India’s foreign trade DEC 2025

Description

India’s Foreign Trade

Dec 2025 Examination

 

 

Q1. You are an economic advisor evaluating the impact of India’s recent export strategies on its international trade performance. Over the past few years, India has witnessed rapid growth in sectors like pharmaceuticals, IT services, and electronics manufacturing. This transformation is largely attributed to the government’s strategic initiatives such as the “Make in India” programme and the Production-Linked Incentive (PLI) schemes, along with active participation in international trade agreements like the India–United Arab Emirates Comprehensive Economic Partnership Agreement (India-UAE CEPA) and the India–Australia Economic Cooperation and Trade Agreement (India-Australia ECTA).

As an advisor, prepare a detailed report highlighting the key drivers behind this transformation in India’s export landscape and analyze their broader impact on the Indian economy. (10 Marks)

Ans 1.

Introduction

India’s export landscape has undergone a remarkable transformation over the past few years, driven by structural reforms, targeted industrial policies, and integration into global value chains. The government’s initiatives such as Make in India, Atmanirbhar Bharat, and the Production-Linked Incentive (PLI) schemes have rejuvenated domestic manufacturing and enhanced export competitiveness. Sectors like pharmaceuticals, IT services, and electronics have emerged as strong global performers, reflecting India’s growing technological capability and policy support. Furthermore, India’s strategic participation in international trade agreements such as the India–UAE CEPA and India–Australia ECTA has expanded market access and improved

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Q2. You are part of a global economic policy think tank analyzing the challenges and opportunities in expanding international trade. The International Monetary System (IMS) plays a vital role in facilitating global trade, economic development, and market integration. Free Trade Agreements (FTAs) are considered key instruments for fostering trade relations between countries. However, several challenges arise during the negotiation and implementation of FTAs. Institutions like the International Monetary Fund (IMF) and the World Bank are instrumental in addressing trade- related financial and developmental issues.

As a trade policy analyst, discuss the major challenges faced by world economies in signing and operationalizing FTAs. Also, evaluate the supportive roles played by the IMF  and  the  World  Bank  in  promoting  international  trade  and  economic development. (10 Marks)

Ans 2.

Introduction

International trade serves as a powerful engine for global growth, connecting economies and facilitating the exchange of goods, services, and technology. Free Trade Agreements (FTAs) are critical instruments designed to promote cross-border trade by reducing tariffs, harmonizing regulations, and strengthening cooperation among nations. However, despite their benefits, the negotiation and implementation of FTAs face numerous political, economic, and institutional challenges. Additionally, the global trading environment is influenced by fluctuations in the international monetary system and the financial stability of nations. Institutions like the International Monetary Fund (IMF) and the World Bank play crucial roles in addressing these

 

Q3 (A)Despite the potential benefits of Free Trade Agreements (FTAs), India and many other countries often face significant hurdles in finalizing such agreements. India, in particular, has encountered challenges in FTA negotiations with countries like the

United States and several others across the globe.

Discuss the key reasons why India and other countries struggle to sign FTAs, with specific reference to the issues India has faced in its negotiations with the U.S. and other trading partner (5 Marks)

Ans 3a.

Introduction

Free Trade Agreements (FTAs) are intended to enhance trade flows, attract investment, and strengthen economic partnerships between nations. However, the negotiation of FTAs often becomes a prolonged and politically sensitive process. India’s experience, especially with major economies such as the United States and the European Union, highlights how differences in market access, regulatory standards, and domestic policy concerns can delay or derail agreements. These

 

 

Q3 (B) How can exporters manage or hedge geopolitical risks in international trade, especially in light of recent conflicts such as the Russia-Ukraine war and the Israel- Hamas conflict? (5 Marks)

 

Ans 3b.

Introduction

Geopolitical risks have become a defining challenge for exporters in an increasingly interconnected world. Conflicts such as the Russia-Ukraine war and the Israel-Hamas conflict have disrupted global supply chains, raised commodity prices, and created market volatility. Exporters operating in this environment must adopt comprehensive strategies to manage uncertainty and protect business continuity. Effective risk management now extends beyond traditional financial hedging