This MCQ module is based on: WTO, BRICS, FTAs & Exercises
TOPIC 24 OF 27
WTO, BRICS, FTAs & Exercises
🎓 Class 12
Social Science
CBSE
Theory
Chapter 8 — International Trade (India)
⏱ ~28 min
🌐 Language: [gtranslate]
🧠 AI-Powered MCQ Assessment
▲
📝 Worksheet / Assessment
▲
This assessment will be based on: WTO, BRICS, FTAs & Exercises
Upload images, PDFs, or Word documents to include their content in assessment generation.
International Trade — India in WTO, BRICS, ASEAN, SAFTA + Exercises
NCERT India: People and Economy — Unit IV, Chapter 8 (Part 3 — Trade Bodies + Exercises)
8.6 India in Major Trade Bodies and Agreements
A nation's foreign trade is shaped not only by individual buyer-seller deals but also by multilateral rules — the global ‘rule book’ written by trade bodies and agreements. India is a member of every major trade institution that matters and an active negotiator at most. This section walks through the bodies and agreements that frame India's external trade today.
India in the World Trade Organisation (WTO)
The World Trade Organisation (WTO)? is the only global international body dealing with the rules of trade between nations. It came into force on 1 January 1995, replacing the earlier General Agreement on Tariffs and Trade (GATT, 1948). India is a founding member of GATT (1948) and therefore a founding member of the WTO. Headquartered in Geneva, the WTO administers trade agreements, hosts negotiations, settles disputes between member countries and reviews national trade policies.
India's stand at the WTO — The Doha Round
The Doha Round of negotiations launched in 2001 has been the WTO's longest-running negotiation. India has consistently argued for: (i) phasing out of agricultural subsidies in developed countries that hurt poor-country farmers; (ii) protecting food security rights of developing nations to stockpile and supply grain through public-distribution systems; (iii) flexibility on TRIPS (Trade-Related Aspects of Intellectual Property Rights) so that affordable generic medicines can be produced; and (iv) special and differential treatment for developing countries.
Bali Trade Facilitation Agreement (TFA), 2013
At the WTO ministerial meeting in Bali (December 2013), members signed the first multilateral trade deal in two decades — the Trade Facilitation Agreement (TFA). The TFA aims to simplify customs procedures, speed up cross-border movement of goods and reduce trade-related red tape. India agreed only after winning a ‘peace clause’ that protects its food-security stockpiling from being challenged at the WTO — a major diplomatic victory.
India in BRICS (2009)
The acronym BRICS? stands for Brazil, Russia, India, China and South Africa. The first four met as ‘BRIC’ in 2009; South Africa joined in 2010. The grouping focuses on:
- Financial cooperation — reducing dependence on the US dollar; coordinating central-bank policies.
- Trade in local currencies — experiments with rupee-rouble or rupee-yuan settlement.
- The New Development Bank (NDB) — established in 2014 at the Fortaleza Summit, headquartered in Shanghai, with India's K.V. Kamath as its first President. NDB lends to BRICS countries for infrastructure and sustainable-development projects.
- BRICS Pay — a proposed payments network to bypass Western settlement systems.
India and ASEAN-FTA (2010)
The Association of Southeast Asian Nations (ASEAN) — ten countries including Thailand, Indonesia, Singapore, Malaysia, Vietnam — signed an India-ASEAN Free Trade Agreement (AIFTA) in 2010 covering goods. The agreement progressively eliminates tariffs on the bulk of products traded between India and ASEAN. The deal anchors India's Look East (1992) and Act East (2014) policy of deeper engagement with South-East Asia. India and ASEAN have also signed agreements on services and investment.
India in SAARC and SAFTA
The South Asian Association for Regional Cooperation (SAARC)?, founded in 1985, brings together Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. Under SAARC, the member states signed the South Asian Free Trade Area (SAFTA) agreement in 2004, which entered into force on 1 January 2006. SAFTA aims to lower tariffs progressively and create a free-trade region across South Asia.
