Peace deal: Cautious Indian shipowners seek govt. help

During the Gupta dynasty (c. 320–550 CE), external trade flourished and several coastal towns emerged as significant maritime centres. Ghantasala and Kadura were located on the eastern coast (Andhra region) and functioned as active ports facilitating overseas commerce, particularly with Southeast Asia and other regions. Ghantasala: Located in present-day Andhra Pradesh, Ghantasala served as an eastern coastal port actively engaged in maritime trade with Southeast Asia and possibly even with the Roman world. Kadura: Also located in the Andhra region (eastern coast), Kadura functioned as a significant port under the Gupta-era trade network and handled trade goods like textiles, spices, and ivory. Chaul:  located on the western coast in present-day Maharashtra, acted as a western seaport linking India with Western Asia and was known for trade in cotton textiles and other goods.

Tight monetary policy is an action taken by a central bank, such as the Federal Reserve, to curb overheated economic growth. Central banks employ tight monetary policy when an economy is experiencing rapid acceleration or when inflation, which pertains to overall prices, is escalating too swiftly. Statement 1 is correct. A tight monetary policy by the US Federal Reserve means higher interest rates in the US. This attracts global investors to shift their capital towards US assets for better returns. As a result, there can be capital flight from emerging markets like India to the US. Statement 2 is correct. When capital flows out, the domestic currency tends to depreciate, and global interest rates rise. Firms that have borrowed in foreign currencies through External Commercial Borrowings (ECBs) will now face higher repayment costs in rupee terms. Thus, their cost of servicing these loans increases, raising their overall financial burden. Statement 3 is incorrect. Devaluation of the domestic currency actually increases the currency risk associated with ECBs. Since these loans are denominated in foreign currency (like USD), a weaker rupee means firms have to pay more in rupees to repay the same amount of foreign debt. Therefore, devaluation heightens, not reduces, currency risk. NOTE: The given question was dropped by UPSC from the Official Answer Key.

Not depending on short-term foreign borrowings: This reduces exposure to capital flight. During a crisis, foreign investors may pull their money out of emerging markets like India, leading to rupee depreciation and financial instability. By limiting short-term foreign borrowings, India can lessen the impact of such capital flight. Opening up to more foreign banks: While this might seem beneficial, it can also increase reliance on foreign capital. During a crisis, foreign banks might be more likely to restrict credit, negatively impacting the Indian economy. Maintaining full capital account convertibility: This allows for the free movement of capital in and out of the country. While it can be beneficial in normal times, it can also exacerbate capital flight during a crisis. Therefore, the most prudent strategy is to reduce dependence on short-term foreign borrowings to minimize the vulnerability caused by potential capital flight. Hence, only statement 1 is correct. Hence, option A 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.

To stop the slide of the Rupee (depreciation), the RBI/Government needs to increase the inflow of foreign currency (USD) or decrease the outflow. Option (a), (b), and (c) are likely measures: They either increase the supply of dollars in the Indian market or reduce the demand for dollars, which helps stabilize the Rupee. Option (d) is NOT a likely measure: An expansionary monetary policy usually involves lowering interest rates. When interest rates fall, the "carry trade" becomes less attractive to foreign investors, leading to capital flight. This increases the supply of Rupee in the market and decreases its value further. To stop a slide, the RBI typically follows a contractionary (dear money) policy to attract capital and curb inflation.

* Korkai, Poompuhar, and Muchiri were well-known ancient port cities in South India. These cities were prominent centres of trade and maritime activities during ancient times, particularly during the Sangam period (300 BCE to 300 CE). * Please Note: In the Sangam Literature - the word ‘Puhar’ referred to harbour towns.

* Statement I is incorrect: India's share in global merchandise trade is only 1.8% and 4% in global services. India plans to increase its export share in global trade from 2.1% to 3% by 2027 and 10% by 2047. * Statement II is correct: The PLI scheme is open to both domestic and international manufacturers. Samsung as well as Indian firms such as Dixon Technologies, UTL, Neolyncs, Lava International, Optiemus Electronics and Micromax are also expanding their factories to take advantage of the PLI scheme.

Statement 1 is incorrect. Typically, the RBI uses open market operations to sell government securities to drain money from the system and control inflation. Buying government securities would inject money into the system, potentially fueling inflation further. Statement 2 is correct. Selling dollars in the market - If the rupee is rapidly depreciating, the RBI might intervene in the foreign exchange market by selling dollars from its reserves. This increased supply of dollars in the market can help stabilize the exchange rate and slow down the depreciation of the rupee. Statement 3 is correct. Lower interest rates in the US/EU make India a more attractive destination for foreign investment, leading to a large inflow of dollars. This causes the rupee to strengthen (appreciate). To prevent the rupee from appreciating too rapidly and hurting exporters, the RBI buys the excess dollars from the market.

