UPSC Mains 2025 · GS III · Q2 · 10 marks · 150 words

What are the challenges before the Indian economy when the world is moving away from free trade and multilateralism to protectionism and bilateralism ? How can these challenges be met ?

हिन्दी में

भारतीय अर्थव्यवस्था के समक्ष वे कौन-सी चुनौतियाँ हैं जब विश्व स्वतंत्र व्यापार तथा बहुपक्षीयता से दूर होकर संरक्षणवाद तथा द्विपक्षीयता की ओर बढ़ रहा है । इन चुनौतियों का सामना किस तरह किया जा सकता है ?

Trade and Foreign Investment

How a topper answered the closest question

Toppers wrote this one in a test series: “How do the rising trends of economic nationalism and protectionism affect India's global trade competitiveness? What recent measures has India taken to navigate these challenges?”

Pakshal SecretryAIR 8 · CSE 2025 · 159 wordsTheir whole copy

Opening · a recent event

Recently, Trump Administration (US) has imposed 25% tariff on all Indian imports, also there is rise of de-globalisation across world.

Body · points and prose

Impact on Competitiveness

  1. Higher Tariff on Indian goods → Less competitiveness.

  2. Trade Diversion from India to competitor (e.g., Vietnam, Bangladesh).

Diagram
[Graph of S and D curves with labels: Tariff, No Tariff, D, S, and shading labeled as Trade Diversion]

  1. Risk of Imported Inflation → would make our imported goods costly.

  2. Non-integration of India into global value chains.

  3. Will result in shifting of MNCs from India → onshoring in USA.

Opportunities

  1. China+1 opportunity
  2. Trade Deal → To Benefit from Trade creation
  3. Depreciation of Rupee → Competitive exports

Measures Taken

  1. FTA with UK & EFTA → 0 duty access.

  2. PLI scheme to reap "China+1" opportunity.

  3. RODTEP Scheme → Make exports competitive.

  4. Negotiation for BTAs with USA & FTA with EU.

  5. Structural Reforms & Labour laws.

Close · a way forward

India needs to Capitalise on "make in India for the world" to increase our share in export to 6%.

3 more toppers’ answers to this question, part by part, and how they all approached it: open the question.

Toppers’ answers to other close questions

Source: UPSC, Civil Services (Main) Examination 2025, General Studies Paper III, Q2. The paper on upsc.gov.in. Themes and links to toppers’ answers are by UPSC Grade, not by UPSC.