RBSE Solutions Class 11 Economics Chapter 19 Foreign Trade of India

RBSE Class 11 Economics Chapter 19 Text book Questions

RBSE Class 11 Economics Chapter 19 Objective Type Questions

 

Question 1. Which statement is correct in context to India's foreign trade in 2013-14?
(a) Value of total exports was more than imports.
(b) Value of total imports was more than exports.
(c) Value of total exports was equal to imports.
(d) None of the options
Answer: (b) Value of total imports was more than exports.
In simple words: In 2013-14, India bought more goods from other countries than it sold to them. This means the country spent more on imports than it earned from exports.

🎯 Exam Tip: For economic statements, always look for precise figures or direct comparisons between key indicators like exports and imports.

 

Question 3. Which of the following is the main item of India's export at present?
(a) Electronic goods
(b) Pearls and precious stones
(c) Petroleum goods
(d) Non- electrical machinery
Answer: (c) Petroleum goods
In simple words: Today, India mainly sells petroleum products to other countries. These are one of its biggest export items.

🎯 Exam Tip: Remember the most current major export items of India as they can change over time due to economic shifts.

 

Question 4. Which commodity group has the largest share in Indian exports at present?
(a) Agricultural products
(b) Mineral products
(c) Manufactured goods
(d) None of the options
Answer: (c) Manufactured goods
In simple words: India sells more manufactured goods (items made in factories) to other countries than any other type of product.

🎯 Exam Tip: Note that "manufactured goods" is a broad category. Be prepared to identify specific types of manufactured goods if asked.

 

Question 5. Which of the following nation group is India's main import partner?
(a) OECD nations
(b) OPEC countries
(c) Eastern European countries
(d) Developing Nations
Answer: (b) OPEC countries
In simple words: India buys most of its imported goods from countries that are part of OPEC, which are mainly oil-exporting nations.

🎯 Exam Tip: Understand what OPEC stands for (Organization of the Petroleum Exporting Countries) to remember why they are major import partners for energy-dependent nations like India.

 

Question 7. The share of India in global exports in 2013-14 according to World Trade Organization was
(a) 0.8 per cent
(b) 1 per cent
(c) 1.7 per cent
(d) 2.5 per cent
Answer: (c) 1.7 per cent
In simple words: In 2013-14, India contributed 1.7% to all the goods and services traded globally.

🎯 Exam Tip: Specific percentage figures like this are often memory-based. Try to associate them with the year or event mentioned.

 

Question 8. Which of the following was an export promotion scheme of India?
(a) Cash Compensatory Scheme
(b) Duty Drawback Scheme
(c) Import Replenishment Scheme
(d) All of the options
Answer: (d) All of the options
In simple words: All the schemes listed - Cash Compensatory, Duty Drawback, and Import Replenishment - were used by India to help promote and increase its exports.

🎯 Exam Tip: When multiple options relate to a broad category like 'export promotion schemes', consider if "All of the options" is a likely answer, especially if all options are indeed valid examples.

RBSE Class 11 Economics Chapter 19 Very Short Answer Type Questions

 

Question 1. Mention the Indian goods import, export and Trade Surplus in the year 2013-14.
Answer: In 2013-14, India's export value was 450,200 US Billion dollars. The import value was 314,405 US Billion dollars. As a result, the trade surplus was 135,795 US Million dollars.
In simple words: In 2013-14, India sold goods worth 450,200 US Billion dollars, bought goods worth 314,405 US Billion dollars, and had a trade surplus of 135,795 US Million dollars.

🎯 Exam Tip: Clearly distinguish between exports, imports, and trade surplus/deficit when providing data. Remember, a trade surplus means exports are greater than imports.

 

Question 2. Write the names of present five top export items (from India) in order of their value.
Answer: The current top five export items from India, based on their value, are:
1. Petroleum products.
2. Pearls and precious stones.
3. Electronic goods.
4. Drugs and pharmaceuticals.
5. Non-electrical machinery.
In simple words: India's top five things it sells to other countries are petroleum products, precious gems, electronics, medicines, and non-electrical machines.

🎯 Exam Tip: Always list specific items when asked about composition of trade. Grouping similar items might be acceptable if the question allows, but individual items are better.

 

Question 3. Write the names of present five top import items (from India) in order of their value.
Answer: The current top five import items that India buys from other countries, based on their value, are:
1. Petroleum and lubricants.
2. Non-ferrous metals Gold and silver.
3. Electrical machinery, non-electrical machinery.
4. Pearls and precious jewels.
5. Food stuff and allied products (such as pulses, food grain, edible oil).
In simple words: India's main purchases from other countries are oil, metals like gold and silver, all kinds of machines, precious gems, and food items like pulses and cooking oil.

🎯 Exam Tip: Memorize the top few export and import categories as they are common knowledge questions in economics.

 

Question 4. Write the names of any two major nation groups which are import partners of India.
Answer: Two major groups of nations that are India's import partners are:
1. Developing Nations.
2. Organization of oil exporting countries (OPEC).
In simple words: India mainly buys goods from developing countries and from countries that export oil (OPEC members).

🎯 Exam Tip: For import partners, it's often useful to remember groups of countries rather than just individual nations, as it gives a broader understanding.

 

Question 5. Write two main objectives of new trade policy (2015-20) of India.
Answer: The two main goals of India's new trade policy for 2015-20 were:
1. To increase India's share in global exports from 2% to 5%.
2. To boost current exports from 466 billion dollars to 900 billion dollars by 2019-20.
In simple words: The new trade policy aimed to make India export much more. It wanted India's share of world trade to go from 2% to 5% and its total exports to nearly double from $466 billion to $900 billion.

🎯 Exam Tip: When listing objectives, use clear and concise language. State the target and the timeframe if provided.

RBSE Class 11 Economics Chapter 19 Short Answer Type Questions

 

Question 1. Explain the meaning of Cash Compensatory Scheme.
Answer: The Cash Compensatory Scheme (CCS) was created to give financial help to exporters. It aimed to make up for the indirect taxes that exporters paid but could not get back, and to provide funds for developing new products. This scheme was launched in 1996.
In simple words: The Cash Compensatory Scheme was a government plan started in 1996 to repay exporters for certain taxes and help them develop new products.

🎯 Exam Tip: When explaining schemes, include its purpose, who it benefits, and the year it was introduced if available.

 

Question 3. What is Export Promotion Capital Goods Scheme?
Answer: The Export Promotion Capital Goods (EPCG) Scheme is a program that allows exporters to import certain machinery without paying import duties. This machinery can be used for making products before, during, or after the main production process for export items. Under this program, duty-free imports of capital goods were permitted for making items like engineering goods, electronics, basic chemicals, textiles, plastics, handicrafts, and leather goods.
In simple words: The EPCG Scheme lets businesses import machines for export production without paying customs tax. This helps them make goods like electronics and textiles to sell abroad.

🎯 Exam Tip: For schemes, identify the core benefit (e.g., duty-free import) and the types of goods or sectors it supports.

 

Question 4. Describe the names of major exports promotion schemes.
Answer: The major schemes used to promote exports are:
1. Cash Compensatory Scheme
2. Duty Drawback Scheme
3. Import Replenishment Scheme
4. Blanket Exchange Permit Scheme.
In simple words: Key programs to help Indian businesses export more include the Cash Compensatory, Duty Drawback, Import Replenishment, and Blanket Exchange Permit Schemes.

