UPSC Essentials | Daily subject-wise quiz : Economy MCQs on mobile phone manufacturing scheme, India Semiconductor Mission and more (Week 171)

3. Under the scheme, the government has placed a key focus on local sourcing to help domestic value addition.

Which one of the following conclusions based on the above statements is correct ?

(a) All three statements are correct.

(b) There are two correct statements, that include statement 1.

(c) There is only one correct statement.

(d) There is no correct statement.

Relevance: The Mobile Phone Manufacturing Scheme is relevant for UPSC Prelims 2027 under Indian Economy, particularly topics related to industrial policy, electronics manufacturing, Production Linked Incentive (PLI) schemes, import substitution, domestic value addition, and the Make in India initiative.

Explanation

— The Union Cabinet has approved a Rs 62,500 crore mobile phone manufacturing scheme, as a follow on of the Production Linked Incentive (PLI) scheme for smartphone assembly, which helped India successfully localise mobile phone production. The scheme will be in force for a period of five years. Hence, statement 1 is correct and statement 2 is not correct.

— The PLI scheme was instrumental in attracting companies such as Apple to set up local production facilities through their contract manufacturing partners, and establishing smartphones as one of the country’s biggest export categories. Thanks to the scheme, India has managed to take local value addition in the sector to 24%, compared to China’s rate of 38%.

— Under the fresh scheme, the government has placed a key focus on local sourcing to help domestic value addition, and design and R&D by Indian brands, along with incentives linked to export of smartphones, Union IT Minister Ashwini Vaishnaw said. Hence, statement 3 is correct.

— The scheme will also provide additional incentive of up to 1.5% linked to domestic sourcing of key components/sub-assemblies. For building Indian brands, an additional incentive at the rate or 3% on eligible sales for design and R&D of the product.

Therefore, option (b) is the correct answer.

QUESTION 2

With reference to the India Semiconductor Mission (ISM), consider the following statements:

1. The ISM 1.0 carried a uniform capex subsidy of 75 per cent for fabs and assembly plants, while under ISM 2.0, silicon fabs will receive a subsidy of 50 per cent, and other fabs will get 40 per cent.

2. ISM 1.0 offered government subsidies for research and development, and talent development in the semiconductor sector, while ISM 2.0 does not provide any subsidies for research and development.

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: The India Semiconductor Mission is relevant for UPSC Prelims under Science and Technology, and Indian Economy, particularly topics related to semiconductor manufacturing, industrial policy, and strategic technologies.

Explanation

— The Union Cabinet approved the second iteration of India’s ambitious Semiconductor Mission, with an outlay of Rs Rs 1.27 lakh crore. The fresh scheme will carry a key focus on subsidising the supply chain around chip manufacturing to attract companies producing commodities like gases, and chemicals used in the production process. The duration of the scheme is six years.

— Compared to the first iteration of the India Semiconductor Mission (ISM), government incentives have been slashed in ISM 2.0. For instance, the first scheme carried a uniform capex subsidy of 50% for fabs and assembly plants. However, under ISM 2.0, silicon fabs will receive a subsidy of 40%, and other fabs will get 35%. Similarly, the incentive for advanced packaging has been kept at 35%, and 25% for conventional packaging. Hence, statement 1 is not correct.

— Beyond that, ISM 2.0 will also offer government subsidies for research and development, and talent development in the semiconductor sector. Hence, statement 2 is not correct.

— By 2029, India expects to achieve the capability to design and manufacture chips required for nearly 70-75% of domestic applications, and by 2035, the country aims to be among the top semiconductor nations globally.

Therefore, option (d) is the correct answer.

QUESTION 3

With reference to the windfall taxes, consider the following statements:

1. It is levied on the imports and exports of diesel and aviation turbine fuel.

2. It is levied by the Ministry of Petroleum and Natural Gas (MoPNG).

3. These taxes are reviewed every month.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

Relevance: Windfall taxes are relevant for UPSC Prelims under Indian Economy, particularly topics related to taxation, fiscal policy, petroleum pricing, and government revenue measures. UPSC can test concepts associated with indirect taxes and recent fiscal interventions in the energy sector.

Explanation

— India has raised windfall taxes on the exports of diesel and aviation turbine fuel (ATF) by Rs 7 per litre each as global energy prices surged following escalation in West Asia and closure of the Strait of Hormuz. The government, however, has cut the levy on petrol exports. Hence, statement 1 is not correct.

— It is levied by the Ministry of Finance. Hence, statement 2 is not correct.

— The export duty on diesel has been raised to Rs 15.5 per litre from Rs 8.5 per litre, while the aviation turbine fuel duty has been raised to Rs 14.5 per litre from Rs 7.5 per litre.

— The changes were part of the government’s fortnightly review of windfall taxes, which are linked to the international fuel prices and refining margins. The latest revision comes after the crude oil prices jumped following tensions between the US and Iran this week. Hence, statement 3 is not correct.

Therefore, option (d) is the correct answer.

QUESTION 4

With reference to the Reserve Bank of India’s governance framework for banks, which one of the following is the primary responsibility of the Board of Directors?

(a) Sanctioning all operational loans above a prescribed limit

(b) Supervising day-to-day banking operations

(c) Providing strategic direction and overseeing risks

(d) Conducting statutory audits

Relevance: The RBI’s governance framework is relevant for UPSC Prelims 2027 under Indian Economy, particularly topics related to banking regulation, financial governance, and the functions of the Reserve Bank of India.

Explanation

— In a move aimed at strengthening bank governance while reducing procedural burden, the Reserve Bank of India (RBI) has rationalised the list of matters that must be placed before the boards of banks. The move is expected to give directors greater flexibility to focus on strategy, risk management and long-term oversight instead of routine compliance.

— The amendments, issued under Section 35A of the Banking Regulation Act, 1949, will come into effect from October 1, 2026. They revise the RBI’s Master Direction on Corporate Governance by consolidating and pruning several existing requirements relating to board functioning.

— The revised framework sharpens the board’s oversight responsibilities. Directors will be expected to focus on the bank’s risk management systems, policies and strategy, monitor exposures to related entities such as subsidiaries, and ensure compliance with corporate governance standards, including the functioning of board committees and adherence to governance norms.

Therefore, option (c) is the correct answer.

QUESTION 5

With reference to the ‘ANEEL’ (Advanced Nuclear Energy for Enriched Life), consider the following statements:

1. It is a Uranium-based fuel.

2. It can be deployed in India’s pressurised heavy water reactors (PHWR) fleet.

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: ANEEL is relevant for UPSC Prelims from the Indian Economy perspective as it relates to energy security, reduction in import dependence, and the role of indigenous technologies in supporting long-term economic growth. It also aligns with themes of self-reliance (Atmanirbhar Bharat) and strategic resource utilisation.

Explanation

— Chicago-based nuclear fuel company Clean Core Thorium Energy (CCTE) has refuted concerns over the use of its advanced nuclear fuel, ANEEL, in existing pressurised heavy water reactors (PHWRs). The company claimed that the thorium-based fuel improves key reactor safety characteristics and can be deployed without requiring modifications to reactor designs or control systems.

— CCTE, only the second American company to have secured an export license from the US Department of Energy to sell nuclear technology to India in nearly two decades, has developed the patented thorium-based fuel called ANEEL (Advanced Nuclear Energy for Enriched Life), which combines thorium with high-assay low-enriched uranium (HALEU) for use in PHWRs. Hence, statement 1 is not correct.

— According to the company, ANEEL can be deployed in India’s PHWR fleet, which accounts for the majority of the country’s operational nuclear reactors. In December 2024, state-owned NTPC Ltd and CCTE had announced a strategic partnership to explore the development and deployment of ANEEL for existing nuclear stations in India, subject to regulatory clearances. Hence, statement 2 is correct.

— Apart from exploring the development and deployment of ANEEL fuel in India, the two companies also intend to collaborate for exploring the possible indigenisation of its manufacturing with local supply chain development, establishing supply chain for HALEU, and supply of Uranium to India with sovereign guarantee.

Therefore, option (b) is the correct answer.

Previous Daily Subject-Wise-Quiz

Daily Subject-wise quiz — History, Culture, and Social Issues (Week 159)

Daily subject-wise quiz — Polity and Governance (Week 171)

Daily subject-wise quiz —  Science and Technology (Week 171)

Daily subject-wise quiz — Economy (Week 170)

Daily subject-wise quiz — Environment and Geography (Week 170)

Daily subject-wise quiz – International Relations (Week 170)

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