However, intra-SAARC trade has remained limited — only about 5% of total trade by member countries flows within the region. The biggest reason is the political tension between India and Pakistan, which has frozen high-level cooperation since 2014. SAARC summits have not been held since 2014.
Look East & Act East — The Pivot to Asia
India's Look East policy (1992) was upgraded to the Act East policy in 2014. The shift is more than semantic — Look implied passive observation; Act implies proactive engagement. Under Act East, India has stepped up bilateral relationships with Japan, Korea, Vietnam, Australia and the ASEAN-10. This has yielded the India-Japan partnership, the India-Korea CEPA (2009) and the India-Australia ECTA (2022).
RCEP — The Agreement India Did NOT Join
The Regional Comprehensive Economic Partnership (RCEP)?, signed in 2020 by 15 Asia-Pacific countries (including ASEAN, China, Japan, Korea, Australia and New Zealand), is the world's largest trading bloc. India walked out of RCEP in November 2019. The principal reasons were:
- Fear that Chinese imports would flood the Indian market under near-zero tariffs.
- The agreement's failure to address India's services-export interests adequately.
- Inadequate safeguards for Indian dairy, agricultural and small manufacturing sectors.
G20 New Delhi Declaration, 2023 — India's Indo-Pacific Pivot
India hosted the G20 Summit in New Delhi in September 2023, the first time the country chaired the world's most influential economic grouping. The summit produced the New Delhi Leaders' Declaration, which gave a strong push to digital public infrastructure (DPI), green-energy transition, debt restructuring for poor nations and inclusion of the African Union as a permanent G20 member. The declaration also endorsed the India-Middle East-Europe Economic Corridor (IMEEC) — a multimodal connectivity project that will link India to Europe via the UAE, Saudi Arabia, Jordan and Israel.
Fig 8.4 — India's Major Trade Bodies & Memberships (Schematic)
India's Recent Free Trade Agreements (FTAs)
| FTA / Agreement | Year | Coverage |
|---|---|---|
| South Asian Free Trade Area (SAFTA) | 2006 | Goods — tariff phase-out among SAARC nations |
| India-Korea CEPA | 2009 | Goods + services + investment |
| India-ASEAN FTA (Goods) | 2010 | 10 ASEAN nations |
| India-Japan CEPA | 2011 | Goods + services + investment |
| India-Mauritius CECPA | 2021 | Africa's first FTA with India |
| India-UAE CEPA | 2022 | Comprehensive Economic Partnership |
| India-Australia ECTA | 2022 | Interim trade agreement |
Fig 8.5 — India's Free Trade Agreement Timeline (1995–2024)
Key Concerns of India's Foreign Trade
Persistent Trade Deficit
Imports continue to exceed exports — the gap widened to ₹14.26 lakh crore in 2021-22. POL imports alone account for nearly a third.
Imported Inflation
When global crude or edible-oil prices spike, India's CPI inflation rises immediately because of import dependence.
Supply Chain Vulnerabilities
Concentrated dependence on China for electronics, APIs and rare earths; vulnerability surfaced during COVID-19.
Trade Diplomacy
Rising protectionism worldwide, US-China trade war and Russia-Ukraine sanctions all affect India's exports.
Discuss — Was India Right to Walk Out of RCEP?
In November 2019 India walked out of the RCEP — the world's largest trade bloc. Some economists believe India should re-join; others argue exit was the right call. Discuss in groups of four.
Discussion frame:
For walking out: RCEP would have given Chinese exports near-zero-tariff access — a flood-risk for Indian small manufacturers. RCEP did not adequately open services markets, where India has comparative advantage. Indian dairy farmers feared cheap New Zealand milk powder.
For re-joining: RCEP covers 30% of world GDP. By staying out, India risks being excluded from regional value chains. ASEAN+5 partners get tariff preferences that Indian exporters do not. Indian firms can adapt with sensitive-list protection and rules-of-origin safeguards.
Balanced view: Pursue strong bilateral CEPAs (UAE, Australia, EU, UK) first, build domestic competitiveness via PLI, and revisit RCEP entry only when terms can address China-specific concerns.
