UPSC Essentials | Daily subject-wise quiz : Economy MCQs on India-Oman trade, Remittances and more (Week 163)

3. Oman largely exports machinery and parts to India.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

Relevance: The topic is relevant for concepts such as tariff lines, zero-duty market access, import-export composition, and India’s trade negotiations with key partners. Aspirants should understand the economic and strategic significance of Oman in India’s energy security, maritime connectivity, and West Asia policy.

Explanation

— Amid the Strait of Hormuz blockade and uncertainty over peace talks between Iran and the US, the Commerce and Industry Ministry said the India-Oman free trade agreement (FTA) signed in December could enter into force as early as June 1.

— The likely implementation, within months of signing, comes as Delhi pushes for faster operationalisation of the deal since Omani ports, mainly Salalah and Duqm, fall outside the Strait and could help India reroute exports for West Asia and Africa.

— Before the war, India’s trade had been heavily dependent on the UAE and Saudi Arabia. The two countries accounted for 8.4% and 2.7% of India’s total exports respectively in FY25, while Oman’s share stood at just 0.9%. On the import side, the UAE and Saudi Arabia comprised 8.8% and 4.2% of India’s total imports, with Oman again at 0.9%, Commerce Ministry data showed. Hence, statement 2 is not correct.

— Under the FTA, Oman has offered zero-duty access for Indian goods on 98% of its tariff lines. Oman largely exports crude oil, liquefied natural gas, fertilisers, and chemical inputs such as methyl alcohol and anhydrous ammonia, along with petroleum coke. Indian exports to Oman, largely consisting of machinery and parts, have doubled in the last five years from $3 billion to $6 billion. New Delhi’s top exports, apart from naphtha and petrol, include machinery, aircraft, rice, iron and steel articles, beauty and personal care products, and ceramics. Hence, statement 1 is correct and statement 3 is not correct.

Therefore, option (a) is the correct answer.

QUESTION 2

With reference to the Remittances, consider the following statements:

1. These are sources of foreign exchange for India.

2. The remittance inflows from the Gulf countries of the UAE and Saudi Arabia had declined in 2023-24 from 2016-17.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Relevance: Aspirants should understand the major sources of remittances to India, trends in migration, and the changing role of regions such as the Gulf countries and the United States in overseas income flows. The topic is also relevant for questions related to diaspora economics, RBI reports, current account dynamics, and India’s global labour connectivity.

Explanation

— Remittances are a key source of foreign exchange for India as it helps offset some part of the country’s trade deficit, which is under pressure due to a sharp rise in global energy prices and the rapid depreciation of the rupee. Hence, statement 1 is correct.

— According to findings from the RBI’s latest survey on remittances, inflows from the Gulf countries of UAE, Saudi Arabia, Kuwait, Qatar, Oman and Bahrain had declined to 38% of the overall figure in 2023-24 from 47% in 2016-17. Meanwhile, money being sent to India has risen from advanced countries such as the US and the UK. Hence, statement 2 is correct.

— While India suffers from a large trade deficit ($119 billion in 2025-26), foreign direct investment (FDI) and remittances help it to usually post a surplus in its overall Balance of Payments (BoP).

Therefore, option (c) is the correct answer.

QUESTION 3

Consider the following statements:

1. Singapore became India’s second-largest export market in April 2026.

2. The exports to Singapore surged by 180% in April compared to a year ago due to the closure of the Strait of Hormuz.

Which one of the following is correct in respect of the above statements?

(a) Both Statement 1 and Statement 2 are correct and Statement 2 is the correct explanation for Statement 1.

(b) Both Statement 1 and Statement 2 are correct and Statement 2 is not the correct explanation for Statement 1.

(c) Statement 1 is correct but Statement 2 is incorrect.

(d) Statement 1 is incorrect but Statement 2 is correct.

Relevance: This is important for UPSC Prelims because questions are frequently asked on international trade routes, strategic maritime chokepoints, and India’s export-import patterns. The topic is also relevant for understanding geopolitical disruptions, supply-chain resilience, India’s trade diversification, and maritime economic geography.

Explanation

— India’s trade flows have begun shifting amid the prolonged closure of the Strait of Hormuz since March, as traders have begun finding alternate routes to export goods amid disruption in trade with countries in the West Asia region, an analysis of data shared by the Commerce and Industry Ministry showed.