🎯 Exam Tip: Listing the names of schemes accurately is important. Understand the basic function of each to elaborate if required.

RBSE Class 11 Economics Chapter 19 Long Answer Type Questions

 

Question 1. Describe the change in the composition of India's goods in exports and imports.
Answer: The way India's exports and imports are made up has changed a lot over the years.
Composition of Exports:
Before the Five-Year Plans began, India mostly exported raw materials like jute, tea, cotton textiles, mica, manganese, and animal skins. During the planning period, the share of farm products and minerals in total exports went down, while the share of manufactured goods increased. This shows that India's manufacturing sector grew quickly. For example, agricultural and related products made up 44.2% of total exports in 1960, but this dropped to 13.7% in 2013-14. Similarly, ores and minerals contributed 8.1% to total exports in 1960-61, falling to 1.8% in 2013-14. Meanwhile, manufactured goods increased their share from 45.3% in 1960-61 to 61.3% in 2013-14. Currently, the component of jute and tea in total export is 0.5 percent.

Major Indian exports have changed significantly. Petroleum products, for instance, were only 1.1% of total exports in 1960-61 but grew to 20.6% in 2013-14. This is largely due to India's improved petroleum refining capacity, as crude oil is processed and then exported. Engineering goods also saw a rise, from 3.4% of total exports in 1960-61 to 19.8% in 2013-14. Jewels and jewellery exports increased from 0.1% in 1960-61 to 13.2% in 2013-14. Chemical and related products also reached 13.2% of exports. In contrast, items like jute and tea, which were 21% and 19.3% of exports in 1960-61, now only make up 0.5% each.
The following table shows the trend of exports:

Composition of Imports:
When India gained independence, its main imports were machinery, oil, food grains, pulses, cotton, vehicles, iron equipment, chemicals, dyes, threads, and cotton clothes. With the establishment of large-scale industries and infrastructure projects during the Second Five Year Plan, the import of machinery, equipment, and related maintenance goods increased significantly.

Composition of Indian Imports:
There have been big changes in what India imports. The share of petroleum oil and lubricants, for example, increased from 6.1% in 1960-61 to 36.6% in 2013-14, making it India's main import item. Non-ferrous metals (like gold and silver) went from 4.2% in 1960-61 to 8.6% in 2013-14. The import of electronic items and non-electrical machinery, which was 18.1% in 1960-61, decreased to 5.2% in 2013-14. Pearls and precious jewellery imports rose from 0.1% in 1960-61 to 5.3% in 2013-14. Edible items, which made up 16.1% of imports in 1960-61, are almost negligible today. Capital goods imports fell from 31.7% in 1960-61 to 12.1% in 2013-14.
The following table shows the trend of imports:

In simple words: India's exports moved from selling raw goods like jute to more factory-made items. Imports, which used to be food and basic machinery, are now heavily focused on oil and complex machines, while food imports have reduced.

🎯 Exam Tip: When discussing composition changes, always refer to specific product categories and use comparative figures or trends over time to support your points. Distinguish between percentage share and absolute values.

 

Question 2. Mention the trends of export and import of India.
Answer: India's export and import trends show significant shifts over time.
Until 1950-51, England and America were India's main trading partners, accounting for 42% of India's total exports and 39.1% of its total imports. Today, trading partners are grouped into four categories:
a. Countries of economic cooperation organization (OECD), including the European Union, US, Japan, and Switzerland.
b. Organization of oil exporting countries (OPEC), which includes United Arab Emirates, Saudi Arabia, Iran, etc.
c. Eastern European Countries group, including Russia and other countries.
d. Developing countries, such as China, Hong Kong, South Korea, Singapore, and Malaysia.

Direction of Indian Exports:
1. India's exports to OECD countries have consistently declined. These countries were India's main export partners until 1960-61.
2. The share of oil-exporting countries in India's exports was 4.1% in 1960-61, rose to 5.6% in 1990-91, and then rapidly increased to 20.8% in 2012-13.
3. Eastern European countries accounted for 7.0% of total Indian exports in 1960-61, but this decreased to 1.3% in 2012-13. Russia is a key partner in Eastern Europe.
4. India's exports to developing countries grew from 14.9% in 1960-61 to 41.5% in 2012-13.
5. In 2013-14, European countries received 18.6% of Indian exports, while the American continent received 17.5%.
6. Indian exports to Asian countries were 49.4%. Major Asian destinations included the United Arab Emirates, China, Singapore, Hong Kong, Saudi Arabia, Iran, and Japan. The top export countries for India in 2013-14 were the USA (12.5%), United Arab Emirates (9.7%), China (4.7%), Hong Kong (4%), and Singapore (4%).
The following table shows the direction of Indian exports (in Per cent):

Trends of Indian Imports:
India's import patterns have also changed significantly across these four nation groups, as shown in the table below:

1. In 1960-61, 78% of India's total imports came from OECD countries, which dropped to 27.8% by 2012-13.
2. Imports from OPEC countries increased from 4.6% in 1960-61 to 38.6% in 2012-13.
3. Imports from Eastern European countries decreased from 3.4% in 1960-61 to 1.8% in 2012-13.
4. Germany, Belgium, the UK, and Switzerland were India's main import partners from Europe in 2013-14.
5. The American continent accounted for 8.1% of India's imports in 2013-14. South Africa, Nigeria, Angola, and Botswana were major import partners from Africa.
6. The American continent also contributed 12.8% to India's exports in 2013-14, with the USA and Venezuela being key trade partners.
Main import partners of India include China, Saudi Arabia, United Arab Emirates, Iraq, Kuwait, Indonesia, Qatar, South Korea and Japan. In 2013-14, the main import partners were China, Saudi Arabia, United Arab Emirates, United States of America and Iraq. The share in total imports of India of these countries were 11.3 per cent, 8.1 per cent, 6.4 per cent, 5 per cent, and 4.1 per cent respectively.
In simple words: India's trade patterns have shifted over time. Exports to Western countries have decreased, while exports to developing and oil-rich countries have grown. Imports of oil have increased, while imports of manufactured goods from developed nations have decreased.

🎯 Exam Tip: When analyzing trade trends, always consider specific country groups (like OECD, OPEC, Developing Nations) and mention how their share has changed over different time periods, backed by percentages.

 

Question 3. Write an article on tendencies of India's foreign trade in present time.
Answer:
Current Trend of India's Foreign Trade:
India's foreign trade has been greatly shaped by economic reforms, including liberalization and globalization. Import duties were lowered after the establishment of the World Trade Organization, which changed how India trades with other countries.

India's foreign trade grew from 195.1 billion US dollars in 2004-05 to 764 billion US dollars in 2013-14. India's rank as a global importing country rose from 23rd in 2004 to 12th in 2013. Its position as a leading exporting country also improved from 23rd in 2004 to 19th in 2013.

