Himachal Apple Growers Protest Reduced Import Duty on New Zealand Apples

Answer: B

Statement 1 is correct. An FTA is a pact between two or more nations to reduce barriers to imports and exports among them. Under a free trade policy, goods and services can be bought and sold across international borders with little or no government tariffs, quotas, subsidies, or prohibitions. Statement 2 is incorrect. While some agricultural products might benefit, the Indian agricultural sector, particularly certain segments like horticulture, has often faced challenges from increased competition due to cheaper imports under FTAs, as highlighted by the apple growers' protest. India's agricultural sector often struggles with productivity, infrastructure, and market access issues compared to developed economies. Statement 3 is correct. 'Rules of Origin' are criteria used to determine the national source of a product. Their importance is to ensure that only goods genuinely originating from the FTA partner countries benefit from the preferential tariffs, preventing third-country goods from being routed through an FTA partner to gain duty-free access.

Answer: B

Statement 1 is correct. Tariffs are indeed taxes on imported goods, serving the dual purpose of making foreign goods more expensive (thus protecting domestic industries) and generating revenue for the government. Statement 2 is correct. SPS measures are legitimate tools to ensure food safety and prevent the spread of diseases. However, if they are overly stringent, discriminatory, or not based on scientific principles, they can effectively restrict trade and function as non-tariff barriers, making it difficult for foreign producers to meet import requirements. Statement 3 is incorrect. India's average MFN tariff rates, particularly for agricultural products, are generally higher than those of many developed economies. This is often a point of contention in trade negotiations, as India seeks to protect its large agricultural sector. The reduction of import duties on New Zealand apples is a specific bilateral agreement, not reflective of India's general MFN tariff stance.

Answer: B

Option A describes the export-import ratio, not specifically 'Terms of Trade'. Option B is the correct definition. The Terms of Trade (TOT) is the ratio of a country's export prices to its import prices, usually expressed as an index. An improvement in a country's terms of trade means its export prices have risen relative to its import prices, allowing it to buy more imports for a given amount of exports. Option C describes the Balance of Trade (or Net Exports), which is a component of the Balance of Payments. Option D describes a broader concept of industrial competitiveness, not a specific economic indicator like Terms of Trade. In the context of the news, if India imports cheaper apples (lower import prices) while its export prices remain stable, its terms of trade would improve, meaning it can get more imports for the same amount of exports. However, this comes at the cost of domestic producers.

Answer: D

All three pairs are correctly matched. 1. Himachal Pradesh is a major apple-producing state, with regions like Kullu Valley, Shimla, Kinnaur, and Mandi being prominent. Kullu Valley is indeed a significant apple belt. 2. Jammu & Kashmir is the largest apple producer in India, and the Pir Panjal Range, which forms part of the Lesser Himalayas, encompasses many of its apple-growing areas, including parts of Kashmir Valley. 3. Uttarakhand also contributes to India's apple production, with orchards primarily located in the Kumaon and Garhwal regions, including the Kumaon Hills. These states constitute the 'Apple Belt' of India, where specific climatic and geographical conditions are conducive to apple cultivation.