Practice Questions on Industrial sector (Economy) for UPSC, APPSC, TGPSC and other state PSC exams

Several sectors are 100% open for FDI under automatic route including manufacturing (most categories) IT/BPO renewable energy e-commerce (marketplace model) and single brand retail. Defence allows 74% under automatic route and 100% under government route. Insurance allows up to 74% FDI.

As per revised MSME classification from April 2025 Micro enterprise has investment up to Rs 2.5 crore and turnover up to Rs 10 crore. Earlier limits were Rs 1 crore investment and Rs 5 crore turnover. Budget 2025-26 increased limits by 2.5 times for investment and 2 times for turnover.

For Miniratna Category-I status a CPSE must have made profit in last three years continuously with pre-tax profit of Rs 30 crore or more in at least one of three years and positive net worth. Category-I Miniratnas can incur capital expenditure up to Rs 500 crore without government approval.

Make in India was launched on 25th September 2014 by Prime Minister Narendra Modi. It aims to transform India into a global manufacturing hub by facilitating investment fostering innovation and building world-class infrastructure. It now covers 27 sectors in manufacturing infrastructure and services.

In the Indian economy, disinvestment is the process by which the government sells or liquidates its shareholding in Public Sector Enterprises (PSEs). This is done to reduce the government’s financial burden, raise funds for development, and improve the efficiency of these enterprises by involving private players.

The disinvestment and asset monetisation target for FY 2026-27 (FY27) was set at ₹80,000 crore in the Union Budget presented on February 1, 2026.

India’s pharmaceutical industry ranks 3rd globally in terms of volume and 14th by value. India is known as Pharmacy of the World supplying about 20% of global generic medicines. India supplies 60% of global vaccines. The sector contributes about 1.72% to GDP and employs about 29 lakh people.

Coal India Limited (CIL) a Maharatna company contributes about 80% to India’s total coal production. It is the world’s largest coal producing company. CIL has 8 subsidiary companies and operates in 8 states. India is the 2nd largest producer of coal globally after China.

India’s highest annual FDI inflow of USD 84.84 billion was recorded in fiscal year 2021-22. FDI inflows stood at USD 45.15 billion in 2014-15 and nearly doubled over the decade. Key FDI receiving sectors include services computer software telecom and manufacturing.

Udyam Registration Portal was launched on 1st July 2020 replacing the earlier Udyog Aadhaar system. It is a free paperless and self-declaration based online registration system. Registration is based on Aadhaar and PAN. Over 7.3 crore enterprises have registered as of December 2025.

PLI scheme was first launched in April 2020 for Large Scale Electronics Manufacturing including mobile phones. Subsequently it was extended to 13 more sectors by November 2020. As of 2024 investments of Rs 1.46 lakh crore have been realized creating employment for 9.5 lakh people.

PM Gati Shakti National Master Plan was launched on 13th October 2021 by Prime Minister Narendra Modi. It is a GIS-based platform integrating data layers of infrastructure from various ministries for integrated planning of multimodal logistics. It aims to reduce logistics costs and improve connectivity.

The New Industrial Policy 1991 was announced on 24th July 1991 by Dr. Manmohan Singh as Finance Minister under PM P.V. Narasimha Rao. It introduced LPG reforms – Liberalization Privatization and Globalization. It abolished industrial licensing for most industries and opened economy to FDI.

TReDS was set up to facilitate financing of trade receivables of MSMEs from corporates and PSUs through multiple financiers electronically. It helps solve the problem of delayed payments to MSMEs. All CPSEs with turnover above Rs 500 crore must mandatorily register on TReDS platforms.

FDI in defence sector is allowed up to 74% under automatic route and up to 100% under government route where it is likely to result in access to modern technology. This was liberalized from earlier 49% limit to attract foreign investment and technology in strategic defence manufacturing.

Over 1.49 lakh (149000) startups have been recognized under Startup India as of 2024. About 48% have at least one woman director and about 50% are based in tier 2 and tier 3 cities. These startups have created over 16 lakh direct jobs and are present in over 95% of districts.

Insolvency and Bankruptcy Board of India (IBBI) is the regulator under IBC. It regulates insolvency professionals insolvency professional agencies and information utilities. NCLT (National Company Law Tribunal) is the adjudicating authority for corporate insolvency. IBC has helped improve credit discipline and recovery.