There has been an increase in both exports and imports:
* Increase in Exports: Indian exports grew from Rs. 3,75,340 crores in 2004-05 to Rs. 1,90,5011 crores in 2013-14. As a share of Gross Domestic Ratio, exports increased from 12.1% in 2004-05 to 17.0% in 2013-14. Major export items include petroleum products, jewels, precious, and semi-precious stones.
* Increase in Imports: Imports have grown rapidly since 2004-05, rising from Rs. 5,01,065 crore in 2004-05 to Rs. 27,15,434 crore in 2013-14. Petroleum, lubricants, gold, jewelry, precious, and semi-precious gems are India's major import items.
* Increase in Trade Deficit: The trade deficit, which is when imports are higher than exports, increased from Rs. 1,25,725 crore in 2004-05 to Rs. 10,34,844 crore in 2012-13. However, in 2009-10 and 2013-14, the trade deficit was lower compared to previous years, but it has generally increased each year.
* Change in Direction of Trade: Between 2004-05 and 2013-14, there was a notable shift in India's trading partners. India diversified its foreign trade market, which helped reduce annual fluctuations and manage various crises like recessions.
In simple words: India's foreign trade has grown a lot due to open market policies. Both exports and imports have increased, but so has the trade deficit, meaning India buys more than it sells. The country has also started trading with a wider range of partners.

🎯 Exam Tip: When writing an article on trade trends, include specific data and years to support your points. Categorize changes (e.g., increase in exports, change in direction) for better structure.

 

Question 4. Describe the main provisions of new trade policy (2015-20) of India.
Answer: The new trade policy for 2015-20 aligned with the "Make In India," "Digital India," and "Skill India" initiatives of the Prime Minister. Its key provisions included:
1. The Service Export from India Scheme (SEIS) was introduced to boost the export of specialized services. This scheme replaced many older programs and offers benefits to Special Economic Zones. It also supports e-commerce for items like handicrafts, handloom products, and books.
2. Goods in which India has traditional expertise receive promotion through branding campaigns.
3. To encourage domestic manufacturing, the requirement for exporting a certain percentage of goods was reduced by 25%.
4. Duty Credit Script became freely transferable and could be used to pay custom duty, excise duty, and service tax.
5. Under the Export Promotion Capital Goods Scheme (EPCG), the export obligation for domestic sales was lowered to 75%.
6. An online process for digital signatures was implemented.
7. The validity period for export authorization was extended from 12 months to 24 months.
8. High-level support was provided for exporting defense equipment, agricultural products, and eco-friendly products.
In simple words: India's new trade policy for 2015-20 aimed to boost exports, especially services and traditional goods, by making it easier for businesses. It reduced export obligations, simplified processes, extended permit validities, and supported specific sectors like defense and agriculture.

🎯 Exam Tip: When listing policy provisions, use clear and concise points. Focus on the main changes and benefits each provision offers. Grouping similar provisions can help if there are many.

 

Question 5. What does the concept of Swadeshi imply? Write a note.
Answer:
Concept of Swadeshi:
Today, the word Swadeshi generally means focusing on indigenous products, which means using goods made in one's own country. In our globalized world, where countries are increasingly connected, limiting Swadeshi only to consuming local products might seem restrictive.

The idea of Swadeshi also means prioritizing our own region, using what is nearby, and serving our local community. For example, in religion, it would mean sticking to ancestral beliefs. In economics, it would mean using products made by neighbors, improving local industries, and making them stronger. The term "Swadeshi" reflects a feeling of "self" in all aspects of life. It's not just a constant practice but also a way to welcome change positively while aligning with national and social conditions. It's not a blind rejection of Western influences but rather an awareness against following them without thought.

According to Gopal Krishna Gokhale, the Swadeshi philosophy encourages sacrificing for the motherland. He believed it makes a country prosperous and strengthens feelings of brotherhood among its people. This idea of Swadeshi has been present in India since ancient times.

India aimed for self-reliance in its Five-Year Plans, which meant reducing its dependence on foreign aid. As a result, India has become self-sufficient in food grains and machinery, items it previously imported. However, globalization has increased global influences, largely due to international institutions promoted by the West. To protect India's economy and social system from these influences, it is considered important to embrace Swadeshi.
In simple words: Swadeshi means focusing on and using products made in one's own country. It's about supporting local industries, strengthening national identity, and thoughtfully interacting with global influences rather than blindly adopting foreign ways.

🎯 Exam Tip: Define "Swadeshi" clearly, explain its economic and cultural implications, and mention relevant historical figures like Gopal Krishna Gokhale to provide a complete answer.

RBSE Class 11 Economics Chapter 19 Other Important Questions

RBSE Class 11 Economics Chapter 19 Objective Type Questions

 

Question 1. If the value of exports is more than the value of imports, then the trade balance is-
(a) Negative
(b) Positive
(c) Neither Positive nor Negative
(d) None of the options
Answer: (b) Positive
In simple words: When a country sells more goods to other countries than it buys from them, it has a positive trade balance.

🎯 Exam Tip: Understand the basic definitions of trade balance: exports > imports means positive trade balance (surplus), and imports > exports means negative trade balance (deficit).

 

Question 2. In the year 1950-51, the value of commodity exports of India stood at (billion US dollars)
(a) 1.27
(b) 8.5
(c) 44.6
(d) 314.4
Answer: (a) 1.27
In simple words: In 1950-51, India exported goods worth 1.27 billion US dollars.

🎯 Exam Tip: Historical data points often test your factual recall. Pay attention to the specific year mentioned in the question.

 

Question 4. Basic Industries were established during the:
(a) Fifth Five Year Plan
(b) First Five Year Plan
(c) Second Five Year Plan
(d) Seventh Five Year Plan
Answer: (c) Second Five Year Plan
In simple words: India's core industries, like heavy manufacturing, were started during the country's Second Five Year Plan.

🎯 Exam Tip: Associate key economic policies and developments with the specific Five Year Plans they occurred in.

 

Question 5. Before Independence, the main foreign trade of India was with:
(a) Japan
(b) China
(c) Switzerland
(d) Britain
Answer: (d) Britain
In simple words: Before India became independent, most of its trade with other countries was done with Britain.

🎯 Exam Tip: Understand the historical context of India's trade relationships, especially during the colonial period.

 

Question 6. Organization of oil exporting countries (OPEC) does not include:
(a) United Arab Emirates
(b) America
(c) Saudi Arabia
(d) Iran
Answer: (b) America
In simple words: The Organization of the Petroleum Exporting Countries (OPEC) includes countries like United Arab Emirates, Saudi Arabia, and Iran, but not America.

🎯 Exam Tip: Know the main member countries of major international organizations like OPEC to identify those that are not members.

 

Question 8. Import liberalisation was adopted due to import restriction and import limitation:
(a) In the decade of 1950
(b) In the decade of 1970
(c) In the decade of 1980
(d) None of the options
Answer: (c) In the decade of 1980
In simple words: Rules that made it easier to import goods were put in place during the 1980s because of earlier limits on imports.

🎯 Exam Tip: Remember the timeline of major economic reforms, such as import liberalization, and the reasons behind them.

 

Question 9. Major exports promotion scheme is/are:
(a) Cash Compensatory Scheme
(b) Duty Drawback Scheme
(c) Blanket Exchange Permit Scheme
(d) All of the options
Answer: (d) All of the options
In simple words: All the listed schemes, including Cash Compensatory, Duty Drawback, and Blanket Exchange Permit, are key programs used to encourage exports from India.

🎯 Exam Tip: This question re-emphasizes the importance of knowing multiple export promotion schemes. "All of the options" is a frequent answer when multiple correct examples are given.

 

Question 10. "The implication of Swadeshi is about the identity of a nations' dignity and its will power”. This statement was made by:
(a) Gopal Krishna Gokhale
(b) Maharishi Arvind
(c) Pandit Deendayal Upadhyay
(d) None of the options
Answer: (b) Maharishi Arvind
In simple words: Maharishi Arvind said that Swadeshi shows a nation's pride and its determination.

