UPSC Prelims 2020 Q64: Indian Economy – International Trade & WTO

UPSC Prelims 2020, General Studies Paper I · Indian Economy

Consider the following statements: 1. The value of Indo - Sri Lanka trade has consistently increased in the last decade. 2. “Textile and textile articles” constitute an important item of trade between India and Bangladesh. 3. In the last five years, Nepal has been the largest trading partner of India in South Asia. Which of the statements given above is/are correct?

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

Answer: (b) 2 only

Explanation

India's South Asian Trade: Partner Performance

Statement	Claim	Verdict	Detail
1	Indo-Sri Lanka trade consistently increased	FALSE	Trade is volatile, not consistently increasing. 2008 crisis + political tensions caused fluctuations.
2	Textiles are important Indo-Bangladesh trade item	TRUE	India-Bangladesh: textiles, yarn, jute are major exports + imports. Textile trade >50% of bilateral merchandise trade.
3	Nepal is largest South Asian trading partner	FALSE	India-Bangladesh > India-Nepal. Bangladesh trade ~$15-18B; Nepal ~$8-10B. Bangladesh is largest after Pakistan historically.

Only statement 2 is correct. Answer: (b) 2 only.

Answer: (b) 2 only.

Why each option is right or wrong

(a) Incorrect. Statement 1 is wrong (volatile, not consistent increase).
(b) CORRECT. Only statement 2 is correct - textiles are major Indo-Bangladesh trade item. Statements 1 and 3 are wrong.
(c) Incorrect. Statement 2 is not the only correct one.
(d) Incorrect. Statements 1 and 3 are wrong.

Key point

South Asian trade ranking: India-Bangladesh (~$15B) > India-Nepal (~$8B) > India-Sri Lanka (~$6B). Textiles dominate Indo-Bangladesh. Trade with Sri Lanka volatile (political tension).

Remember

Of the statements: Indo-Sri Lanka trade is NOT consistently increasing (Statement 1 wrong - volatile). Textiles are indeed important Indo-Bangladesh trade items (Statement 2 correct). Nepal is NOT the largest SA trading partner - Bangladesh is (Statement 3 wrong). Answer: 2 only.

Common mistakes

Assuming trade with smaller nations grows steadily. Sri Lanka, Nepal face volatility (politics, currency).
Confusing total bilateral trade with India's share. India is dominant partner; smaller nations depend on India.
Missing that Nepal is LANDLOCKED - depends on India for all sea access (strategic limitation).

Exam tip

South Asian economic integration: SAARC trade only ~5% of South Asian GDP (lowest regional integration globally). Barriers: tariffs, political tensions, border disputes, infrastructure gaps.

Sources

Ministry of Commerce - India SAARC Trade Statistics
ADB - South Asian Regional Trade Report

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