Test: India's Foreign Trade Policy - UGC NET MCQ

One of the key objectives of India's Foreign Trade Policy is to stimulate industrial growth. By promoting industrial development, especially for small and medium-sized enterprises (SMEs), the policy aims to create employment opportunities and foster economic growth. This objective aligns with the broader goal of enhancing the competitiveness of Indian industries in the global market.

In foreign trade, the use of multiple currencies is a crucial aspect that requires currency exchanges for payments and settlements. This occurs because different nations have their own currencies, leading to the need for exchange rates to facilitate transactions between countries. Currency exchange plays a significant role in the process of international trade, influencing the cost of goods and services being traded and impacting the overall trade balance between nations.

Recent changes in India's Foreign Trade Policy include a stronger emphasis on boosting services exports, such as IT, BPO, tourism, and healthcare, alongside traditional merchandise exports. This shift reflects a strategic move towards diversification and expansion of India's export capabilities to include service-oriented sectors, in addition to traditional goods.

India's Foreign Trade Policy aims to encourage technological advancement by promoting the adoption of new technologies and innovations. By embracing technological progress, Indian exports can become more competitive on the global stage. This strategy not only enhances the quality and efficiency of Indian products but also positions the country as a leader in innovation within various industries.

• Assertion: The statement regarding India's focus on reducing import dependence and enhancing domestic manufacturing is true based on the provided information.
• Reason: The statement about providing incentives and subsidies to boost competitiveness and export performance is also true.
• Explanation: While both statements are true, they are not directly related in a cause-effect manner. The incentives and subsidies mentioned in the Reason may contribute to boosting competitiveness and export performance, but they do not directly explain the assertion about reducing import dependence and enhancing domestic manufacturing.

• Assertion: India's Foreign Trade Policy does emphasize diversifying the export basket to include electronics, pharmaceuticals, and agriculture. This is in alignment with the information provided.
• Reason: The reason statement, however, talks about the government providing subsidies and incentives to exporters, which is not directly related to the assertion.
• Explanation: While the Assertion is correct based on the content provided, the Reason is somewhat disconnected from the Assertion. The Reason does not serve as a direct explanation for the Assertion, making Option C the correct answer.

• Assertion: The statement that the FTP plays a crucial role in boosting India's economic growth is correct based on the advantages highlighted in the provided content.
• Reason: The reason statement is also accurate as it mentions how the FTP promotes technological advancement and enhances competition, contributing to long-term economic prosperity.
• Explanation: The reason given provides a logical explanation for the assertion. The FTP's focus on technological advancement and competition indeed leads to economic growth by fostering innovation and efficiency in industries, aligning with the assertion.

• Assertion: Increased imports due to trade policies may lead to the closure of domestic industries, resulting in job losses in those sectors. This statement is true as per the disadvantages of the Foreign Trade Policy mentioned in the content provided.
• Reason: Open trade policies may expose domestic industries to competition from cheaper imports, potentially harming some sectors. This statement is also true based on the disadvantages outlined.
• Explanation: Both the Assertion and Reason are true. The Reason statement provides a general context for why increased imports can lead to job losses in domestic industries. However, while there is a relationship between the two statements, the Reason doesn't directly explain why increased imports could result in job losses. Other factors could also contribute to this outcome, making the Reason not a direct explanation of the Assertion. Hence, Option B is the correct answer.

• SAARC comprises eight member states and headquarters and secretariat located in Kathmandu. 
• India's foreign policy has always placed "Neighbourhood First" as a top priority. 
• Narendra Modi intimated during the election campaign to put forward the idea of the neighbourhood first in order to promote friendly connections and synergistic economic growth.
• Thus, the most appropriate answer is from options A and C Only.

• Statement 1 is incorrect. The primary goal of the Foreign Trade Policy is to increase India's exports of goods and services to global markets, not imports.
• Statement 2 is also incorrect. The policy aims to generate employment opportunities within the country, particularly in export-focused sectors, and not reduce them.
• Therefore, neither of the given statements is correct, making option D the correct answer.