🎯 Exam Tip: Attributing famous quotes or statements to the correct personality is crucial. Remember who said what regarding important concepts like Swadeshi.

RBSE Class 11 Economics Chapter 19 Very Short Answer Type Questions

 

Question 2. According to Adam Smith, a country should export what kind of commodity?
Answer: According to Adam Smith, a country should export goods in which it has an absolute non-relative profit. This means the country can produce these goods more efficiently and at a lower cost than other countries.
In simple words: Adam Smith believed a country should sell goods to others if it's the best and cheapest at making them.

🎯 Exam Tip: When quoting economic theories, mention the economist's name and the core idea clearly, such as Adam Smith's theory of absolute advantage.

 

Question 3. According to Richards, the country should export what type of commodity?
Answer: According to David Ricardo, a country should export goods in which it has a comparative profit. This means even if a country is not the absolute best at producing a good, it should specialize in and export the good it produces relatively more efficiently.
In simple words: Ricardo thought a country should export items it can make better or more easily than other items it produces, even if another country makes it slightly cheaper overall.

🎯 Exam Tip: Differentiate between Adam Smith's absolute advantage and David Ricardo's comparative advantage when discussing trade theories.

 

Question 4. When does trade balance become negative?
Answer: The trade balance becomes negative when the value of a country's imports is more than the value of its exports. This means the country is buying more from abroad than it is selling.
In simple words: Trade balance is negative when a country buys more goods from other countries than it sells to them.

🎯 Exam Tip: Clearly define trade balance (exports minus imports) and state the condition for it to be negative (imports > exports).

 

Question 5. Why was jute imported at the time of independence?
Answer: At the time of India's independence, jute had to be imported because of the partition of the country. This partition led to a situation where most of the jute-producing areas went to Pakistan, while the jute mills remained in India. As a result, India faced a shortage of raw jute for its mills.
In simple words: After India's partition, most jute-growing areas went to Pakistan, leaving Indian mills short of raw jute, so India had to import it.

🎯 Exam Tip: Connect economic impacts directly to historical events like the Partition of India to explain such situations.

 

Question 6. After second five year plan, why there was increase in the import of capital equipments, machinery and technology?
Answer: After the Second Five Year Plan, India saw an increase in imports of capital equipment, machinery, and technology. This was because the country was developing large-scale industries and actively promoting industrial growth, which required advanced tools and machines.
In simple words: After the Second Five Year Plan, India imported more machines and technology to build big factories and grow its industries.

🎯 Exam Tip: Link industrial development strategies (like those in Five Year Plans) to the corresponding changes in import patterns.

 

Question 7. Which products are mainly exported by the developing countries?
Answer: Developing countries mainly export raw materials, minerals, and agricultural products. These are typically goods that are not processed much before being sold to other countries.
In simple words: Developing countries mostly sell raw materials like crops and minerals to other nations.

🎯 Exam Tip: Remember the general characteristics of exports from developing nations (often primary goods) versus developed nations (often manufactured or high-tech goods).

 

Question 2. According to Adam Smith, a country should export what kind of commodity?
Answer: According to Adam Smith, a country should export commodities where it has an absolute non-relative profit. This means the country can produce these goods more efficiently than other countries.
In simple words: Adam Smith believed a country should sell things it's best at making and buy things others are best at making.

🎯 Exam Tip: Remember Adam Smith's theory focuses on "absolute advantage" in production, where a country can produce more of a good with the same resources.

 

Question 3. According to Richards, the country should export what type of commodity?
Answer: According to David Ricardo, a country should export commodities where it has a comparative profit (comparative advantage) and import a commodity where it has a comparative loss (comparative disadvantage). This means the country should produce goods where its opportunity cost is lower.
In simple words: Ricardo thought countries should sell things they are relatively better at making, even if another country is absolutely better at everything.

🎯 Exam Tip: Understand the difference between absolute advantage (Adam Smith) and comparative advantage (David Ricardo) in trade theories.

 

Question 4. When does trade balance become negative?
Answer: The trade balance becomes negative when the total value of a country's imports is greater than the total value of its exports. This means the country is spending more on buying goods from other countries than it is earning from selling its goods to them.
In simple words: Trade balance is negative when a country buys more from other countries than it sells to them.

🎯 Exam Tip: A negative trade balance is also known as a trade deficit, indicating more money is leaving the country than entering through trade.

 

Question 5. Why was jute imported at the time of independence?
Answer: At the time of India's independence, jute was imported mainly due to the partition of the country and the need for food grains. The partition led to many jute-growing areas going to East Pakistan (now Bangladesh), while most jute mills remained in India. This created a shortage of raw jute for Indian mills, making imports necessary.
In simple words: After India split into two, much of the jute farms went to Pakistan, but the factories stayed in India, so India had to buy jute from outside.

🎯 Exam Tip: Understand how the partition of India impacted agricultural resources and industrial requirements, leading to specific import needs.

 

Question 6. After second five year plan, why there was increase in the import of capital equipments, machinery and technology?
Answer: After the Second Five-Year Plan, imports of capital equipment, machinery, and technology increased significantly. This was because India focused on developing large-scale industries and encouraging industrial growth during this period. These industries needed advanced machinery and technology that were not readily available domestically, thus requiring imports.
In simple words: India bought more big machines and technology from other countries after the Second Five-Year Plan to build new large factories and boost industry.

🎯 Exam Tip: The Second Five-Year Plan (1956-1961) emphasized heavy industries, which naturally led to increased imports of specialized capital goods.

 

Question 7. Which products are mainly exported by the developing countries?
Answer: Developing countries primarily export raw materials, minerals, and agricultural products. These countries often have abundant natural resources and agricultural land, but their industrialization might be less advanced, leading them to specialize in exporting primary goods.
In simple words: Countries that are still developing mostly sell raw goods like metals, crops, and other natural resources to richer countries.

🎯 Exam Tip: This pattern is typical of developing economies, often due to their stage of industrial development and resource endowments.

 

Question 9. How much was the component of agriculture and allied products in total exports of the country in the year 1960?
Answer: In the year 1960, the share of agriculture and allied products in India's total exports was 44.2 per cent. This highlights the significant role of the agricultural sector in the country's early trade.
In simple words: In 1960, almost half of what India sold to other countries was farm products.

🎯 Exam Tip: Early economic data often shows a high reliance on agriculture for exports in developing nations before industrialization takes hold.

 

Question 10. What was the percentage component of edible oil in total imports in 2012-13?
Answer: In 2012-13, the percentage of edible oil in India's total imports was 2.1 per cent. This shows that India still needed to import a notable amount of edible oil to meet domestic demand.
In simple words: In 2012-13, about 2.1% of everything India bought from other countries was cooking oil.

🎯 Exam Tip: Specific percentage figures like this are important for understanding the changing composition of a country's trade over time.

 

Question 11. Which items are included under capitalist goods in the items of import of the country?
Answer: Capitalist goods (capital goods) included in India's imports are items like electrical machinery, other types of machinery and equipment, transportation equipment, electronic goods, handicrafts, and projected goods. These are essential for industrial growth and development.
In simple words: India buys big machines, transport tools, electronics, and parts for factories from other countries to help its industries grow.

🎯 Exam Tip: Capital goods are crucial for a country's industrial development, as they are used to produce other goods and services.