Chart 8.7 — India's FTA Coverage as % of Total Foreign Trade (Indicative)
FTAs cover roughly 25% of India's total foreign trade in 2024 — a significant rise from less than 5% before 2010. Indicative figures based on Ministry of Commerce data.
NCERT End-of-Chapter Exercises — Complete Solutions
1. Choose the Right Answer (MCQs)
iTrade between two countries is termed as —
- (a) Internal trade
- (b) External trade
- (c) International trade ✓
- (d) Local trade
Answer: (c) International trade. Trade across national boundaries is called international (or foreign) trade. Internal/local trade is within a country; external trade is a synonym sometimes used informally for international trade, but the textbook answer is ‘international trade’.
iiWhich one of the following is a land-locked harbour?
- (a) Vishakhapatnam ✓
- (b) Mumbai
- (c) Kamarajar (Ennore)
- (d) Haldia
Answer: (a) Vishakhapatnam. Vizag is a land-locked harbour in Andhra Pradesh, connected to the sea by a channel cut through solid rock and sand. An outer harbour was later developed for handling iron-ore, petroleum and general cargo.
iiiMost of India's foreign trade is carried through —
- (a) Land and sea
- (b) Land and air
- (c) Sea and air ✓
- (d) Sea
Answer: (c) Sea and air. NCERT clearly states that most of India's foreign trade moves through sea and air routes. Only a small portion is carried through land routes to neighbouring Nepal, Bhutan, Bangladesh and Pakistan.
2. Answer the Following in About 30 Words
iMention the characteristics of India's foreign trade.
Answer: India's foreign trade has grown nearly 6,358-fold from 1950-51 to 2020-21 (₹1,214 cr to ₹77.2 lakh cr). Exports are dominated by manufactured goods (~67.8%); imports by petroleum (~31.6%). Trade is unfavourable — imports exceed exports. India contributes about 1% of world trade, with USA, UAE and China as top partners.
iiDistinguish between port and harbour.
Answer: A harbour is a sheltered body of water, natural or artificial, where ships can take refuge from storms and rough seas. A port is a commercial facility built within (or alongside) a harbour with docks, cranes, warehouses, customs offices and rail/road links for loading, unloading and processing cargo and passengers. Every port needs a harbour, but not every harbour develops into a port.
iiiExplain the meaning of hinterland.
Answer: The hinterland is the inland area whose trade is served by a particular port. It supplies the goods that are exported through the port and consumes the goods that are imported through it. A hinterland is not fixed — it expands or shrinks with road, rail and pipeline links, and may overlap with that of a neighbouring port.
ivName important items which India imports from different countries.
Answer: India's principal imports are petroleum, oil & lubricants (POL) from the Gulf, Saudi Arabia, UAE, Iraq; gold and silver from Switzerland, UAE; electronics and machinery from China, Japan, Korea; chemicals and fertilisers from China and West Asia; edible oils from Indonesia, Malaysia, Argentina; iron and steel from China and Korea; pearls and precious stones from various sources for the gem-cutting industry.
vName the ports of India located on the east coast.
Answer: The major ports on the East Coast (Bay of Bengal) are: (1) Shyama Prasad Mookerjee (Kolkata) on the Hugli; (2) Haldia, 105 km downstream from Kolkata; (3) Paradip in the Mahanadi delta of Odisha; (4) Visakhapatnam — land-locked harbour in Andhra Pradesh; (5) Kamarajar (Ennore) — satellite of Chennai; (6) Chennai — oldest, artificial harbour built 1859; (7) V.O. Chidambaranar (Tuticorin) in Tamil Nadu.
3. Answer the Following in About 150 Words
iDescribe the composition of export and import trade of India.
