International Relations Effect of Policies of Other Countries on India UPSC Practice Questions

Effect of Policies of Other Countries — Practice Questions

UPSC Prelims-pattern practice questions on foreign policies affecting India — GSP, Nitaqat, capital outflows, the Fragile Five and Chabahar — with explanations.

5 Questions Updated Oct 2026 #upsc#practice-questions#international-relations

Questions

These are original UPSC-pattern practice questions. Attempt each one before revealing the answer.

UPSC Practice · Prelims GS I Qefp-1

With reference to the Generalised System of Preferences (GSP), consider the following statements:

  1. It is a scheme under which developed countries give non-reciprocal preferential tariffs to imports from developing countries.
  2. The United States withdrew India’s GSP beneficiary status in 2019.
  3. It is a WTO agreement that obliges all developed members to grant such preferences.

Which of the statements given above is/are correct?

  1. A 1 only
  2. B 2 and 3 only
  3. C 1 and 2 only
  4. D 1, 2 and 3
Solution

Statements 1 and 2 are correct — GSP schemes are voluntary, non-reciprocal preferences; the US ended India’s benefits in June 2019. Statement 3 is wrong — GATT’s Enabling Clause permits such preferences but does not oblige anyone to grant them, which is why the US could withdraw them.

Answer: C

UPSC-pattern practice question
UPSC Practice · Prelims GS I Qefp-2

The term “Nitaqat”, which has implications for Indian workers abroad, refers to:

  1. A Saudi Arabia's policy to increase the employment of its own nationals in the private sector
  2. B The UAE's long-term residence visa scheme
  3. C Qatar's reform of the kafala sponsorship system
  4. D Kuwait's policy on oil production quotas
Solution

Nitaqat is Saudi Arabia’s workforce-localisation (Saudisation) programme, introduced in 2011. It sets quotas for Saudi nationals in private firms and so affects expatriate workers, including Indians. The other options describe different policies.

Answer: A

UPSC-pattern practice question
UPSC Practice · Prelims GS I Qefp-3

Which of the following can lead to portfolio capital outflows from India?

  1. A rise in interest rates by the US Federal Reserve
  2. A strengthening of the US dollar
  3. Global risk aversion during a financial crisis

Select the correct answer using the code given below.

  1. A 1 only
  2. B 1 and 2 only
  3. C 2 and 3 only
  4. D 1, 2 and 3
Solution

All three push investors towards US and safe-haven assets. Higher US rates raise returns there; a stronger dollar makes rupee assets less attractive in dollar terms; risk aversion leads investors to sell emerging-market assets. All three were at work in 2013 and 2022.

Answer: D

UPSC-pattern practice question
UPSC Practice · Prelims GS I Qefp-4

The “Fragile Five” economies identified during the 2013 taper tantrum included India and which of the following?

  1. Brazil
  2. Turkey
  3. China
  4. South Africa

Select the correct answer using the code given below.

  1. A 1 and 2 only
  2. B 1, 2 and 4 only
  3. C 2, 3 and 4 only
  4. D 1, 2, 3 and 4
Solution

The Fragile Five were Brazil, India, Indonesia, South Africa and Turkey — economies with large current-account deficits that relied on foreign capital. China, with large surpluses and reserves, was not in the group.

Answer: B

UPSC-pattern practice question
UPSC Practice · Prelims GS I Qefp-5

With reference to Chabahar port, consider the following statements:

  1. It is located in Iran’s Sistan-Baluchestan province on the Gulf of Oman.
  2. The United States exempted its development from Iran-related sanctions in November 2018.

Which of the statements given above is/are correct?

  1. A 1 only
  2. B 2 only
  3. C Both 1 and 2
  4. D Neither 1 nor 2
Solution

Both are correct. Chabahar lies on the Gulf of Oman, outside the Strait of Hormuz. After re-imposing sanctions on Iran, the US exempted Chabahar’s development in November 2018, recognising its role in supplying Afghanistan.

Answer: C

UPSC-pattern practice question
UPSC Practice · Mains GS II 10 marks · 150 words Qefp-m1

Unilateral sanctions imposed by major powers often hurt third countries more than their targets. Examine with reference to India’s energy security and connectivity interests.

Solution

Introduction: Unilateral sanctions — imposed by one country or bloc without UN Security Council approval — work by threatening anyone who trades with the target. India, which recognises only UNSC sanctions as binding, has repeatedly borne their costs.

Body:

  • Iran: after the US left the JCPOA (2018), India stopped importing Iranian crude (2019), losing a nearby, flexible supplier; Chabahar and the INSTC slowed despite the November 2018 exemption.
  • Russia: sanctions and the G7 price cap (2022) complicated payments, shipping and insurance; India’s purchases of discounted crude drew Western criticism and later US tariff pressure.
  • Defence: CAATSA (2017) threatened sanctions over the S-400.
  • India’s responses: exemptions through diplomacy; rupee-based settlement; diversified crude sources; strategic reserves; insistence on strategic autonomy.

Conclusion: Sanctions expose the vulnerability of energy and connectivity plans built on single partners. Diversification, payment resilience and steady diplomacy are India’s best insurance.

UPSC-pattern practice question