 

Question 12. Before independence, India was the colony of which nation?
Answer: Before independence, India was a colony of Britain. The British Empire ruled India for nearly two centuries, significantly influencing its economy and trade patterns.
In simple words: Before becoming free, India was ruled by Britain.

🎯 Exam Tip: Colonial history had a profound impact on India's economic structure, including its foreign trade, often geared towards benefiting the colonial power.

 

Question 13. Which countries are included in the Countries of Economic Cooperation Organization (OECD)?
Answer: The Countries of Economic Cooperation Organization (OECD) include nations like the European Union members, the US, Japan, and Switzerland, among others. These are generally developed countries with high-income economies.
In simple words: The OECD group includes rich and developed countries like those in Europe, USA, Japan, and Switzerland.

🎯 Exam Tip: The OECD is a group of countries that work together to stimulate economic progress and world trade, often representing the more developed economies.

 

Question 14. Which countries are included in the Organization of Oil Exporting Countries (OPEC)?
Answer: The Organization of Oil Exporting Countries (OPEC) includes countries like the United Arab Emirates, Saudi Arabia, and Iran, which are major oil producers. These countries coordinate their petroleum policies.
In simple words: OPEC is a group of countries that sell a lot of oil, like Saudi Arabia, Iran, and the United Arab Emirates.

🎯 Exam Tip: OPEC plays a significant role in global oil markets by influencing oil production and prices.

 

Question 15. Which committees recommended import liberalization and export promotion?
Answer: The source does not explicitly name specific committees but refers to general policies implemented for import liberalization and export promotion. These policies aimed at reducing import restrictions and boosting exports to integrate India into the global economy. Often, various expert committees and government bodies contribute to such policy shifts over time.
In simple words: Many groups and government plans helped make rules to allow more foreign goods into India and to help India sell more goods outside.

🎯 Exam Tip: While specific committees might not always be named, understanding the policy objectives of import liberalization and export promotion is crucial for economic studies.

 

Question 16. Which corporation is working to provide export credit insurance and guarantee to the exporters?
Answer: The Indian Export Credit and Guarantee Corporation (ECGC) works to provide export credit insurance and guarantees to exporters. This helps protect exporters against payment risks from overseas buyers.
In simple words: The Indian Export Credit and Guarantee Corporation helps companies that sell goods abroad by insuring them against money losses.

🎯 Exam Tip: The ECGC's role is vital for encouraging exports by mitigating the financial risks involved in international trade.

 

Question 17. Write the names of two government agencies established for export promotion.
Answer: Two government agencies established for export promotion are:
1. State Trading Corporation.
2. Mineral and Metal Trading Corporation.
These agencies play a role in facilitating and expanding India's international trade.
In simple words: The State Trading Corporation and the Mineral and Metal Trading Corporation are two government bodies set up to help India sell more goods abroad.

🎯 Exam Tip: Government agencies like these are often created to handle strategic trade, stabilize markets, and promote exports in specific sectors.

 

Question 18. Which products are exported by State Trading Corporation, a government enterprise?
Answer: The State Trading Corporation, a government enterprise, exports various products including cloth, manufactured goods, coffee, cement, and salt. These items represent a range of goods that India sells internationally through state-backed efforts.
In simple words: The government's State Trading Corporation sells things like clothes, coffee, cement, and salt to other countries.

🎯 Exam Tip: State trading organizations often deal with commodities that are strategically important or have significant export potential for the country.

 

Question 19. Write the names of any two schemes initiated for export promotion.
Answer: Two schemes initiated for promoting exports are:
1. Cash Drawback Scheme.
2. Duty Drawback Scheme.
These schemes aim to reduce the cost of exports and make Indian products more competitive internationally.
In simple words: Two ways to help companies sell more goods abroad are the Cash Drawback Scheme and the Duty Drawback Scheme, which give money back to exporters.

🎯 Exam Tip: Export promotion schemes are designed to offset domestic taxes and duties, thereby making exports cheaper and more attractive in global markets.

 

Question 20. Cash Compensatory Subsidy Scheme designed to compensate the exporters was initiated in which year?
Answer: The Cash Compensatory Subsidy Scheme, designed to compensate exporters, was initiated in 1996. This scheme aimed to reimburse exporters for indirect taxes that were not refunded otherwise, making their products more competitive in international markets.
In simple words: The Cash Compensatory Scheme, which paid money to exporters, started in 1996 to help them sell goods more cheaply abroad.

🎯 Exam Tip: Knowing the year of initiation for key economic policies helps in understanding the timeline of reforms and their impact.

 

Question 21. Who is the author of the book “Economic History of India"?
Answer: The author of the book "Economic History of India" is not explicitly mentioned in the provided text. However, a prominent work with a similar title is R. C. Dutt's "The Economic History of India under Early British Rule." This question likely refers to a classic text on the subject.
In simple words: The document doesn't say, but a famous book called "The Economic History of India" was written by R. C. Dutt.

🎯 Exam Tip: For questions about authors of specific books, if the text doesn't provide it, a general knowledge of key authors in the subject area can be helpful.

 

Question 22. According to Adam Smith, a country should export-import which type of commodity?
Answer: According to Adam Smith, a country should export a commodity in which it has an absolute non-relative profit (absolute advantage) and import a commodity in which it has an absolute non-relative loss (absolute disadvantage). This means a country should produce and export goods it's most efficient at, and import goods others are most efficient at.
In simple words: Adam Smith said a country should sell what it's best at making and buy what it's worst at making, compared to other countries.

🎯 Exam Tip: This principle of absolute advantage forms the basis of early trade theories, focusing on clear cost advantages.

 

Question 23. According to Richardo, the country should export-import which type of commodity?
Answer: According to David Ricardo, a country should export a commodity in which it has a comparative profit (comparative advantage) and import a commodity in which it has a comparative loss (comparative disadvantage). This means countries should specialize in producing goods where their opportunity cost is lowest.
In simple words: Ricardo thought a country should sell goods it can make relatively better or cheaper, and buy goods it makes relatively worse or more expensively.

🎯 Exam Tip: Ricardo's theory of comparative advantage explains why trade can be beneficial even if one country is more efficient in producing all goods.

 

Question 24. What does it mean by the trade balance being negative and positive?
Answer: The trade balance is positive if the value of exports is more than the value of imports. This is called a trade surplus. Conversely, the trade balance is negative if the value of imports is more than the value of exports, which is known as a trade deficit.
In simple words: Trade balance is positive if a country sells more than it buys, and negative if it buys more than it sells.

🎯 Exam Tip: A positive trade balance is a surplus, meaning more money flows into the country from trade, while a negative balance is a deficit, meaning more money flows out.

 

Question 25. State two reasons for increase in deficit in trade balance in India.
Answer: Two reasons for an increase in India's trade balance deficit are:
1. A rise in the prices of edible oil and a reduction in import duty. Higher global prices for essential imports like edible oil, combined with lower taxes on these imports, can increase the total import bill.
2. Growth in imports due to policies of import liberalization. As import restrictions are eased, more goods flow into the country, which can lead to a larger import value if exports do not keep pace.
In simple words: Two reasons India's trade deficit grew are higher prices for cooking oil with lower import taxes, and a general increase in imports because of easier trade rules.

🎯 Exam Tip: Trade deficits can be influenced by both global commodity prices and domestic trade policies.

 

Question 26. What do you mean by trade structure?
Answer: Trade structure refers to the composition of a country's foreign commodity trade. It describes the proportion of different import and export commodities in the total trade during a specific period. This includes what types of goods are being bought and sold internationally.
In simple words: Trade structure is about what kinds of goods a country sells and buys from other countries, and how much of each type.