MSME Samadhaan Portal was launched on 30th October 2017 for monitoring delayed payments to MSMEs from buyers. It helps MSMEs file applications for delayed payment. As per MSMED Act 2006 buyers must make payment within 45 days. The portal helps redress grievances related to delayed payments.

The Industrial Policy Resolution of 1956 is known as the Economic Constitution of India. It was based on the socialist pattern of society adopted at Avadi Session of Congress in 1955. It classified industries into three schedules and gave prominence to public sector in heavy industries.

Phased Manufacturing Programme (PMP) aims to progressively increase domestic value addition by mandating localization of components over phases. It has been implemented for mobile phones electronic components and other sectors. PMP helps develop domestic component ecosystem and reduce import dependence.

11 industrial corridors are being developed under National Industrial Corridor Development Programme. These include Delhi-Mumbai Industrial Corridor (DMIC) Chennai-Bengaluru Industrial Corridor (CBIC) Amritsar-Kolkata Industrial Corridor and others. 12 new projects worth Rs 28602 crore have been approved.

National Infrastructure Pipeline (NIP) was launched in 2019 with projected investment of Rs 111 lakh crore during 2020-2025 across sectors like energy roads urban infrastructure railways etc. Share is 39% Centre 39% States and 22% Private sector. It was updated to Rs 143 lakh crore later.

The Navratna scheme was introduced in 1997 to identify CPSEs with comparative advantages and support them to become global giants. Initially 9 CPSEs were given Navratna status. The term Navratna means nine gems. As of 2025 there are 26 Navratna companies in India.

NIIF was established in 2015 as India’s first sovereign wealth fund focused on infrastructure. It is sponsored by Government of India which holds 49% stake. NIIF has three funds: Master Fund Fund of Funds and Strategic Opportunities Fund. It has attracted investment from Abu Dhabi Investment Authority Singapore etc.

MSME stands for Micro Small and Medium Enterprises. The MSME sector is governed by MSME Development Act 2006. Ministry of MSME formulates policies for this sector. MSMEs contribute about 30% to GDP 45% to exports and employ about 11 crore people in formal sector.

National Logistics Policy (NLP) was launched on 17th September 2022. It aims to reduce logistics cost from about 14% of GDP to global benchmark of 8% improve India’s Logistics Performance Index ranking to top 25 by 2030 and create data-driven decision support for efficient logistics ecosystem.

Odisha is the largest producer of steel in India followed by Jharkhand and Chhattisgarh. These states have rich iron ore and coal reserves. Major steel plants include Rourkela Steel Plant (SAIL) in Odisha Tata Steel in Jharkhand and Bhilai Steel Plant in Chhattisgarh.

Navratna status allows CPSEs to invest up to Rs 1000 crore or 15% of their net worth whichever is lower on a single project without government approval. In a year they can spend up to 30% of net worth not exceeding Rs 1000 crore. They can also form JVs alliances and subsidiaries abroad.

Corporate tax rate for new domestic manufacturing companies incorporated after 1st October 2019 and commencing production by 31st March 2024 is 15% (effective rate about 17% with surcharge and cess). This is among lowest in the world aimed at attracting manufacturing investment to India.

The Maharatna category was introduced in 2010 by the Government of India to give greater autonomy to the largest and best-performing CPSEs. Maharatna companies can invest up to Rs 5000 crore or 15% of net worth in a single project. The first Maharatna companies included ONGC IOC NTPC and SAIL.

Udyam Assist Platform was launched on 11th January 2023 to bring Informal Micro Enterprises (IMEs) into formal fold and help them avail Priority Sector Lending (PSL) benefits. It helps unregistered micro enterprises get formal recognition and access government schemes and bank credit.

IPR 1956 classified industries into three categories or schedules. Schedule A had 17 industries exclusively for public sector. Schedule B had 12 industries for progressive state ownership. Schedule C included remaining industries left for private sector with state regulation.

Over 7.3 crore MSMEs have been registered on Udyam Registration Portal and Udyam Assist Platform from July 2020 to December 2025. This includes 4.37 crore on Udyam Portal and 2.92 crore on Udyam Assist Platform. These have generated employment for about 28.73 crore people.

