International Economic Cooperation and Trade Agreements

Statement 1 is correct. Merchandise trade deficit is the largest component of India's current account deficit. As per RBIs data, India's Merchandise exports during April-August 2019- 2020 were USD 133.14 billion, as compared to USD 210.39 billion of imports during the same period. Statement 2 is incorrect. Commodity-wise composition of imports between 2011-12 and 2018-19 shows that imports of iron and steel, organic chemicals, industrial machinery have registered positive growth rates as % of share in imports. Statement 3 is correct. India's net services (service exports - service imports) have been in surplus. India's Service exports during April-August 2019- 2020 were USD 67.24 billion, as compared to USD 39.25 billion of imports during the same period. Statement 4 is correct. Current Account Deficit (CAD) or trade deficit is the shortfall between exports and imports. As per Economic Survey 2019-20, India's CAD was 2.1% in 2018-19, and 1.5% of GDP in H1 of 2019-20. Therefore, the correct answer is (D) 1, 3 and 4 only. _NOTE: UPSC has not considered this question for marking._

Statement 1 is Correct: The OEKO-TEX certification ensures that textiles are rigorously tested and proven free from harmful substances, heavy metals, and toxic chemicals. This certification acts as a major endorsement, directly enhancing the global marketability of Eri Silk and allowing Indian exporters to confidently compete in high-end international markets that prioritize sustainable, chemical-free, and ethically produced textiles. Statement 2 is Correct: The certification confirms that a textile meets strict international safety, environmental, and human health standards. This is highly valued by buyers in premium, eco-conscious global markets, particularly in Europe and North America. Combined with its Geographical Indication (GI) status and reputation as a cruelty-free "peace silk," the certification cements Eri Silk's position as a premium eco-friendly fabric, enabling its entry into these premium markets. Therefore, both statements are correct, making the correct option C.

Statement 1 is Incorrect: Share of agriculture in GDP has actually decreased since 1991, as the service sector has grown significantly. Statement 2 is Correct: Share of India's exports in world trade has increased. India has become a more integrated part of the global economy, with a larger export footprint. Statement 3 is Correct: FDI inflows have increased considerably. The liberalisation measures made India a more attractive destination for foreign investment. Statement 4 is Correct: India's foreign exchange reserves have also increased enormously. This reflects India's improved ability to generate foreign currency and manage its external finances. Therefore, the correct answer is 2, 3, and 4 only. Hence, option B is the correct answer.

Statement 1 is correct. When a country devalues its currency, it becomes cheaper for foreign buyers to purchase the country's exports. This can lead to increased demand for exports, making domestic producers more competitive in the international market. Statement 2 is incorrect. Devaluation actually decreases the foreign value of the domestic currency. The whole point is to make the domestic currency less expensive relative to foreign currencies. Statement 3 is also incorrect. While improved export competitiveness can lead to a better trade balance (more exports, fewer imports), it's not a guaranteed outcome. Other factors like import prices, global demand, and domestic production costs can also influence the trade balance. Devaluation can also lead to increased import costs if the country relies on imported raw materials. Therefore, the correct code is 1 only.

Participatory Note (P-Note): This is a financial instrument issued by registered foreign portfolio investors (FPIs) to overseas investors. It allows overseas investors to participate in the Indian stock market indirectly without directly registering with the Securities and Exchange Board of India (SEBI). The FPI holds the underlying Indian securities, and the P-Note represents ownership for the overseas investor. The other options are not used for this purpose: Certificate of Deposit (CD): Issued by banks to raise short-term funds, not related to stock markets. Commercial Paper (CP): Short-term debt instrument issued by companies, not related to foreign investment in stocks. Promissory Note: A written promise to repay a debt, not used in this context of stock market participation.

Statement 1 is Incorrect: While China and Russia were not part of the TPP negotiations, it wasn't solely focused on Pacific Rim countries. Other economies like Vietnam and Singapore were part of the TPP despite not exactly being on the Pacific Rim. Statement 2 is Incorrect: The TPP was a proposed trade agreement, not a strategic alliance for maritime security. It aimed to reduce trade barriers and promote economic integration among member countries. The TPP negotiations were concluded in 2015, but the agreement was never ratified by all the signatories. The United States withdrew from the TPP in 2017, effectively ending the initiative in its original form. However, some member countries pursued alternative trade agreements based on the TPP framework. Hence, option D is the correct answer.

Critical minerals are essential for modern technologies and clean energy, but many countries, including India, depend on imports for several of them. To strengthen supply chains, India has joined international partnerships and reformed mining laws. ✅ Statement I: Correct India joined the Minerals Security Partnership (MSP) in 2023 to ensure reliable access to critical minerals. ❌ Statement II: Incorrect India is not resource-rich in all 30 critical minerals it has identified and remains import-dependent for several, like cobalt and nickel. ✅ Statement III: Correct In 2023, Parliament amended the Mines and Minerals Act, giving the Central Government power to auction leases for critical minerals.

Statement 1 is Correct. The International Finance Corporation (IFC) is indeed an arm of the World Bank Group, a group of five international organizations that work together to fight poverty and promote sustainable development. The IFC specifically focuses on encouraging growth in the private sector of developing countries. Statement 2 is Correct. Masala bonds are rupee-denominated bonds issued by foreign entities (public or private sector) outside of India. These bonds raise capital for the issuer in Indian rupees, providing an alternative funding source. Therefore, the correct answer is 1 and 2 both are correct.