Industry: UPSC Previous Year Questions (Indian Economy)

Explanation

Option (b) is correct: The Forward Markets Commission (FMC) was the regulatory authority for commodity futures markets in India. It was responsible for overseeing trading in commodity futures, including the regulation of commodity exchanges like NCDEX and MCX. In 2015, the FMC was merged with SEBI to create a unified regulator for both commodities and securities markets. So, if this question were about the present day, SEBI would be the correct answer for regulating commodities futures trading! Options (a), (c) and (d) are incorrect: Currency Futures Trading and Equity Futures Trading are regulated by SEBI. FMC only regulated commodities futures trading. Financial futures (like equity and currency futures) were regulated by SEBI.

Explanation

The Special Economic Zones (SEZ) Act, 2005 was enacted to boost economic growth by creating designated zones with special incentives for businesses.

Statement 1 is correct: One of the key objectives of the SEZ Act is to develop world-class infrastructure facilities within these zones. This includes roads, power, water supply, and other utilities to attract businesses and promote industrial growth.

Statement 2 is correct: The SEZ Act aims to attract foreign direct investment (FDI) by offering tax incentives, simplified regulations, and a business-friendly environment. This helps in bringing in capital and technology from abroad.

Statement 3 is incorrect: The SEZ Act is not limited to promoting exports of services only. It aims to promote both goods and services exports. SEZs are designed to boost over-all export-oriented production, including manufacturing, IT services, and other sectors.

Explanation

MMTC has played a key role in India’s international trade landscape while also contributing to industrial growth through projects like NINL.

Statement 1 is correct: MMTC Limited (Metallic Materials Trading Corporation of India) is one of India’s largest public sector trading companies and the largest in the field of inter-national trade. It handles both exports and imports, primarily dealing with metals, minerals, and other commodities. MMTC is involved in the trading of precious metals, ores, and other products, making it the largest trading organization in India in its sector.

Statement 2 is correct: Neelachal Ispat Nigam Limited (NINL) is a joint venture between MMTC Limited, Government of Odisha, and other stakeholders. It was established to set up a steel plant in the state of Odisha. The venture focuses on the production of steel and other related activities, contributing to industrial growth in the region.

Explanation

Rourkela Steel Plant was established with West German collaboration, not the Soviet Union. It was India’s first public sector integrated steel plant, commissioned in 1959. The Bhilai Steel Plant was set up with Soviet assistance. The plant was a fruit of Indo-German friendship, with machinery and expertise provided by Germany’s Krupp and Demag. Options (b), (c) and (d) are correct:

Salem Steel Plant, located in Tamil Nadu, is a premier producer of stainless steel in India. It’s a unit of SAIL and specializes in producing stainless steel in various forms like coils, sheets, and blades. It caters to both domestic and international markets. Maharashtra Elektrosmelt Ltd. (MEL) is a subsidiary of SAIL located in Chandrapur, Maharashtra. It specializes in producing ferroalloys, which are critical raw materials for steel production. Ferroalloys are used to enhance the strength and durability of steel, Visakhapatnam Steel Plant also known as Vizag Steel is operated by Rashtriya Ispat Nigam Limited (RINL). It was the first shore-based steel plant in India and plays a key role in regional industrial development.

Explanation

Option (a) is correct: The Abid Hussain Committee (1997) recommended the abolition of the reservation of items for the small-scale sector in industry. This recommendation was made to enhance the competitiveness of small-scale industries (SSIs) by opening up reserved items to medium and large-scale industries and promoting efficiency and modernization. Options (b) is incorrect: Narasimham Committee (1991 & 1998) focused on banking sector reforms to enhance financial stability and improve banking efficiency. Some of its recommendations include:

Reducing Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR). Recommended the establishment of Asset Reconstruction Companies (ARCs) to address Non-Performing Assets (NPAs). Proposed the autonomy of public sector banks and the establishment of a stronger regulatory framework under RBI. Options (c) is incorrect: Nayak Committee (1992) focused on improving credit availability for small-scale industries (SSIs). Key Recommendations:

Banks should provide working capital equivalent to 20% of the annual turnover of SSIs. Simplify loan procedures and reduce collateral requirements for SSIs. Establish specialized branches for SSI lending. Recommended the formation of a dedicated financial institution to cater to small-scale industries. Options (d) is incorrect: Rakesh Mohan Committee (2004) analyzed small savings schemes and suggested reforms to align them with market rates. It recommended rationalization of interest rates on schemes like National Savings Certificates (NSCs) and Post Office Deposits. It proposed that small savings schemes should no longer distort the financial market and advocated better financial literacy for savers.