Startup India initiative was launched on 16th January 2016 by Prime Minister Narendra Modi. It aims to build a robust startup ecosystem and transform India from job seekers to job creators. Over 1.49 lakh startups have been recognized with about 48% having at least one woman director.

BHEL (Bharat Heavy Electricals Limited) is a Navratna company not a Maharatna. The 14 Maharatna companies include ONGC IOC NTPC Coal India SAIL BPCL GAIL HPCL Power Grid Corporation OIL PFC REC and HAL. BHEL was initially a Navratna and remains in that category.

India became a net exporter of bulk drugs (API) in FY 2024-25 with surplus of Rs 2280 crore compared to deficit of Rs 1930 crore in FY 2021-22. This transformation was enabled by PLI scheme for pharmaceuticals with outlay of Rs 15000 crore. Domestic Value Addition reached 83.70%.

PLI scheme covers 14 key sectors with a total outlay of Rs 1.97 lakh crore (about USD 26 billion). Sectors include mobile manufacturing IT hardware pharma medical devices automobiles auto components telecom textile food products solar PV white goods ACC batteries drones and specialty steel.

MSME-TEAM (Trade Enablement and Marketing) scheme was launched on 27th June 2024 with outlay of Rs 277.35 crore. It supports 5 lakh MSEs including 2.5 lakh women-led enterprises in digital onboarding cataloguing logistics and packaging to help them access e-commerce markets.

PM Vishwakarma scheme was launched on 17th September 2023 with an outlay of Rs 13000 crore for 2023-24 to 2027-28. It aims to support traditional artisans and craftspeople in 18 trades by providing skill training toolkit incentives credit support and market linkages.

ODOP initiative aims to promote indigenous products and craftsmanship of each district. It identifies and promotes products unique to each district. Unity Malls are being set up in 27 states to showcase ODOP products. It helps SMEs artisans and local manufacturers access wider markets.

Ministry of Commerce and Industry through Department of Commerce administers SEZs in India. SEZs were introduced to boost exports manufacturing and employment. IT/ITES SEZs are most common. Incentives include 100% income tax exemption for first 5 years 50% for next 5 years and 50% of ploughed back profits for next 5 years.

IIP is released by the Ministry of Statistics and Programme Implementation (MoSPI) through National Statistical Office (NSO). It is released monthly with a lag of about 6 weeks. The current base year is 2011-12. IIP measures changes in volume of production in mining manufacturing and electricity sectors.

MSME sector contributes about 30.1% to India’s GDP making it the second highest contributor after agriculture. It also contributes 35.4% to manufacturing output and about 45.73% to total exports. Over 6.3 crore MSMEs provide employment to about 11 crore people formally.

India ranks 3rd globally in automobile production after China and USA. It is the largest producer of two-wheelers and three-wheelers. The automobile industry contributes about 7% to India’s GDP. PLI scheme for automobile sector has outlay of Rs 25938 crore.

SEZs in India are governed by Special Economic Zone Act 2005 and SEZ Rules 2006. SEZs are duty-free enclaves for manufacturing and services with special incentives. As of 2024 there are about 268 operational SEZs in India. Major SEZ hubs are in Maharashtra Gujarat and Tamil Nadu.

LPG stands for Liberalization Privatization and Globalization. These were the three pillars of New Economic Policy 1991. Liberalization meant reducing government controls. Privatization meant increasing role of private sector. Globalization meant integrating Indian economy with world economy.

Manufacturing sector’s share in India’s GVA is approximately 17-18%. The government aims to increase this to 25% under Make in India initiative. Manufacturing GVA grew at 4.26% in FY 2024-25 compared to 1.4% in FY 2023-24. Services sector contributes about 54% to GVA.

India’s textile industry contributes about 7% to manufacturing output 2% to GDP and about 11% to total exports. It is the second largest employer after agriculture employing over 4.5 crore people directly. India is 2nd largest producer of textiles and garments globally after China.

New Industrial Policy 1991 abolished industrial licensing for most industries reduced reserved list for public sector allowed automatic FDI approval and liberalized foreign technology agreements. It did NOT nationalize more industries; rather it encouraged privatization and disinvestment.

