Previous Year Question
Consider the following statements:
The value of Indo-Sri Lanka trade has consistently increased in the last decade.
“Textile and textile articles” constitute an important item of trade between India and Bangladesh.
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?
1 and 2 only
2 only
3 only
1, 2 and 3
Correct Answer: B
Detailed Solution
Statement 1 is incorrect. Although India-Sri Lanka bilateral trade increased over the longer term, its value did not increase consistently every year.
For example:
India-Sri Lanka merchandise trade stood at approximately USD 6.05 billion in 2015-16.
It declined to approximately USD 4.5 billion in 2016-17.
This represented a decline of about 25% within one year.
The value of bilateral trade also fluctuated across different years due to global demand, petroleum prices, exchange-rate movements and Sri Lanka’s domestic economic conditions. Therefore, the expression “consistently increased” is incorrect.
Statement 2 is correct. Textiles and textile articles have constituted an important commodity group in bilateral trade between India and Bangladesh.
India’s major exports to Bangladesh have included cotton, cotton yarn, fabrics and textile machinery. India’s imports from Bangladesh have included ready-made garments, textile articles and jute products.
A structural reason for this trade is that Bangladesh’s ready-made garment industry uses Indian inputs such as cotton, yarn, fabric, chemicals and machinery. The textile value chains of the two countries are therefore closely connected.
Statement 3 is incorrect. Nepal was not India’s largest trading partner in South Asia during the reference period. Bangladesh was India’s largest trading partner in South Asia.
It is important to distinguish between two facts:
India has been Nepal’s largest trading partner.
Nepal was not India’s largest trading partner in South Asia.
India’s dominant position in Nepal’s trade cannot be reversed to conclude that Nepal was India’s largest South Asian trading partner.