Statement 1 is correct: This is the primary objective of the Gold Monetization Scheme (GMS). The scheme encourages individuals and institutions to deposit their idle physical gold (jewellery, coins, bars) with banks. This gold is then melted, assayed, and added to the country's gold reserves, which can be lent to jewellers, thereby bringing it into the formal economy. Statement 2 is incorrect: These schemes are focused on managing domestic gold supply and demand. They are not designed to attract Foreign Direct Investment (FDI). Policies related to FDI in the jewellery sector are separate from these schemes. Statement 3 is correct: This is a core objective of both schemes.
* The Sovereign Gold Bond (SGB) Scheme provides a financial alternative to buying physical gold. By shifting demand from physical gold to paper gold, it helps reduce the demand for gold imports.
* The Gold Monetization Scheme (GMS) increases the domestic supply of recycled gold available to jewellers, thus reducing their reliance on imported gold. Both schemes aim to curb gold imports, which are a major component of India's import bill and contribute significantly to the Current Account Deficit (CAD).

Statement 1 is Incorrect: The Vizhinjam International Seaport is designed as an international container transshipment hub, not an exclusively domestic cargo hub. Rather than reducing reliance on coastal shipping, a transshipment hub relies heavily on a "hub-and-spoke" model, where large mother ships offload cargo that is then distributed to other Indian ports via smaller coastal feeder vessels. Furthermore, it actively seeks to attract foreign shipping lines and global integration, rather than eliminating foreign collaborations. Statement 2 is Incorrect: While the port has provisions for a cruise terminal, its primary focus is handling international container transshipment and multi-purpose cargo. It is not primarily focused on passenger cruise tourism or heritage shipping. Statement 3 is Correct: Vizhinjam leverages its natural deep draft of 18 to 24 meters, allowing it to berth Ultra Large Container Ships (ULCS) that previously bypassed Indian ports. Situated just 10 nautical miles from the busy East-West international shipping corridor, it aims to reclaim transshipment cargo historically handled by foreign hubs like Colombo, Singapore, and Jebel Ali. This structural shift reduces dependence on foreign ports, retains an estimated $200 to $400 million annually in transshipment revenues, and repositions India in regional maritime trade. Therefore, option D is the correct answer.

Statement 1 is correct: The article states, 'the Bharat Maritime Insurance Pool, that came with a sovereign guarantee of $1.4 billion for providing re-insurance'. Statement 2 is incorrect: The article mentions, 'one Indian shipowner had received a quote from a public sector company and it turned out to be more than London rates', indicating it was not competitive. Statement 3 is correct: The article attributes the situation to 'lack of trust and transparency on the part of both shipowners and Indian insurance companies'. Therefore, statements 1 and 3 are correct.

Option A is incorrect: The article mentions identifying '16 vessels carrying fertilizers' and being 'keen on LNG ships', in addition to crude oil carriers, indicating concern for various critical supplies. Option B is correct: The article states the government 'has identified 34 vessels of Indian interest' including '16 vessels carrying fertilizers' and 'keen on LNG ships', and is 'considering naval escorts and other protective measures for safe exit'. Option C is incorrect: The article lists Indian-flagged vessels in the Persian Gulf (west of Strait of Hormuz), Gulf of Oman, Gulf of Aden, and Red Sea area, implying risks across multiple strategic waterways, not just the Strait of Hormuz. Option D is incorrect: The article details measures to reduce port congestion for 'substantial volume of cargo' including 'additional storage' and 'extended support for stacking cargo', alongside concerns for seafarers.

Statement 1 is correct: The article states, 'a substantial volume of cargo is currently stranded or awaiting evacuation across ports. At major ports, the volume comprises 11,299 TEUs of containers and 1,771 TEUs of perishable cargo.' Statement 2 is correct: The article mentions, 'The government has put in place several measures to reduce congestion at ports... Additional storage has been allocated for cargo handling requirements, along with extended support for stacking cargo within the port area.' Statement 3 is incorrect: The article states, 'The relief measures are expected to provide immediate operational and financial support to the trade community while helping ports manage congestion, preserve time-sensitive cargo, and maintain the smooth flow of maritime commerce,' not to increase port charges. Therefore, statements 1 and 2 are correct.