Model Answer:
Composition of Exports (2021-22): The export basket is overwhelmingly dominated by manufactured goods (~67.8%) — engineering goods (the single largest sub-group with significant growth), gems and jewellery, drugs and pharmaceuticals, textiles and garments, and chemicals. Crude petroleum and petroleum products (16.4%) form the second-largest block, followed by agriculture and allied products (11.9%) — including marine products, sugar, fresh fruits and floricultural products. Ore and minerals contribute about 2%.
Composition of Imports (2021-22): The import basket is dominated by petroleum, oil and lubricants (~31.6%), used both as fuel and as industrial raw material. Other major items include pearls, precious and semi-precious stones (~7%), gold and silver, electronics and machinery, capital goods (~10.1%), chemicals, iron and steel, fertilisers and edible oils. Food and allied products imports have steadily declined since the Green Revolution. Imports of capital goods have also been declining as domestic production rises. Pharmaceuticals and IT services are large invisibles in India's services trade.
iiWrite a note on the changing nature of the international trade of India.
Model Answer:
India's foreign trade has changed dramatically since Independence along three dimensions:
1. Volume: Total trade rose from a modest ₹1,214 crore in 1950-51 to ₹77,19,796 crore in 2020-21 — about 6,358-fold growth. Three drivers explain this surge: the momentum picked up by manufacturing sectors, the liberal post-1991 policies of the government (de-licensing, tariff cuts, currency reform) and the diversification of markets.
2. Composition: The export basket has shifted from primary commodities (raw cotton, jute, tea) towards manufactured goods (engineering, pharmaceuticals, gems and jewellery) and refined petroleum products. The import basket has shifted from foodgrain (1950s-60s) and capital goods to petroleum, gold, electronics and chemicals. Services exports, especially IT/ITES (~US$ 200 billion), are an entirely new pillar.
3. Direction: Earlier dominated by Britain and the USSR, today's trade map is led by the USA (~18% of exports) and China (~16% of imports), followed by UAE, ASEAN and the EU. Asia and ASEAN now account for the largest regional share of imports. India is also adopting suitable measures — import liberalisation, reduction in import duties, delicensing and the 1995 shift from process to product patents — to deepen its integration with the global economy. The persistent unfavourable balance of trade is the single biggest concern.
Key Terms & Glossary
| Term | Meaning |
|---|---|
| Foreign Trade | Exchange of goods and services between countries. |
| Balance of Trade (BoT) | Difference between value of exports and imports of goods. Negative when imports exceed exports. |
| Visible Trade | Trade in tangible goods that can be loaded on a ship. |
| Invisible Trade | Trade in services (IT, tourism, finance, shipping, royalties, remittances). |
| Hinterland | Inland area whose trade is served by a port. |
| Gateway | A port or airport that connects a hinterland to international trade. |
| Major Ports (12) | Ports administered by the Central Government. |
| Minor Ports (200+) | Ports administered by State Governments. |
| Kandla / Deendayal | First post-Independence multi-purpose port at the head of Gulf of Kuchchh. |
| JNPT (Nhava Sheva) | Largest container port in India; satellite to Mumbai. |
| Mormugao | Iron-ore export port at the entrance of Zuari estuary, Goa. |
| New Mangalore | Karnataka iron-ore port. |
| Cochin | ‘Queen of the Arabian Sea’; near Suez-Colombo route. |
| Chennai Port | Oldest east-coast port; artificial harbour built in 1859. |
| Visakhapatnam | Land-locked deep-water harbour; ship-building centre. |
| Paradip | Deepest harbour in India for iron-ore export from Odisha. |
| Haldia | Bulk-cargo port 105 km downstream from Kolkata. |
| Kolkata Port | Riverine port on Hugli; affected by silting; serves Nepal & Bhutan. |
| IGI Delhi | India's busiest international airport. |
| UDAN | Regional connectivity scheme launched October 2017 for affordable air travel. |
| WTO | World Trade Organisation, founded 1995, replaces GATT. |
| Doha Round | WTO trade negotiation round launched 2001 (still not fully concluded). |
| BRICS | Brazil, Russia, India, China, South Africa — economic grouping. |
| NDB | New Development Bank set up by BRICS in 2014, headquartered Shanghai. |
| ASEAN-FTA | India-ASEAN Free Trade Agreement (Goods) 2010. |
| SAARC | South Asian Association for Regional Cooperation, 1985. |
| SAFTA | South Asian Free Trade Area, signed 2004, in force 2006. |
| RCEP | Regional Comprehensive Economic Partnership; India did not join (2019). |
| Look East / Act East | India's policy of engagement with East & South-East Asia. |
| Dry Port (ICD) | Inland Container Depot offering port-like customs services in the interior. |
Summary — The Story of India's International Trade
Chapter Recap in 10 Sentences
- India contributes about 1% of total world trade volume but plays a significant role in the world economy.
