UPSC Prelims Practice Questions — Cabinet approves Container Manufacturing Promotion Scheme

Q1. With reference to interest subvention and output-linked operational assistance as instruments of industrial support, consider the following statements: Which of the statements given above is/are correct?

  1. An interest subvention reduces a firm's cost of capital at the investment stage irrespective of whether the financed unit later reaches its planned output.
  2. Operational assistance linked to output mainly lowers the up-front cost of building a plant, which is why it suits capital-intensive start-ups.
  3. Assistance paid only on verified production and sales places the risk of under-performance largely on the firm rather than on the government.
  • A. 1 and 3 only
  • B. 2 and 3 only
  • C. 1, 2 and 3
  • D. 1 and 2 only

Q2. Consider the following statements in the context of the Container Manufacturing Promotion Scheme (CMPS): Which of the following is correct in respect of the above statements?

  1. Under CMPS, the interest subvention component is paid to a unit on each standard-compliant container that it sells.
  2. Output-linked assistance is released only after production and sales are achieved, which shifts the risk of under-performance onto the firm.
  • 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. Suppose domestic shipping-container manufacturing in India expands sharply under a government support scheme. Consider the following statements about its likely consequences: Which of the statements given above is/are correct?

  1. Employment gains would be confined to workers in the container assembly plants.
  2. Demand faced by domestic producers of specialised steel and corner castings would rise.
  3. Output of the domestic steel industry would fall because steel would be diverted towards container making.
  • A. 2 and 3 only
  • B. 2 only
  • C. 1 and 2 only
  • D. 1, 2 and 3

Q4. With reference to import substitution and export-oriented industrialisation, consider the following statements: Which of the statements given above is/are correct?

  1. Classic import substitution industrialisation relied on tariffs and import licensing to shelter domestic producers of goods previously imported.
  2. Under an export-oriented strategy, shelter in the home market cannot by itself make output viable, because exports must compete in foreign markets on price and standards.
  3. Economies that adopted export-oriented strategies, notably the East Asian newly industrialising economies, sustained growth during worldwide recessions better than those that persisted with import substitution.
  • A. 1 and 2 only
  • B. 1 and 3 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q5. Consider the following facts: India relies mostly on imported shipping containers; global disruptions have caused container shortages and freight spikes; and a new scheme seeks to raise domestic container manufacturing capacity about tenfold while making India an export hub for containers built to global standards. Which of the following inferences can be drawn from the above?

  1. Once domestic capacity expands, Indian exporters will be fully insulated from global freight-rate increases.
  2. At present, container availability for Indian traders is sensitive to conditions in foreign supply markets.
  3. The scheme's objectives extend beyond substituting imports to meet domestic demand.
  • A. 1, 2 and 3
  • B. 2 only
  • C. 2 and 3 only
  • D. 1 and 3 only