Explanation

Option (a) is incorrect: Reliance Industries Limited (RIL) was India’s largest petrochemical company and not Indian Petrochemicals Corporation Limited (IPCL). RIL had established itself as a dominant player in the petrochemical sector, with significant market shares in various products. Specifically, RIL was the largest manufacturer of monoethylene glycol, puri-fied terephthalic acid, and paraxylene, holding an 80% market share in these products. Additionally, the company had a 50% market share in polymers such as polyvinyl chloride, polypropylene, and polyethylene.

Option (b) is correct: Reliance Industries Limited (RIL) is the largest private sector company in India by market capitalization and revenue. It has diversified interests in petrochemicals, refining, oil, telecommunications, and retail.

Option (c) is correct: MTNL (Mahanagar Telephone Nigam Limited) was listed on the New York Stock Exchange (NYSE).

Option (d) is correct: BSNL (Bharat Sanchar Nigam Limited) was the first telecom service organization in India to launch nationwide mobile services. It was formed by separating the telecom services division from the Department of Telecommunications (DoT). Note: Currently India is second largest producer of steel and coal both.

Explanation

Option (a) is incorrect: India has a significant fertilizer industry, particularly in nitrogenous fertilizers. According to the "Chemical and Petrochemical Statistics at a Glance" report by the Department of Chemicals and Petrochemicals, India ranks 4th globally in the production of inorganic chemicals, which includes nitrogenous fertilizers.

Option (b) is correct: Regarding steel production, India was the ninth-largest producer in 2002, with a production of 31.8 million metric tons as per worldsteel.org.

Option (c) is correct: India is the second-largest producer of silk globally, after China.

Option (d) is correct: In 2003, India was the third-largest producer of coal globally, following China and the United States.

Explanation

Option (d) is correct: In the fiscal year 2000-01, In-dia’s industrial sector experienced varied growth rates across different industries. According to the Economic Survey 2000-01, during the period from April to December 2000, the growth rates for key industries were as follows:

Cement: The cement industry recorded a growth rate of 2.3%, a significant decline from the 16.0% growth observed during the same period in the previous year. Electricity: The electricity sector experienced a growth rate of 4.7%, down from 7.5% in the corresponding period of the previous year. Coal: The coal industry saw an improvement, with a growth rate of 5.2% compared to 3.0% in the same period of the prior year. Steel: The steel industry achieved a growth rate of 9.0%, which was a decrease from the 11.0% growth rate recorded in the same period of the previous year.

Explanation

Option (a) is correct: Alliance Air is a wholly-owned subsidiary of Indian Airlines which was established in 1996. Alliance Air operates regional flights under the UDAN (Ude Desh ka Aam Nagrik) scheme to enhance connectivity to remote areas. Alliance Air was rebranded as Alliance Air (India) Limited in 2022 after the privatization of Air India. Options (b), (c), (d) are incorrect:

As of 2003, the Airports Authority of India (AAI) managed 12 international airports across the country, including major hubs like Chennai, Kolkata, and Trivandrum. The number of international airports under AAI’s management has evolved over time due to the development of new airports and changes in management structures. As of 2024, AAI manages 34 international airports and over 110 domestic airports. The Directorate General of Civil Aviation (DGCA) not AAI is the regulatory body responsible for enforcing civil aviation regulations, air safety, and airworthiness standards in India. The AAI primarily focuses on creating, upgrading, maintaining, and managing civil aviation infrastructure, including airports and air traffic management. DGCA ensures compliance with international aviation standards set by the International Civil Aviation Organization (ICAO). The planning and construction of runways and terminal buildings fall under the purview of the Airports Authority of India. The AAI handles the design, development, operation, and maintenance of airports, ensuring the infrastructure meets international standards.

Explanation

Statement 1 is correct: The Minerals and Metals Trading Corporation of India Limited (MMTC) is one of the largest non-oil importers in India, focusing on minerals, metals, and agricultural commodities.

Statement 2 is incorrect: The Project and Equipment Corporation of India Limited (PEC) operates under the Ministry of Commerce and Industry, not exclusively under the Ministry of Industry. It focuses on project exports, providing project engineering, consultancy, and execution services.

Statement 3 is incorrect: The Export Credit Guarantee Corporation of India Limited (ECGC) does not enforce quality control or pre-shipment inspection. Its primary objective is to provide export credit insurance to Indian exporters. This insurance protects exporters against risks like non-payment by foreign buyers, political risks, and other uncertainties associated with international trade. ECGC facilitates exports by reducing these risks, encouraging exporters to venture into new markets.