UPSC Prelims Practice Questions — Department of Commerce Extends RELIEF Initiative under Export Promotion Mission Until March 31, 2027

Q1. With reference to export credit insurance of the kind provided by ECGC, consider the following statements: Which of the statements given above is/are correct?

  1. It can compensate an exporter when an overseas buyer is willing to pay but the buyer's government blocks the transfer of foreign exchange.
  2. It compensates an exporter for the additional ocean freight paid when a vessel is diverted around a conflict zone.
  3. By reducing the risk that export proceeds are not realised, it can make banks more willing to extend credit against an export order.
  • A. 1, 2 and 3
  • B. 1 only
  • C. 2 and 3 only
  • D. 1 and 3 only

Q2. A government-owned insurer offers export credit insurance to exporters only. During a regional conflict it holds premiums at their earlier level, even though the risk of buyer default has risen. With reference to the WTO Agreement on Subsidies and Countervailing Measures (SCM), consider the following statements: Which of the statements given above is/are correct?

  1. The measure lies outside SCM disciplines because the benefit flows through an insurance company and not as a direct budgetary grant.
  2. Whether it is a prohibited export subsidy under the Agreement's illustrative list depends on whether the premium rates are inadequate to cover the programme's long-term operating costs and losses.
  3. A Member whose domestic industry is injured by the resulting exports may impose countervailing duties after conducting its own investigation.
  • A. 2 and 3 only
  • B. 2 only
  • C. 1 and 2 only
  • D. 1, 2 and 3

Q3. With reference to instruments used to support Indian exporters, consider the following statements: Which of the statements given above are correct?

  1. Under a credit guarantee such as the Credit Guarantee Scheme for Exporters, the guarantee runs in favour of the lending institution, which is compensated if the exporter-borrower defaults.
  2. Under export credit insurance, the risk chiefly transferred is that of the overseas buyer not paying the exporter.
  3. Interest subvention lowers the exporter's effective cost of credit but does not by itself shift the loan's default risk away from the lender.
  4. The NEIA Trust administered by ECGC is designed mainly to cover routine short-term shipments of small exporters that ECGC already underwrites.
  • A. 2, 3 and 4 only
  • B. 1, 2 and 3 only
  • C. 1 and 2 only
  • D. 1, 2, 3 and 4

Q4. Consider the following facts: (I) The Export Promotion Mission merges several export-support schemes into one digitally delivered framework implemented by DGFT, and prioritises MSMEs and first-time exporters. (II) RELIEF is a time-bound intervention under this Mission. (III) RELIEF Component II delivers its benefit as enhanced ECGC export credit cover for holders of Standalone or Whole Turnover policies, with claims lodged through ECGC. Which of the following inferences can be validly drawn from the above facts?

  1. An MSME shipping to the Gulf without any ECGC policy gets no benefit from Component II, even though MSMEs are a priority group of the parent Mission.
  2. Since RELIEF sits under the Mission, Component II claims are settled and paid by DGFT through the Mission's digital platform.
  3. Since support schemes have been merged into one framework, an exporter can no longer draw on more than one type of export support at the same time.
  • A. 2 only
  • B. 1, 2 and 3
  • C. 1 only
  • D. 1 and 3 only

Q5. Suppose insecurity around the Bab-el-Mandeb forces container lines on the India–Europe trade to sail around the Cape of Good Hope. Consider the following statements: Which of the statements given above is/are correct?

  1. War-risk premia would rise mainly for vessels transiting the Strait of Malacca, because that strait is the main entry to the affected route.
  2. Indian shipments to European buyers would face longer transit times, even though their destinations lie far from the conflict zone.
  3. Mediterranean-bound trade through the Suez route is affected even if the Suez Canal itself stays open, because the strait is the southern approach to that route.
  • A. 2 and 3 only
  • B. 1, 2 and 3
  • C. 3 only
  • D. 1 and 2 only

Q6. RELIEF Component II covers shipments moving in FCL, LCL and reefer containers, and excludes energy shipments. Which of the following inferences can be validly drawn from this?

  1. A small exporter whose cargo is too little to fill a container, and is packed together with other shippers' goods, can still fall within the covered cargo types.
  2. Perishable goods shipped in temperature-controlled containers fall within the covered cargo types.
  3. All non-energy cargo, including dry bulk such as iron ore or grain loaded loose in a ship's hold, is covered.
  • A. 1 and 3 only
  • B. 1 and 2 only
  • C. 1, 2 and 3
  • D. 2 only

Q7. An Indian exporter takes pre-shipment credit from a bank and ships goods to a Gulf importer. The importer then becomes insolvent and never pays. Which one of the following arrangements, if in place beforehand, would have shifted the loss from the importer's insolvency away from the exporter?

  • A. Remission of duties on inputs used in the exported goods
  • B. Interest subvention on the exporter's pre-shipment credit
  • C. Export credit insurance cover obtained by the exporter on the shipment
  • D. A credit guarantee given to the bank against the exporter's default