- India's external trade rose from ₹1,214 crore (1950-51) to ₹77.2 lakh crore (2020-21) — a 6,358-fold rise.
- Three drivers: manufacturing momentum, liberal policies, market diversification.
- Manufactured goods (~67.8%) dominate exports; petroleum (~31.6%) dominates imports.
- The trade balance is persistently unfavourable — imports exceed exports.
- Top export markets are USA, UAE, China, Hong Kong, Singapore; top import sources are China, USA, UAE, Saudi Arabia, Switzerland.
- India has 12 major ports + 200 minor ports; the West coast hosts more ports than the East.
- Major airports: Delhi, Mumbai, Bengaluru, Chennai, Hyderabad, Kolkata, Cochin; the UDAN scheme (2017) has added 73 regional airports.
- India is a founding member of WTO (1995), founder of BRICS (2009), party to ASEAN-FTA (2010) and SAFTA (2006); chose not to join RCEP (2019).
- Recent FTAs with UAE (2022) and Australia (2022); India hosted the G20 in New Delhi (2023).
Think About It — Doubling Trade Share in Five Years
NCERT notes that India aims to double its share in international trade within the next five years. List three policy levers that could help meet this goal, and three risks that could derail it.
Three levers: (i) Production Linked Incentive (PLI) schemes that subsidise manufacturing in 14 sectors. (ii) FTAs with major markets (UK, EU, GCC negotiations). (iii) Services exports — doubling IT, education, healthcare and tourism services.
Three risks: (i) Global recession in major importers (US, EU). (ii) Geopolitical disruption — wars, sanctions, supply-chain shocks. (iii) Domestic infrastructure bottlenecks — congested ports, slow customs, expensive logistics. India's overall logistics cost is about 13% of GDP, much higher than the global benchmark of 8%.
Competency-Based Questions — Trade Bodies, Agreements & Synthesis
Case Study: Aarav is interning at a think-tank in New Delhi during India's G20 presidency in 2023. His brief is to evaluate which trade agreements have been most beneficial to India and to recommend the country's next move — should India re-engage with RCEP, or focus on bilateral CEPAs? India is a founding WTO member (1995), founder of BRICS (2009), party to ASEAN-FTA (2010) and SAFTA (2006), but exited RCEP in 2019. Use the case to answer the questions below.
1. The New Development Bank (NDB), established by BRICS, is headquartered in —
L1 Remember
Answer: (c) Shanghai. The NDB was set up at the Fortaleza BRICS Summit in 2014 with its headquarters in Shanghai, China. India's K.V. Kamath served as its first President.
2. Why did India walk out of RCEP in 2019? Identify three structural reasons.
L4 Analyse
Answer: (i) Chinese-imports flood risk — near-zero tariffs would have allowed cheap Chinese goods to enter the Indian market. (ii) Insufficient services-trade gains — RCEP gave little market access for India's IT and professional services exports. (iii) Inadequate safeguards — for sensitive sectors like dairy (NZ milk), agriculture and small manufacturing. The decision protected domestic industry in the short run but cost India access to a 30%-of-world-GDP bloc.
3. Compare WTO, BRICS and ASEAN-FTA in terms of (i) membership scale, (ii) primary focus and (iii) decision-making style.
