External Sector of Economy

31. India enacted The Geographical Indications of Goods (Registration and

India enacted The Geographical Indications of Goods (Registration and Protection) Act, 1999 in order to comply with the obligations to

ILO
IMF
UNCTAD
WTO
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The correct answer is D) WTO.
– The Geographical Indications of Goods (Registration and Protection) Act, 1999, was enacted by India primarily to comply with its obligations under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
– The TRIPS Agreement, administered by the World Trade Organization (WTO), includes provisions for the protection of Geographical Indications (GIs).
– Article 22 of the TRIPS Agreement requires WTO members to provide the legal means for interested parties to prevent the use of a GI that misleads the public as to the geographical origin of a good.
– India, being a signatory to the WTO and TRIPS agreement, enacted this domestic legislation to meet these requirements and protect Indian GIs as well as facilitate the protection of foreign GIs in India.
A Geographical Indication (GI) is a sign used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin. Examples of registered Indian GIs include Darjeeling Tea, Kanchipuram Silk, Alphanso Mango, Nashik Valley Wine, etc.

32. With reference to India’s decision to levy an equalization tax of 6% o

With reference to India’s decision to levy an equalization tax of 6% on online advertisement services offered by non-resident entities, which of the following statements is/are correct ?

  • 1. It is introduced as a part of the Income Tax Act.
  • 2. Non-resident entities that offer advertisement services in India can claim a tax credit in their home country under the “Double Taxation Avoidance Agreements”.

Select the correct answer using the code given below :

1 only
2 only
Both 1 and 2
Neither 1 nor 2
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Statement 1 is incorrect. The equalization levy (often referred to as ‘Google Tax’) was initially introduced in India by the Finance Act, 2016, as a separate levy on specified services received by a resident in India or a non-resident having a permanent establishment in India, from a non-resident service provider without a permanent establishment in India. It was *not* initially introduced as a part of the Income Tax Act, 1961, but as a distinct levy. Later, it was expanded and included within the Finance Act framework, but the initial introduction was separate.
Statement 2 is incorrect. Double Taxation Avoidance Agreements (DTAAs) are typically designed to address taxes on income. The equalization levy, as introduced, was a levy on the gross consideration for specified services, distinct from income tax. Whether it falls within the scope of specific DTAAs is complex and depends on the definition of ‘taxes covered’ in each treaty. Generally, standalone levies like the equalization levy are not automatically covered by DTAAs, and therefore, claiming a tax credit in the home country under standard DTAA provisions is unlikely or not straightforward.
– The equalization levy was introduced by the Finance Act, 2016, as a separate levy, not initially part of the Income Tax Act.
– DTAAs primarily cover income taxes and may not apply to levies like the equalization levy, making tax credit claims under DTAA unlikely.
– The levy targeted business models of digital companies where traditional nexus rules for taxation were not effective.
The equalization levy was expanded in Finance Act, 2020, to cover e-commerce operators and transactions, levied at 2% on gross consideration for e-commerce supply or services by a non-resident e-commerce operator. This further complicated its interaction with DTAAs.

33. What is/are the consequence/consequences of a country becoming the mem

What is/are the consequence/consequences of a country becoming the member of the ‘Nuclear Suppliers Group’?

  • 1. It will have access to the latest and most efficient nuclear technologies.
  • 2. It automatically becomes a member of “The Treaty on the Non-Proliferation of Nuclear Weapons (NPT)”.

Which of the statements given above is/are correct ?

1 only
2 only
Both 1 and 2
Neither 1 nor 2
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Statement 1 is correct. Membership in the Nuclear Suppliers Group (NSG) facilitates trade in nuclear material, equipment, and technology for peaceful purposes among member states. Being an NSG member allows a country access to the latest and most efficient nuclear technologies from other member countries, provided they adhere to the NSG guidelines and safeguards.
Statement 2 is incorrect. NSG membership and the Treaty on the Non-Proliferation of Nuclear Weapons (NPT) membership are separate. NSG guidelines require members to be parties to the NPT as non-nuclear-weapon states or to meet certain non-proliferation commitments. However, NSG membership does not automatically make a country an NPT member. India, for instance, is not a member of the NPT (as it possesses nuclear weapons and views the treaty as discriminatory) but received a specific waiver from the NSG in 2008 allowing it to engage in nuclear commerce. India is seeking full NSG membership but is not an NPT member.
– NSG membership allows access to global nuclear trade and technology for peaceful uses under safeguards.
– NSG membership and NPT membership are not the same.
– NSG members are generally required to adhere to non-proliferation commitments, often including being NPT members (though exceptions/waivers exist).
The NSG is a group of nuclear supplier countries that aims to prevent nuclear proliferation by controlling the export of materials, equipment, and technology that can be used to manufacture nuclear weapons.

34. What is the importance of developing Chabahar Port by India ?

What is the importance of developing Chabahar Port by India ?

India's trade with African countries will enormously increase.
India's relations with oil-producing Arab countries will be strengthened.
India will not depend on Pakistan for access to Afghanistan and Central Asia.
Pakistan will facilitate and protect the installation of a gas pipeline between Iraq and India.
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The development of Chabahar Port by India provides a strategic alternative route to Afghanistan and Central Asia, reducing India’s dependence on transit through Pakistan.
Chabahar Port, located on the southeastern coast of Iran, offers India direct sea-land access to Afghanistan and beyond, bypassing Pakistan’s territory which has historically been a bottleneck for India’s trade with landlocked Central Asian countries.
The port is also a key component of the International North-South Transport Corridor (INSTC), a multi-modal transport route linking the Indian Ocean and the Persian Gulf via Iran to Russia and Northern Europe. The port is primarily aimed at enhancing connectivity to Afghanistan and Central Asia, not directly aimed at significantly increasing trade with Africa or strengthening relations with Arab countries.

