UPSC Prelims Practice Questions — Khelo India Sports Goods Manufacturing Scheme

Q1. With reference to the two kinds of manufacturing incentive combined in the Khelo India Sports Goods Manufacturing Scheme, consider the following statements: Which of the statements given above is/are correct?

  1. Turnover-linked support suits a large anchor investor better than capex support because it lowers the project's risk before production begins.
  2. Capex support is computed on the investment made rather than on the output that the investment later generates.
  3. Under a PLI-type incentive, a firm whose sales do not rise above the base-year level earns no incentive, however large its investment.
  • A. 1 and 3 only
  • B. 1 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q2. A government wishes to pay manufacturers only to the extent that their production in India actually expands, leaving the risk of the upfront investment with the firms themselves. Which one of the following incentive designs best serves this objective?

  • A. A grant equal to a fixed share of plant and machinery cost, paid on commissioning
  • B. A payment computed as a percentage of sales above a base-year level of sales
  • C. A concessional loan for buying land in a plug-and-play industrial park nearby
  • D. A reimbursement of a fixed share of the cost of international product certification

Q3. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. Where inputs such as carbon fibre bear higher duties than finished sports goods, manufacturing in India can become costlier than importing the finished product.
  2. When inputs are taxed at a higher rate than the output, the protection effectively available to domestic value addition is reduced and can even turn negative.
  • 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

Q4. With reference to the inverted duty structure, consider the following statements: Which of the statements given above is/are NOT correct?

  1. Under GST, it causes input tax credit to accumulate unused because the tax payable on output is too small to absorb it.
  2. Provisional refund of accumulated credit eases working capital but does not by itself remove the rate inversion between inputs and output.
  3. It arises when the finished product attracts a higher rate of tax than the inputs used to make it.
  • A. 2 and 3 only
  • B. 1 and 3 only
  • C. 1 only
  • D. 3 only

Q5. Suppose a Quality Control Order under the BIS Act, 2016 is notified making BIS certification mandatory for EVA foam, a key input for sports footwear. Consider the following statements regarding its likely consequences: Which of the statements given above is/are correct?

  1. A footwear maker could no longer lawfully rely on EVA imported from a foreign producer that lacks BIS certification.
  2. A domestic EVA producer without a BIS licence could continue selling, since such an order restricts only imports.
  3. A foreign EVA producer could keep supplying the Indian market by obtaining a licence from BIS.
  • A. 1 and 3 only
  • B. 1, 2 and 3
  • C. 1 only
  • D. 2 and 3 only

Q6. With reference to the two spatial instruments of the scheme, namely upgradation of existing clusters and Sports Goods Manufacturing Zones (SGMZs), consider the following statements: Which of the statements given above is/are correct?

  1. Cluster upgradation creates shared facilities, such as testing laboratories, that small units in a cluster could not afford individually.
  2. The cost of cluster upgradation is shared between the Centre and the States rather than borne by the Centre alone.
  3. SGMZs are to be developed by converging with programmes offering plug-and-play parks, so units need not build trunk infrastructure.
  • A. 1 only
  • B. 2 and 3 only
  • C. 1, 2 and 3
  • D. 1 and 2 only

Q7. Consider the following assertion: Locating large anchor units in integrated manufacturing zones can raise the competitiveness of small suppliers located in the same zone. Which of the statements given above support/supports the assertion?

  1. Co-location lets component and ancillary suppliers cut transport and search costs by serving a large buyer close by.
  2. A large anchor creates enough demand for testing, design and prototyping services to make providing them locally viable.
  3. Anchor investors in such zones receive government support covering a share of their own capital expenditure.
  4. A concentration of firms helps build a pool of skilled workers that every firm in the zone can draw upon.
  • A. 1 and 4 only
  • B. 1, 2, 3 and 4
  • C. 2 and 3 only
  • D. 1, 2 and 4 only