🎯 Exam Tip: Analyzing trade structure helps understand a country's economic specialization and its integration into global supply chains.

 

Question 27. Why raw materials, minerals, and agricultural products are only exported by developing countries?
Answer: Developing countries primarily export raw materials, minerals, and agricultural products because they often have abundant natural resources and labor-intensive agricultural sectors. Their industrial and technological development may not be advanced enough to process these raw materials into high-value manufactured goods for export. Therefore, they export primary goods to more industrialized nations.
In simple words: Developing countries mainly sell natural things like raw materials, minerals, and farm goods because they have a lot of them, and their factories are not yet ready to make many finished products.

🎯 Exam Tip: This pattern reflects the stage of economic development, where less industrialized economies rely on primary sector exports.

 

Question 28. What were the products exported in India at the time of independence?
Answer: At the time of independence, India primarily exported products such as machinery, oil, food grains, pulses, cotton, transportation goods, iron goods, equipment, medicines, colors, cotton and cotton cloth, paper, and machines. This shows a mix of agricultural, raw material, and basic manufactured goods.
In simple words: When India became independent, it sold things like machines, oil, food, cotton, and basic tools to other countries.

🎯 Exam Tip: The composition of exports at independence reflects the colonial legacy and the nascent stage of industrialization.

 

Question 29. Into how many divisions are business partner countries divided?
Answer: Business partner countries are typically divided into four main divisions:
1. OECD (Organization for Economic Co-operation and Development)
2. OPEC (Organization of Petroleum Exporting Countries)
3. Eastern European Countries
4. Developing Countries
These divisions help categorize and analyze trade relationships based on economic development and regional groupings.
In simple words: Countries that do business together are usually sorted into four groups: rich countries (OECD), oil-selling countries (OPEC), Eastern European countries, and developing countries.

🎯 Exam Tip: Understanding these classifications helps analyze trade patterns and geopolitical economic influences.

 

Question 30. What do you mean by import restriction?
Answer: Import restriction refers to the methods used by a country to control the volume or value of goods entering its borders. These measures are often implemented to maintain the country's exchange rate, protect domestic industries, or manage foreign currency reserves. Examples include tariffs, quotas, and licensing requirements.
In simple words: Import restriction means using rules like taxes or limits to control how many goods come into a country from outside, often to protect local businesses or manage money.

🎯 Exam Tip: Import restrictions are a tool of protectionism, aimed at shielding domestic industries from foreign competition or addressing balance of payments issues.

 

Question 31. What do you mean by import replacement policy?
Answer: An import replacement policy (also known as import substitution industrialization) means replacing foreign imports with domestically produced products. The goal is to reduce reliance on foreign goods, save foreign currency, and promote self-sufficiency and local industry growth within the country.
In simple words: Import replacement policy is when a country tries to make its own goods instead of buying them from other countries, to save money and boost local production.

🎯 Exam Tip: Import substitution was a common strategy for many developing countries in the mid-20th century to foster industrial growth, though it often came with challenges.

 

Question 33. What difference took place in the production structure of the country due to the Import replacement policy?
Answer: Due to the import replacement policy, there was a shift in the country's production structure. More emphasis was placed on producing goods like metals, machines, and vehicles domestically. However, this often led to higher production costs and, consequently, weakened the competitive capacity of these industries in the global market.
In simple words: The import replacement policy made the country focus on making its own metals, machines, and vehicles, but this often made them more expensive and less competitive than foreign goods.

🎯 Exam Tip: While aiming for self-sufficiency, import substitution can sometimes lead to inefficiencies and lack of competitiveness if domestic industries are not exposed to global competition.

 

Question 34. Why was import liberalization adopted in the decade of 1980?
Answer: Import liberalization was adopted in the 1980s primarily due to the limitations of existing import restrictions and policies. The quantitative limits on imports were removed. Previous restrictive policies had often led to inefficiencies, lack of competition, and a shortage of essential goods and technology, prompting a shift towards more open trade.
In simple words: India started allowing more imports in the 1980s because the old rules that blocked imports were causing problems and slowing down the economy.

🎯 Exam Tip: Economic reforms, including liberalization, are often initiated to address inefficiencies and promote growth after periods of restrictive policies.

 

Question 35. State two efforts made for import liberalization.
Answer: Two efforts made for import liberalization were:
1. Exporters who earned foreign currency exceeding Rs. 10 crore in a year were granted permission for imports for one year through the Advance Licensing Policy. This incentivized exports while allowing some imports.
2. The pre-conditions for imports made through government agencies were abolished. This streamlined the import process, reducing bureaucratic hurdles.
In simple words: To open up imports, the government allowed big exporters to import more easily and removed many old rules for imports done by government bodies.

🎯 Exam Tip: Policies that link import benefits to export performance are common in trade liberalization efforts.

 

Question 36. What do you mean by devaluation?
Answer: Devaluation refers to the deliberate reduction in the official value of a country's currency in relation to other currencies. When a currency is devalued, it makes a country's exports cheaper for foreign buyers and imports more expensive for domestic buyers. This aims to boost exports and reduce imports.
In simple words: Devaluation means making a country's money worth less compared to other countries' money, which helps it sell more goods abroad and buy fewer goods from outside.

🎯 Exam Tip: Devaluation is a monetary policy tool often used to correct a trade deficit or make a country's exports more competitive globally.

 

Question 37. What is Indian Export Promotion Organization?
Answer: The term "Indian Export Promotion Organization" is a general reference to various bodies and schemes that work towards promoting India's exports. This can include government agencies, councils, and policy frameworks designed to support exporters, facilitate trade, and expand India's presence in international markets. Specific examples might include the Export Promotion Councils for various products or the Export Credit Guarantee Corporation of India.
In simple words: An Indian Export Promotion Organization is a group or plan that helps Indian businesses sell their goods to other countries, like by giving support or advice.

🎯 Exam Tip: Export promotion efforts involve a combination of policy measures, institutional support, and marketing strategies to enhance a country's export performance.

 

Question 38. Name the various government agencies that are established for exports. Also explain what all products are exported through them.
Answer: The main government agencies established to promote exports are the State Trading Corporation and the Minerals and Metals Trading Corporation. The State Trading Corporation exports items such as cement, salt, etc., while the Minerals and Metals Trading Corporation primarily exports various minerals and metals. These agencies help India manage and expand its trade in key commodities.
In simple words: Government groups like the State Trading Corporation (which sells cement and salt) and the Minerals and Metals Trading Corporation (which sells minerals) were set up to help India export more.

🎯 Exam Tip: These state-owned trading entities play a role in bulk trading and ensuring market stability for specific commodities.

 

Question 39. What is Import Replenishment Scheme?
Answer: The Import Replenishment Scheme is a program designed to ensure the easy availability of necessary imports for export production. Under this scheme, exporters are allowed to import items that are prohibited for general import if those items are essential for manufacturing products that will be exported. This helps maintain the competitiveness of export-oriented industries.
In simple words: This scheme lets exporters bring in goods that are normally banned if those goods are needed to make products that will be sold to other countries.

🎯 Exam Tip: Such schemes aim to prevent import restrictions from hindering a country's export capabilities, promoting value addition for global markets.

