5 Real IES Questions That Help You Understand India’s Trade Story

If you’ve been studying for the Indian Economic Service exam for a while, you’ve probably noticed something — certain topics always come back. One of them is India’s trade performance.

It doesn’t matter how the paper changes; trade always finds a way in. It makes sense too. Trade isn’t just about numbers or charts. It tells you how strong your economy really is, how self-reliant it’s becoming, and where it still struggles.

When you go through old IES papers, you start seeing a pattern. Most of the questions are data-based, but what they really test is how you think about that data.

Let’s walk through five questions that have come up again and again — and what they actually reveal about India’s trade story.

You can find the original question papers here: Indian Economic Service previous year question paper

1. Why does India’s trade deficit never seem to go away?

Almost every year, in some form, this question appears: “Discuss the trend in India’s trade deficit and its key drivers.”

At first, it sounds like a question that just wants facts. But when you start looking at the data, you realize it’s asking something deeper.

The trade deficit touched around USD 26.4 billion in April 2025, up from about USD 19 billion the year before. Imports keep growing — petroleum, gold, electronics — while exports have been steady but not enough to balance it.

So, what’s behind it? Some part of this is good — a growing economy needs more goods. But another part of it isn’t — it means we’re still dependent on what we can’t make ourselves.

When you write about it, don’t just say “the deficit increased.” Ask why it did. What’s driving those numbers? What does it say about India’s production base?

If we’re importing the very things we aim to produce domestically, can we really say we’re moving toward self-reliance?

That’s the kind of thought that turns a dry question into a meaningful one.

2. Which sectors are actually driving our exports?

This question comes in many forms — sometimes about diversification, sometimes about growth. But it’s really about understanding how India is changing as an exporter.

In the last few years, electronics have become one of the fastest-growing export categories, rising by around 24%. That’s mostly due to production-linked incentives and the government’s focus on manufacturing.

Pharmaceuticals and engineering goods are doing well too. But traditional sectors — textiles, gems, leather — have slowed.

It’s progress, but uneven progress. We’re moving into new spaces but leaving behind some old strengths.

When you write about this, don’t make it sound like a list. Think of it as a shift in India’s economic identity. From raw materials to technology, from simple goods to complex products.

But also ask: are we really manufacturing, or just assembling imported components and calling them exports?

That one question shows you understand the nuance — and that’s what makes an answer stand out.

3. How have our trade partnerships evolved?

Trade partnerships say a lot about how the global economy sees India — and how India sees the world.

Right now, China is our biggest trading partner with trade worth over USD 118 billion. The United States follows, and that’s where we actually have a trade surplus — roughly USD 36 billion.

With China, though, it’s the opposite. The deficit is large and still growing. The same goes for Russia and South Korea.

It’s not just about numbers. These relationships show how much we still depend on other countries for critical imports. Electronics, machinery, crude oil — a lot of it comes from countries where we run a deficit.

You can use this data to build a strong answer, but make sure you draw out what it means. It’s about dependency, strategy, and where India fits in the global chain.

If our biggest trading partner is also the one we depend on most, can we really say our economy is balanced?

That’s the kind of honest question that gives your answer a real voice.

4. Can services exports keep saving the day?

This is one of those questions that doesn’t always sound exciting, but it’s quietly powerful.

Services have been India's largest buffer, despite fluctuations in merchandise exports. Approximately USD 196 billion was spent on imports and USD 383 billion was spent on services in FY 2024–2025. That is almost USD 187 billion in excess. India's strengths remain in business services, consulting, and the IT sector.

But it’s worth asking — can we depend on this forever? Automation, AI, and global slowdowns could easily hit our service exports in the next decade.

If you get a question on this, make sure to show both sides. Yes, services exports are a major strength, but they can’t carry the entire load forever.

Eventually, manufacturing has to catch up.

So, in your conclusion, you might say something like — “India’s services sector has carried our trade balance for years, but unless goods exports grow, this advantage won’t last.”

Simple, clear, and true.

5. What reforms can make India’s trade stronger?

This is the question that usually comes near the end of the paper — the one that tests whether you can connect data to ideas.

You already know the main themes.India needs to:

• Diversify its export basket.

• Invest more in research and innovation.

• Improve logistics and infrastructure.

• Build domestic supply chains for sectors like electronics and semiconductors.

• Sign smarter trade agreements that protect and promote Indian industries.

But when you write about reforms, don’t just throw them as points. Explain why they matter.

For example: “Since electronics imports form a large share of India’s trade deficit, developing domestic chip manufacturing could be a game changer.”

That’s the kind of reasoning that feels real — not memorized.

Because anyone can list policies. Very few can explain why they matter.

The real lesson from IES trade questions

When you read through the Indian Economic Service previous year question papers, you start to see that the best answers are not full of data, they’re full of understanding.

Trade numbers are just a starting point. What matters is what you can read between those lines — the policies, the patterns, the opportunities.

If you can explain what those numbers mean, you’ve already done more than half the work.

The examiner isn’t testing if you know every export figure by heart. They’re testing whether you can think like an economist — whether you can see how data turns into insight.

A closing thought

India’s trade story isn’t finished. It changes with every policy, every quarter, every deal.

Each deficit tells us something about our dependence. