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Q34 (IAS/2020) Economy › External Sector & Trade › Regional trade agreements Official Key

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 ?

Result
Your answer: —  ·  Correct: B
Explanation

The correct answer is Option 2. The explanation for each statement is as follows:

  • Statement 1 is incorrect: The value of Indo-Sri Lanka trade has been fluctuating rather than showing a "consistent" increase over the last decade. Factors such as Sri Lanka’s economic crisis, foreign exchange shortages, and shifting demand patterns led to declines in specific years (e.g., 2012-13, 2015-16, and 2019-20).
  • Statement 2 is correct: India and Bangladesh share a robust trade relationship in the textile sector. Bangladesh is a global hub for garment manufacturing and relies heavily on India for raw materials like cotton, yarn, and fabric. Reciprocally, textile articles are a major export from Bangladesh to India.
  • Statement 3 is incorrect: In the last five years, Bangladesh, not Nepal, has consistently been India's largest trading partner in South Asia, followed by Sri Lanka or Nepal depending on the fiscal year.

Therefore, only statement 2 accurately reflects the trade dynamics of the region.

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Don’t just practise – reverse-engineer the question. This panel shows where this PYQ came from (books / web), how the examiner broke it into hidden statements, and which nearby micro-concepts you were supposed to learn from it. Treat it like an autopsy of the question: what might have triggered it, which exact lines in the book matter, and what linked ideas you should carry forward to future questions.
Q. Consider the following statements : 1. The value of Indo-Sri Lanka trade has consistently increased in the last decade. 2. "Textile and…
At a glance
Origin: Mostly Current Affairs Fairness: Low / Borderline fairness Books / CA: 0/10 · 3.3/10
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This is a classic 'Economic Survey' trend question disguised as a static geography question. You don't need 10 years of data; you need to spot the 'extreme modifier' trap ('consistently') and know the basic hierarchy of India's neighbors (Bangladesh > Sri Lanka/Nepal in economic size).

How this question is built

This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.

Statement 1
Did the value of India–Sri Lanka (Indo–Sri Lanka) bilateral trade increase year-on-year in every year during 2010–2019?
Origin: Weak / unclear Fairness: Borderline / guessy
Indirect textbook clues
Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 13: International Organizations > 13.13 Free Trade Agreements (FTAs) and RCEP > p. 393
Strength: 4/5
“India has bilateral FTAs with Sri Lanka, Afghanistan, Thailand, Singapore, Bhutan, Nepal, Korea, Malaysia and Japan and regional trade agreements, the South Asian Free Trade Agreement (SAFTA, 2004) and India - ASEAN Agreement (2010).”
Why relevant

Notes that India has a bilateral Free Trade Agreement with Sri Lanka, a policy instrument that typically encourages higher bilateral trade flows.

How to extend

A student could infer the FTA likely supported trade growth and then check year-by-year trade statistics (2010–2019) to see if growth was uninterrupted.

Contemporary World Politics, Textbook in political science for Class XII (NCERT 2025 ed.) > Chapter 3: Contemporary South Asia > Ideas for the Teacher > p. 41
Strength: 4/5
“government now prefers a policy of disengagement vis-à-vis Sri Lanka's internal troubles. India signed a free trade agreement with Sri Lanka, which strengthened relations between two countries. India's help in post-tsunami reconstruction in Sri Lanka has also brought the two countries closer. India enjoys a very special relationship with Bhutan too and does not have any major conflict with the Bhutanese government. The ef forts made by the Bhutanese monarch to weed out the guerrillas and militants from northeastern India that operate in his country have been helpful to India. India is involved in big hydroelectric projects in Bhutan and remains the Himalayan kingdom's biggest source of development aid.”
Why relevant

States explicitly that India signed a free trade agreement with Sri Lanka and that such agreements strengthen relations and post-disaster aid has boosted ties—providing an explanatory link for potential trade increases.

How to extend

Use this as a hypothesis that trade should trend upward post-FTA, then compare annual bilateral trade values (e.g., from customs or UN COMTRADE) for 2010–2019 to test for any year-on-year declines.

Geography of India ,Majid Husain, (McGrawHill 9th ed.) > Chapter 12: Transport, Communications and Trade > INTERNATIONAL TRADE > p. 47
Strength: 5/5
“India's total external trade (exports plus imports including re-exports) in the year 1950–51 was Rs. 1214 crore. Since then, this has witnessed continuous increase with occasional downturns. During 2008–09, the value of India's external trade reached Rs. 1,566,897 crore (Table 12.6). It may also be noted from this Table that the balance of payment of India is adverse throughout the planning period. It may be seen from (Table 12.7) that the major items of export from India are engineering goods (20.7%), followed by gems and jewellery (15.1%), textiles (14.5%), chemicals and related products (11.6%), and agricultural products (10.2%).”
Why relevant

Describes India's total external trade as having 'continuous increase with occasional downturns', indicating that even when overall trade trends upward, some years may show declines.

How to extend

Apply this general rule to bilateral trade: a student should not assume monotonic yearly growth and should check each year's bilateral data for downturns within 2010–2019.

Contemporary World Politics, Textbook in political science for Class XII (NCERT 2025 ed.) > Chapter 2: Contemporary Centres of Power > Ideas for the Teacher > p. 26
Strength: 3/5
“They have also signed agreements on cultural exchanges and cooperation in science and technology, and opened four border posts for trade. With India– China trade growing at 30 per cent per year since 1999, a more positive perspective on relations with China has emerged. Bilateral trade between India and China has increased from $338 million in 1992 to more than $84 billion in 2017. More recently, both India's nuclear tests in 1998, was justified on the grounds of a threat from China, did not stop greater interaction. It is true that China was seen as contributing to the build up of Pakistan's nuclear programme.”
Why relevant

Provides a concrete example (India–China bilateral trade) of large multi-year increases but over long periods, not asserting uninterrupted year-on-year growth, illustrating that growth can be uneven.

How to extend

Use this comparative example to caution that large decadal rises don't guarantee no single-year declines; verify Indo–Sri Lanka annual series for gaps in growth.

Geography of India ,Majid Husain, (McGrawHill 9th ed.) > Chapter 16: India–Political Aspects > INDIA'S ROLE IN WORLD AFFAIRS > p. 60
Strength: 3/5
“China. Sri Lanka, Japan and India jointly signed an agreement on May 28, 2019, to develop the East Container Terminal at the Colombo Port. An agreement has been signed between India and Maldives on May 30, 2019 to develop socio-economic infrastructure in the neighbouring countries in the field of health and sanitation. Konkan Railways with Nepal signed an agreement on May 10, 2019 to supply two 1600 HP DEMU trains sets. The Ministry of External Affairs with the National Bank for Agriculture and Rural Development Consultancy Service (NABCONS) on April 2, 2019 shall establish India-Africa Institute of Agriculture and Rural Development in Malawi.”
Why relevant

Mentions a 2019 trilateral agreement to develop Colombo Port infrastructure, showing that infrastructure and agreements can change trade capacity in specific years (affecting annual flows).

How to extend

A student could consider such 2019 developments as potential reasons for a jump or recovery in trade that year, then inspect annual data around 2018–2019 to see impacts.

Statement analysis

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Statement analysis

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