVYA: Creating Investment-Ready Manufacturing Ecosystems

Q1. With reference to Special Economic Zones (SEZs) and plug-and-play industrial parks in India, consider the following statements: Which of the statements given above is/are correct?

  1. The fiscal concessions and duty benefits available to SEZ units are built into a parliamentary statute and the rules made under it.
  2. Locating a unit in a plug-and-play industrial park by itself makes the unit's imports exempt from customs duty.
  3. SEZ benefits are tied mainly to export-oriented operations, whereas the core offering of a plug-and-play park is ready land, utilities and approvals.
  • A. 1 and 2 only
  • B. 1 and 3 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

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

  1. Goods cleared from a unit in a Special Economic Zone into the Domestic Tariff Area attract customs duties.
  2. A Special Economic Zone is deemed to be a territory outside the customs territory of India for authorised operations.
  • 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 about the difference between a Government's equity infusion into a project entity and grant-in-aid to it: Which of the statements given above is/are correct?

  1. Equity infusion, unlike a grant, obliges the project entity to repay the principal to the Government on a fixed schedule.
  2. Equity infusion gives the Government an ownership claim and a share in the residual value of the asset, while a grant creates no such claim.
  3. Releasing equity in tranches linked to project milestones lets the investing Government stage its exposure according to delivery.
  • A. 2 and 3 only
  • B. 1, 2 and 3
  • C. 1 and 3 only
  • D. 1 and 2 only

Q4. With reference to the National Industrial Corridor Development Programme (NICDP), consider the following statements: Which of the statements given above are correct?

  1. The corporation that now anchors the programme began as a special purpose vehicle for a single corridor before its mandate was widened to a national programme.
  2. Its nodes are planned as greenfield industrial cities with integrated utilities, logistics and multimodal connectivity rather than as standalone industrial estates.
  3. In project SPVs under the programme, the State's equity usually comes as land, while central funds come as equity or debt.
  4. Its industrial nodes are notified as SEZs, so every unit in a node is deemed outside the customs territory of India.
  • A. 1 and 2 only
  • B. 1, 3 and 4 only
  • C. 1, 2 and 3 only
  • D. 2 and 4 only

Q5. Planners of an industrial corridor place manufacturing nodes along a high-capacity freight spine and give each node integrated utilities and common facilities. What is the main economic rationale for this design?

  • A. It rewards firms with cash payouts linked to growth in their incremental sales
  • B. It transfers ownership of industrial land in the nodes from the States to the Union
  • C. It reserves the nodes' output mainly for export markets under duty concessions
  • D. It lowers transport and transaction costs for firms and their co-located suppliers

Q6. Consider the following assertion: 'The design of BHAVYA embodies competitive cooperative federalism.' Which of the following statements, if true, support the above assertion?

  1. States contribute land and co-own the park SPVs with the Centre's implementing agency.
  2. States compete for Phase-1 parks on project readiness, land availability and industrial potential.
  3. Private developers can take part in park development through project-specific SPVs.
  4. Up to a quarter of a park's approved funding may be spent on external road, rail and last-mile connectivity.
  • A. 1 and 2 only
  • B. 2 and 4 only
  • C. 1, 2 and 3 only
  • D. 1, 2, 3 and 4

Q7. With reference to input-side and output-side tools of industrial policy, consider the following statements: Which of the statements given above is/are correct?

  1. A firm that sets up in a centrally supported plug-and-play park thereby becomes eligible for Production Linked Incentives.
  2. Production Linked Incentives are calculated on a firm's incremental sales of eligible products over a base year.
  3. Financing common effluent treatment plants in a park is an output-side incentive because it is paid per unit of output treated.
  • A. 2 and 3 only
  • B. 1 and 3 only
  • C. 2 only
  • D. 1 and 2 only