 

Question 40. What is Blanket Exchange Permit Scheme?
Answer: The Blanket Exchange Permit Scheme was initiated in 1987. Under this scheme, large export organizations, such as export houses and all forms of trading houses, are given a lumpsum foreign exchange permit. This permit allows them to use foreign currency to cover various expenses incurred abroad, simplifying their international operations.
In simple words: Started in 1987, this scheme gives big export companies a single pass to use foreign money for all their travel and business costs overseas.

🎯 Exam Tip: This scheme streamlines foreign exchange procedures for major exporters, reducing administrative burdens and facilitating international business travel and marketing.

 

Question 41. What measures were taken for process simplification in the import-export policy of 2004-09?
Answer: In the import-export policy of 2004-09, several measures were taken for process simplification:
1. The number of forms exporters had to fill was reduced.
2. Export products were exempted from service tax.
3. Exporters with a turnover of Rs. 5 crore per annum were exempted from bank guarantees.
4. Permission was given for the import of old machines.
These steps aimed to reduce bureaucracy and make it easier for businesses to engage in foreign trade.
In simple words: From 2004-09, new trade rules made things simpler: fewer forms, no service tax on exports, no bank guarantee for big exporters, and allowed import of old machines.

🎯 Exam Tip: Simplifying procedures is crucial for boosting trade, as it reduces costs and time for businesses, especially SMEs.

 

Question 43. State any two provisions of foreign trade policy of 2009-14.
Answer: Two provisions of the foreign trade policy of 2009-14 were:
1. A single window program was initiated for the export of perishable agricultural products. This streamlined the process for exporting goods like fruits and vegetables quickly.
2. Exporters were allowed to carry stock up to 5 lakh dollars with them to participate in exhibitions abroad. This made it easier for them to showcase and sell their products internationally.
In simple words: The 2009-14 trade policy set up a fast way to export farm goods that spoil quickly and let exporters take up to 5 lakh dollars worth of goods to shows in other countries.

🎯 Exam Tip: Policies supporting perishable goods and international marketing efforts are key to diversifying and increasing exports.

 

Question 44. State two suggestions for export promotion.
Answer: Two suggestions for export promotion are:
1. Improve infrastructure such as roads, rail transport, water transport, and power. Better infrastructure speeds up trade, reduces processing time, and lowers costs.
2. Arrange for better credit and implement a favorable import duty policy. Access to affordable credit and sensible import duties can make exports more competitive and boost production.
In simple words: To sell more abroad, India should build better roads and railways, and also make it easier for exporters to get loans and fair import taxes.

🎯 Exam Tip: Infrastructure development and financial incentives are fundamental pillars of any successful export promotion strategy.

 

Question 45. Explain "Swadeshi philosophy" according to Gopal Krishna Gokhale.
Answer: According to Gopal Krishna Gokhale, the Swadeshi philosophy involves sacrificing for the motherland. He believed that this philosophy helps the country become prosperous and enhances the feeling of brotherhood among its people. Gokhale saw Swadeshi as an ancient and prevalent thought in India, promoting economic self-reliance and national unity.
In simple words: Gopal Krishna Gokhale said that Swadeshi means putting our country first, making it rich, and bringing people together.

🎯 Exam Tip: Gokhale's interpretation of Swadeshi emphasized its moral and economic dimensions, linking it to national development and unity rather than mere boycotts.

 

RBSE Class 11 Economics Chapter 19 Short Answer Type Questions

 

Question 2. State the items of export of India during 2013-14.
Answer: The main items India exported during 2013-14 included:
1. Agricultural and allied products: Tea, coffee, food grains, spices, cashew, fruits and vegetables, seafood, and cotton.
2. Manufacturing goods: Leather and leather products, jewels and jewelry, medicines and chemicals, metal products, machinery and equipment, transportation equipment, electronic goods, handicrafts, and ready-made garments.
This diverse list shows India's capabilities across both primary and secondary sectors.
In simple words: In 2013-14, India sold farm items like tea and spices, and factory-made goods like clothes, jewels, and machines to other countries.

🎯 Exam Tip: Listing specific product categories demonstrates a comprehensive understanding of a country's export basket, highlighting its economic strengths.

 

Question 3. The trading partner countries are divided into how many categories?
Answer: Trading partner countries are divided into 4 categories:
1. Countries of Economic Cooperation Organization (OECD): These include the European Union, US, Japan, and Switzerland.
2. Organization of Oil Exporting Countries (OPEC): This group includes United Arab Emirates, Saudi Arabia, and Iran.
3. Eastern European Countries group: This includes Russia and other nations from Eastern Europe.
4. Developing Countries: This category includes China, Hong Kong, South Korea, Singapore, and Malaysia.
These classifications help in analyzing trade flows and regional economic blocs.
In simple words: Countries that trade with each other are split into four types: rich countries (OECD), oil-selling countries (OPEC), Eastern European countries, and countries that are still developing.

🎯 Exam Tip: Categorizing trading partners provides a structured way to understand international trade relationships and geographical distribution of commerce.

 

Question 4. Explain the state-wise export structure of India in the year 2013-14.
Answer: The state-wise export structure of India in 2013-14 shows varying contributions from different states. For example, Tamil Nadu led with 8.6% of total exports, followed by Karnataka at 5.7%, and Andhra Pradesh at 4.9%. Other significant contributors included Uttar Pradesh (4.3%), Haryana (3.4%), and West Bengal (3.4%). States like Delhi (3.0%), Punjab (2.3%), and Rajasthan (1.9%) also had notable shares. This distribution indicates that certain states are more integrated into the global trade network due to their industrial base or resource endowments.
In simple words: In 2013-14, different Indian states exported different amounts. Tamil Nadu exported the most, followed by Karnataka and Andhra Pradesh, showing where most of India's international business comes from.

🎯 Exam Tip: Understanding state-wise export contributions helps in identifying regional economic strengths and policy implications for balanced development.

 

Question 5. During the second five year plan, why total exports were divided into 3 categories?
Answer: The source does not explicitly state that total exports were divided into 3 categories *during* the Second Five-Year Plan or the reason for it. Typically, trade categorization is a tool for analysis rather than a direct outcome of a specific plan's structure. However, the plan itself focused on heavy industrialization, which would have naturally influenced the composition of both imports and exports, leading to shifts in trade patterns and the way they were later categorized for study.
In simple words: The document doesn't say why exports were split into three groups during the second five-year plan.

🎯 Exam Tip: When a question asks for details not directly present, acknowledge the missing information and, if possible, infer relevant context from related topics.

 

Question 6. Explain Import Replacement Scheme.
Answer: The Import Replacement Scheme, also known as import substitution, is a policy where a country aims to produce goods domestically that it previously imported. The main goal is to reduce reliance on foreign imports, conserve foreign currency, and boost the growth of local industries. This helps the country achieve greater self-sufficiency in its production.
In simple words: Import replacement means a country tries to make its own products instead of buying them from other countries, saving foreign money and helping local businesses.

🎯 Exam Tip: Understand that while import replacement fosters domestic industry, it can sometimes lead to less competitive local products if not carefully managed.

 

Question 7. What is Duty Drawback Scheme?
Answer: The Duty Drawback Scheme allows manufacturers to receive a refund of excise duty and customs duty paid on inputs and services used in producing goods that are then exported. This scheme aims to ensure that Indian exports are not burdened by domestic taxes, making them more competitive in international markets. It effectively means duties are "drawn back" or returned to the exporter.
In simple words: The Duty Drawback Scheme gives back taxes paid on raw materials and services if the finished goods are exported, making them cheaper for foreign buyers.

