Global Economy & India's Interests — UPSC CSE Questions

8 UPSC CSE practice questions on Global Economy & India's Interests, part of International Relations. Below are 8 of them in full, each with the answer and a written explanation.

Questions & explanations

1. The US law CAATSA, which complicates India's defence purchases from Russia, threatens:

  1. (a) Tariffs on Indian textiles
  2. (b) Secondary sanctions on buyers of Russian arms
  3. (c) Visa bans on Indian students
  4. (d) A ban on Indian pharma exports

Answer: (b) Secondary sanctions on buyers of Russian arms

CAATSA (Countering America's Adversaries Through Sanctions Act) threatens secondary sanctions on countries making significant arms deals with Russia, affecting India's S-400 purchase.

2. India is called the 'pharmacy of the developing world' largely because of which provision?

  1. (a) Section 3(d) of the Patents Act 1970 limiting evergreening
  2. (b) The FCRA 2010
  3. (c) Section 135 of the Companies Act 2013
  4. (d) The Essential Commodities Act 1955

Answer: (a) Section 3(d) of the Patents Act 1970 limiting evergreening

Section 3(d) of the Patents Act 1970 blocks patent evergreening, enabling India to produce affordable generic medicines for the developing world.

3. Which principle does India invoke to argue that developed countries should bear more responsibility in climate action?

  1. (a) Most Favoured Nation
  2. (b) Common But Differentiated Responsibilities (CBDR)
  3. (c) National Treatment
  4. (d) Polluter-stays-free principle

Answer: (b) Common But Differentiated Responsibilities (CBDR)

India invokes Common But Differentiated Responsibilities (CBDR), arguing that developed nations, having emitted most historically, must do more.

4. The EU's Carbon Border Adjustment Mechanism (CBAM) primarily affects which Indian exports?

  1. (a) Software services
  2. (b) Carbon-intensive goods like steel and aluminium
  3. (c) Pharmaceuticals
  4. (d) Tea and spices

Answer: (b) Carbon-intensive goods like steel and aluminium

CBAM imposes a carbon levy on imports of carbon-intensive goods such as steel, aluminium and cement, directly affecting these Indian exports.

5. Consider the following about developing-country policies and India: 1. India leads the 'Global South' through Voice of Global South Summits. 2. OPEC output decisions affect India's oil import bill. 3. Bangladesh and Vietnam are major competitors to India in textiles. Which are correct?

  1. (a) 1 and 2 only
  2. (b) 2 and 3 only
  3. (c) 1 and 3 only
  4. (d) 1, 2 and 3

Answer: (d) 1, 2 and 3

All three statements are correct - India leads the Global South, OPEC affects its oil bill, and Bangladesh and Vietnam compete in textiles.

6. India's buffer against external monetary shocks, its foreign-exchange reserves, are in the range of:

  1. (a) Around US$50 billion
  2. (b) Around US$200 billion
  3. (c) Over US$600 billion
  4. (d) Over US$2 trillion

Answer: (c) Over US$600 billion

India's foreign-exchange reserves have stood at over US$600 billion in recent years, acting as a buffer against capital-flow volatility.

7. The 'taper tantrum' that hit the Indian rupee occurred in which year, triggered by the US Fed?

  1. (a) 2008
  2. (b) 2011
  3. (c) 2013
  4. (d) 2016

Answer: (c) 2013

The 2013 'taper tantrum', when the US Fed signalled tapering of bond purchases, caused sharp capital outflows and rupee depreciation.

8. India withdrew from which mega trade agreement negotiation in 2019 over fears of import surges?

  1. (a) CPTPP
  2. (b) RCEP
  3. (c) USMCA
  4. (d) EU FTA

Answer: (b) RCEP

India exited the Regional Comprehensive Economic Partnership (RCEP) negotiations in 2019, fearing a flood of cheap Chinese imports.

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