The current base year for IIP is 2011-12. Earlier base years were 2004-05 1993-94 1980-81 and 1970. IIP covers 407 item groups under manufacturing. It measures short-term changes in industrial production and is a key indicator of economic performance.

Public Procurement Policy for Micro and Small Enterprises (MSEs) Order 2012 mandates 25% annual procurement from MSEs by Central Ministries Departments and CPSEs. Within this 4% is reserved for SC/ST owned MSEs and 3% for women owned MSEs. 358 items are exclusively reserved for MSEs.

RAMP stands for Raising and Accelerating MSME Performance. It is a World Bank assisted programme with outlay of Rs 6000 crore to strengthen MSMEs by addressing challenges related to finance technology and market access. It focuses on improving regulatory environment and access to institutional credit.

India ranked 63rd in World Bank’s Ease of Doing Business 2020 jumping from 142nd rank in 2014. This was a significant improvement of 79 positions in 6 years. The ranking has been discontinued since 2020. India improved in areas like starting business getting electricity enforcing contracts etc.

Directorate General of Foreign Trade (DGFT) under Ministry of Commerce and Industry is the apex body for formulating and implementing Foreign Trade Policy and promoting exports. It issues Import Export Code (IEC) which is mandatory for import/export. DGFT also administers export promotion schemes.

KVIC stands for Khadi and Village Industries Commission. It was established in 1957 under KVIC Act 1956. It promotes khadi and village industries to create rural employment. It functions under Ministry of MSME. KVI sales increased 4-fold from Rs 33135 crore in 2014-15 to Rs 155673 crore in 2023-24.

Self Reliant India (SRI) Fund was set up with a corpus of Rs 50000 crore under Fund of Funds for providing equity funding to MSMEs with potential to grow and become large units. It supports MSMEs facing liquidity problems and helps them access equity finance for expansion.

Department for Promotion of Industry and Internal Trade (DPIIT) under Ministry of Commerce and Industry monitors Ease of Doing Business reforms. India improved its World Bank Ease of Doing Business ranking from 142 in 2014 to 63 in 2019. The ranking has been discontinued since 2020.

India is the world’s 2nd largest producer of crude steel after China. Steel production capacity has crossed 160 million tonnes. The National Steel Policy 2017 aims for 300 million tonnes capacity by 2030-31. Major steel companies include SAIL Tata Steel JSW Steel and JSPL.

Semicon India Programme has a budget of Rs 76000 crore to boost semiconductor and display manufacturing ecosystem in India. It supports setting up semiconductor fabs display fabs compound semiconductors packaging and design. Major projects include Micron in Gujarat and Tata in Assam.

Manufacturing sector has the highest weightage in IIP at 77.63%. Mining has 14.37% and Electricity has 7.99% weightage. Within manufacturing basic metals pharmaceuticals motor vehicles and electrical equipment are major contributors. IIP tracks growth in 23 industry groups.

Credit Guarantee Scheme for MSEs was revamped in 2023 to provide collateral-free loans up to Rs 5 crore (increased from Rs 2 crore). Guarantee coverage for women-owned enterprises was enhanced to 90% (from 85%). In 2024-25 Rs 3 lakh crore worth credit guarantees were extended.

National Single Window System (NSWS) was launched in September 2021 to simplify investor experience by integrating approvals from 32 ministries and 29 states on a single platform. It speeds up clearances and reduces compliance burden. It is part of Ease of Doing Business reforms.

Insolvency and Bankruptcy Code (IBC) was enacted in 2016 to consolidate and amend laws relating to reorganization and insolvency resolution of corporate persons partnership firms and individuals. It established NCLT as adjudicating authority and IBBI as regulator. It improved ease of doing business.

Quality Control Orders are issued to mandate compliance with Indian Standards (BIS standards) for specified products. QCOs ensure that products meet quality and safety standards before being sold in Indian market. They help protect consumers and promote domestic manufacturing of quality products.

PMEGP stands for Prime Minister’s Employment Generation Programme. It is a credit-linked subsidy scheme for establishing micro-enterprises in non-farm sector. Maximum project cost is Rs 50 lakh for manufacturing and Rs 20 lakh for service sector. Subsidy ranges from 15-35% depending on location and category.