35. Consider the following statements: 1. India has ratified the Trade F

Consider the following statements:

  • 1. India has ratified the Trade Facilitation Agreement (TFA) of WTO.
  • 2. TFA is a part of WTO’s Bali Ministerial Package of 2013.
  • 3. TFA came into force in January 2016.

Which of the statements given above is/are correct?

1 and 2 only
1 and 3 only
2 and 3 only
1, 2 and 3
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Statements 1 and 2 are correct. India ratified the Trade Facilitation Agreement (TFA) of the WTO, and the TFA was indeed part of the WTO’s Bali Ministerial Package of 2013.
The WTO Trade Facilitation Agreement (TFA) aims to streamline and simplify customs procedures for the movement, release, and clearance of goods across borders.
Statement 3 is incorrect. The TFA entered into force on 22 February 2017, after two-thirds of WTO members formally accepted the agreement, not in January 2016.

36. ‘Broad-based Trade and Investment Agreement (BTIA)’ is sometimes seen

‘Broad-based Trade and Investment Agreement (BTIA)’ is sometimes seen in the news in the context of negotiations held between India and

European Union
Gulf Cooperation Council
Organization for Economic Cooperation and Development
Shanghai Cooperation Organization
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The Broad-based Trade and Investment Agreement (BTIA) is a comprehensive trade and investment agreement being negotiated between India and the European Union.
The negotiations for BTIA cover a wide range of areas, including trade in goods, services, investment protection, intellectual property rights, and dispute settlement mechanisms, aiming to enhance economic ties between India and the EU.
Negotiations for the BTIA began in 2007 but were paused in 2013. They were formally resumed in June 2022, reflecting a renewed push to deepen trade and investment cooperation.

37. The term ‘Digital Single Market Strategy’ seen in the news refers to

The term ‘Digital Single Market Strategy’ seen in the news refers to

ASEAN
BRICS
EU
G20
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The correct answer is C, referring to the EU.
The Digital Single Market Strategy is a policy initiative by the European Union aimed at making the EU’s single market fit for the digital age by removing regulatory barriers and creating a seamless online environment across member states.
The EU has been actively working on establishing a Digital Single Market to boost its economy, foster innovation, and provide consumers with greater access to online goods and services across borders. This strategy involves legislative proposals related to e-commerce, digital contracts, cybersecurity, copyright, and platform regulation, among others. This initiative is specific to the European Union’s integration efforts.

38. European Stability Mechanism’, sometimes seen in the news, is an

European Stability Mechanism’, sometimes seen in the news, is an

agency created by EU to deal with the impact of millions of refugees arriving from Middle East
agency of EU that provides financial assistance to eurozone countries
agency of EU to deal with all the bilateral and multilateral agreements on trade
agency of EU to deal with the conflicts arising among the member countries
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The European Stability Mechanism (ESM) is an intergovernmental organization established by the Eurozone Member States to provide financial assistance to Eurozone countries experiencing or threatened by severe financing problems. It acts as a financial backstop for the Eurozone.
Option A is incorrect as the ESM’s primary role is financial stability, not refugee management.
Option C is incorrect as the ESM focuses on financial stability, not trade agreements.
Option D is incorrect as the ESM deals with financial crises, not general conflicts among member countries, although financial stress can contribute to tensions.
ESM is a Eurozone agency providing financial assistance to member states in difficulty.
The ESM was established in 2012 as a permanent successor to temporary bailout funds like the European Financial Stability Facility (EFSF) and European Financial Stabilisation Mechanism (EFSM), in response to the sovereign debt crisis in the Eurozone.

39. ‘Global Financial Stability Report’ is prepared by the

‘Global Financial Stability Report’ is prepared by the

European Central Bank
International Monetary Fund
International Bank for Reconstruction and Development
Organization for Economic Cooperation and Development
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The Global Financial Stability Report (GFSR) is a half-yearly report published by the International Monetary Fund (IMF). It assesses key risks to global financial stability and highlights structural issues that could undermine financial resilience.
The Global Financial Stability Report is a publication that provides an assessment of trends and systemic risks in the global financial system.
The IMF is an international organization headquartered in Washington, D.C., consisting of 190 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. The GFSR is one of its flagship publications, along with the World Economic Outlook (WEO).

40. Which of the following best describes the term ‘import cover’, sometim

Which of the following best describes the term ‘import cover’, sometimes seen in the news?

It is the ratio of value of imports to the Gross Domestic Product of a country
It is the total value of imports of a country in a year
It is the ratio between the value of exports and that of imports between two countries
It is the number of months of imports that could be paid for by a country's international reserves
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The correct answer is D) It is the number of months of imports that could be paid for by a country’s international reserves. Import cover is a measure of a country’s ability to meet its import requirements using its foreign exchange reserves.
– Import cover is calculated as the total value of international reserves divided by the average monthly value of imports.
– It indicates how many months a country can continue to pay for imports if its sources of foreign exchange earnings (like exports, remittances, capital inflows) were to cease.
– A higher import cover indicates a stronger external position and greater resilience to external shocks. A common benchmark is 3-4 months of import cover, considered adequate by many international financial institutions.
International reserves typically include a country’s holdings of foreign currencies, gold, SDRs, and its reserve position in the IMF.
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