— The most notable shift in trade routes was seen in the two transshipment hubs that India has free trade agreements (FTA) with – UAE and Singapore. Replacing UAE, Singapore became India’s second largest export market in April, registering a five-fold jump compared to February. The US continues to be India’s largest export destination. Hence, statement 1 is correct.

— The Strait of Hormuz was closed on March 2. While exports to Singapore surged by 180% in April to $3.20 billion compared to $1.14 billion a year ago, exports to UAE slipped by 36% to $2.18 billion last month compared to $3.43 billion a year ago. Exports from Singapore have been rising month-on-month too since February amid the disruption in trade with the UAE. Hence, statement 2 is correct.

Both Statement 1 and Statement 2 are correct and Statement 2 is the correct explanation for Statement 1.

Therefore, option (a) is the correct answer.

QUESTION 4

With reference to the India-Nordic relationship, consider the following statements:

1. India-Nordic relationship has a Strategic Partnership focused on Green Technology and Innovation.

2. India-Nordic trade in goods and services in 2024 has approximately equal exports and imports.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Relevance: This is important for UPSC Prelims because questions can be asked on India’s bilateral and regional partnerships, especially those linked with green energy, innovation, climate cooperation, and trade. The topic is also relevant from the perspective of international groupings, economic diplomacy, foreign trade data, and current developments in India-Europe relations.

Explanation

— As India and Nordic countries agreed to transform ties into a Green Technology Partnership, leaders of all six countries flagged concerns of global tensions and turbulence in the international order, and Prime Minister Narendra Modi said India and the Nordic nations will continue to stand together in upholding a “rules-based global order”.

— After attending the third India-Nordic summit in Oslo, Modi said, “We have decided to shape the India-Nordic relationship into a Strategic Partnership focused on Green Technology and Innovation. Through this Green Technology Partnership, by combining Iceland’s expertise in geothermal energy and fisheries, Norway’s strengths in the Blue Economy and Arctic affairs, and the maritime and sustainability expertise of all Nordic nations with India’s scale. Hence, statement 1 is correct.

— India and the Nordic countries has nearly quadrupled over the last decade, investments flowing from the Nordic nations into India have witnessed an increase of approximately 200 per cent over the past decade.

— India-Nordic trade in goods and services reached USD 19 billion in 2024 (exports USD 9.4 billion, imports USD 9.6 billion). Over 700 Nordic companies operate in India, while 150 Indian companies are present in the Nordic region. Hence, statement 2 is correct.

Therefore, option (c) is the correct answer.

QUESTION 5

The Reserve Bank of India (RBI) has signed a Memorandum of Understanding (MoU) on cooperation in the field of central banking with:

(a) International Monetary Fund

(b) World Bank

(c) Federal Reserve

(d) European Central Bank

Relevance: This is important for UPSC Prelims because questions can be framed on international financial institutions, central banks, and India’s external economic engagements. Aspirants should focus on the roles and functions of major global monetary institutions such as the Reserve Bank of India, European Central Bank, IMF, World Bank, and Federal Reserve.

Explanation

— The Reserve Bank of India (RBI) and the European Central Bank (ECB) signed a Memorandum of Understanding (MoU) on cooperation in the field of central banking.

— The MoU, which updates the previous MoU of 2015, provides a framework for a regular exchange of information, policy dialogue and technical cooperation between the two institutions in areas of mutual interest in the field of central banking.

— ECB is the central bank of the euro area, which comprises European Union (EU) countries that have the euro as their currency. Its main task is to maintain price stability in the region.

— Earlier in 2025, the RBI and NPCI International Payments Limited (NIPL) along with the European Central Bank, agreed to start the realisation phase for the UPI-TIPS link.

Therefore, option (d) is the correct answer.

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Previous Daily Subject-Wise-Quiz

Daily Subject-wise quiz — History, Culture, and Social Issues (Week 156)

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Daily subject-wise quiz —  Science and Technology (Week 163)

Daily subject-wise quiz — Economy (Week 162)

Daily subject-wise quiz — Environment and Geography (Week 162)

Daily subject-wise quiz – International Relations (Week 162)

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