L5 Evaluate
Answer: Membership: WTO has 164 members worldwide (a global body); BRICS has 5 members (now expanding to BRICS+); ASEAN-FTA covers India + 10 ASEAN countries (regional). Focus: WTO sets global rules on tariffs, subsidies and IPR; BRICS focuses on financial/development cooperation (NDB, local-currency trade); ASEAN-FTA focuses on regional tariff elimination. Decision-making: WTO works by consensus — very slow (Doha Round still incomplete after 20 years); BRICS works through summit-level political consensus — flexible but limited; ASEAN-FTA uses agreed schedules — binding but with sensitive lists. Together, the three give India multiple, complementary platforms.
4. Aarav must recommend India's next big trade move — (a) re-engage RCEP, (b) join CPTPP, (c) sign FTA with EU, (d) deepen IMEEC. Choose one and justify with three arguments.
L6 Create
Model recommendation: Sign FTA with the European Union. Argument 1 — Market size: The EU is the world's largest single market, an important destination for Indian textiles, pharma and engineering goods. Argument 2 — Standards: An EU FTA forces Indian manufacturers to upgrade to high quality standards, raising long-term competitiveness. Argument 3 — Geopolitics: Closer EU ties balance the Asia-tilted trade map and provide a strategic counterweight to China. Counter-points: EU negotiations are slow and demand strict labour/environmental clauses. Conclusion: EU FTA > RCEP, CPTPP or IMEEC for India's medium-term diversification strategy.
HOT — A young economist argues that India should set up its own ‘Indian-led’ trade bloc with Africa and the Indian Ocean Rim, similar to ASEAN. Argue for or against.
L5 Evaluate
Answer: For: India already has the IORA (Indian Ocean Rim Association, 1997) framework. A deeper bloc with Africa and IORA members would diversify trade (currently only ~10% with Africa), exploit India's diaspora links, give Indian firms first-mover access to a young African market, and secure energy/critical-mineral supply chains. Against: Bloc-building is expensive and slow — ASEAN took decades to mature. Many African economies have small absorptive capacity; Indian firms lack the financial muscle of Chinese firms backed by state capital (e.g., Belt & Road). India's banking sector is not yet ready to fund a large infrastructure push abroad. Balanced view: Strengthen existing institutions (IORA, India-Africa Forum), focus first on bilateral CEPAs (Mauritius 2021, Egypt, Kenya), and only then consider a formal bloc.
Assertion & Reason — Trade Bodies & Synthesis
Assertion (A): India has been a member of GATT since 1948 and is therefore a founding member of the WTO.
Reason (R): The WTO replaced GATT on 1 January 1995, and all GATT members automatically became WTO founding members.
Reason (R): The WTO replaced GATT on 1 January 1995, and all GATT members automatically became WTO founding members.
Correct: (A) — Both statements are true, and R correctly explains A. India joined GATT in 1948; when WTO replaced GATT on 1 January 1995, India became a founding member of the new organisation.
Assertion (A): The New Development Bank (NDB) was established to fund infrastructure and sustainable-development projects in BRICS and emerging economies.
Reason (R): RCEP was signed in 2020 by 15 Asia-Pacific countries.
Reason (R): RCEP was signed in 2020 by 15 Asia-Pacific countries.
Correct: (B) — Both statements are individually true, but they are unrelated. NDB was set up by BRICS in 2014 in Shanghai; RCEP is a separate Asia-Pacific FTA. R does not explain A.
Assertion (A): Intra-SAARC trade remains very limited despite the SAFTA agreement.
Reason (R): Political tensions between India and Pakistan have frozen high-level cooperation, and SAARC summits have not been held since 2014.
Reason (R): Political tensions between India and Pakistan have frozen high-level cooperation, and SAARC summits have not been held since 2014.
Correct: (A) — Both statements are true, and the political stalemate is precisely the cause of limited intra-SAARC trade. India's deeper engagement has shifted east through ASEAN, BIMSTEC and Act East, leaving SAARC effectively dormant.
AI Tutor
Class 12 Geography — India: People and Economy
Ready