🎯 Exam Tip: This scheme is a common export incentive used worldwide to promote exports by neutralizing the impact of indirect taxes on export prices.

 

Question 8. Why were Agricultural Export Zones established in the year 2001?
Answer: Agricultural Export Zones (AEZs) were established in 2001 to promote agricultural exports. These zones were created to identify specific agricultural products with export potential and provide special attention to their production. The entire process, from initial farming to market distribution, was integrated within these zones to boost the export of agricultural goods.
In simple words: Agricultural Export Zones were started in 2001 to help India sell more farm products abroad by focusing on growing and selling specific crops efficiently.

🎯 Exam Tip: AEZs aim to create a comprehensive value chain for agricultural exports, from farm to foreign market, to ensure quality and competitiveness.

 

Question 9. State any five provisions of Foreign trade policy of 2015-20.
Answer: Five provisions of the Foreign Trade Policy of 2015-20 were:
1. To promote domestic manufacturing, the export obligation (compulsion) for certain benefits was reduced by 25 per cent.
2. Under the Export Promotion Capital Goods (EPCG) Scheme, the export obligation for domestic production was reduced to 75 per cent.
3. An online process for digital signatures was introduced to simplify trade documentation.
4. The valid period for export authorizations was extended from 12 months to 24 months, providing more flexibility.
5. Duty Credit Scrips became freely transferable and could be used to pay custom duty, excise duty, and service tax.
These measures aimed to ease the process of exporting and make Indian products more competitive globally.
In simple words: The 2015-20 trade policy made it easier to export by cutting export requirements, starting online paperwork, giving more time for export permits, and making duty credits transferable for tax payments.

🎯 Exam Tip: Knowing the key provisions of trade policies helps in understanding government's strategy for promoting trade and industry in a given period.

 

Question 1. What do you mean by liberalization? Under this, what efforts were made towards the direction of imports?
Answer: Liberalization is a broad economic term referring to any process where a state reduces or removes restrictions from various sectors of the economy. In the context of imports, liberalization involves easing controls, duties, and quotas on goods coming into the country.
Efforts for import liberalization included:
1. Rebates in import duty were given to exporters to develop re-exporting and ensure a continuous supply of raw materials.
2. Exporters earning foreign currency of more than Rs. 10 crore were allowed to import goods for one year through the Advance Licensing Policy.
3. To support industrialization, the supply of capital goods and raw materials was ensured. More items were included in the Open General License list, and imports from open general licenses were permitted without affecting production.
4. Import facilities were provided to trading houses and star trading houses. Exporters meeting certain export values were recognized and given import benefits.
5. A technology development fund was established to make Indian products competitive and facilitate easier imports of technology and specialized services.
6. Pre-conditions for imports through government agencies were abolished, and the list of items requiring agency processing was shortened to allow faster imports.
In simple words: Liberalization means making rules less strict, especially for imports. Efforts included giving tax breaks for re-exports, letting big exporters import more easily, ensuring raw material supply, and simplifying import rules for technology and government agencies.

🎯 Exam Tip: Liberalization is a key component of economic reforms, aimed at increasing efficiency, competitiveness, and integration with the global economy by reducing government control.

 

Question 2. Explain the schemes initiated for Import promotion. OR Explain the following terms:
Answer: The question asks about import promotion, which is unusual as policies usually focus on export promotion or import management. However, based on the context of 'efforts for import liberalization' (from the previous answer) and the subsequent details, the "schemes for Import promotion" refers to the *facilitation* of imports necessary for economic growth, rather than actively promoting more imports for consumption.
Schemes and efforts related to facilitating necessary imports include:
1. **Rebates in Import Duty:** Provided to exporters to ensure raw material availability for re-exporting.
2. **Advance Licensing Policy:** Allowed exporters earning significant foreign currency to import for a year.
3. **Open General License (OGL):** Expanded to include more capital goods and raw materials, ensuring continuous supply for industries.
4. **Import Facilities for Trading Houses:** Special facilities given to large trading and star trading houses based on their export performance to allow necessary imports.
5. **Technology Development Fund:** Established to facilitate easier import of technology and specialized services, making Indian products competitive.
6. **Abolition of Pre-conditions:** Removed for imports through government agencies, simplifying the process.
These measures indirectly "promote" necessary imports by making them easier and cheaper, which in turn supports domestic production and exports.
In simple words: Import promotion here means making it easier and cheaper to bring in important goods like raw materials and technology. This was done through tax breaks, special licenses for exporters, and simplifying rules for trading companies.

🎯 Exam Tip: Policies that seem to "promote imports" are often aimed at facilitating essential imports for production and technology transfer, which indirectly supports exports and overall economic growth.

 

Question 3. State the objectives and provisions of the foreign trade policy of 2009-14.
Answer: The main objective of India's foreign trade policy of 2009-14 was to double the exports of commodities and services by the year 2014. It also aimed to increase India's share in global trade by 100 percent, from 1.64 percent in 2008 to 3.28 percent in 2020.
Its provisions included:
1. Under the export promotion capital goods program, duty-free capital goods imports were allowed for producing engineering goods, electronic products, basic chemicals, textiles, plastics, handicrafts, and leather goods.
2. The use of electronic mediums was encouraged, and freedom was given to carry imported items from ports to production sites. Arrangements were made for disposing of manufacturing waste after payment of manufacturing tax.
3. An inter-departmental committee was established to provide dollar credit to exporters.
4. Exporters were allowed to carry stock up to 5 lakh dollars to participate in exhibitions abroad.
5. A single-window program was initiated for the export of perishable agricultural products.
These provisions aimed to simplify trade, boost manufacturing, and increase export competitiveness.
In simple words: The 2009-14 trade policy wanted to double exports and India's share in world trade. It did this by letting exporters import machines duty-free, making trade easier with electronics, helping exporters get dollar loans, allowing them to take goods to foreign shows, and speeding up farm exports.

🎯 Exam Tip: A country's foreign trade policy combines ambitious objectives with specific provisions designed to achieve them, reflecting its economic priorities.

 

Question 4. Which efforts need to be made to increase exports of India? OR Suggest the ways for export promotion in India.
Answer: To increase India's exports and overcome current challenges, the following efforts are needed:
1. **Improve infrastructure:** There is a strong need to build better roads, rail transport, water transport, and power infrastructure. This will speed up import and export processes, reduce time, and lower costs.
2. **Facilitate input availability:** Raw materials, intermediate products, labor, and capital inputs must be supplied to export industries on time and at lower costs. Interest rates on capital should also be reduced to be competitive with other developing countries.
3. **Search for new markets:** India should actively seek new markets for its products instead of relying on just a few countries. This diversification helps mitigate adverse effects from economic crises or recessions in existing markets.
4. **Better credit and import duty policies:** There should be arrangements for better credit facilities and import duty policies to encourage exporters. Tax reforms need to be implemented quickly.
5. **Focus on agricultural and manufacturing production:** More attention should be given to boosting agricultural and manufacturing production, which should then be included in the country's exports. Domestic consumption of these goods should be managed to maximize export potential.
In simple words: To sell more goods abroad, India needs better roads, cheaper raw materials, new foreign markets, easier loans and taxes for exporters, and to make more farm and factory products while also controlling how much is used at home.

🎯 Exam Tip: A holistic approach combining infrastructure, finance, market diversification, and production efficiency is key for sustained export growth.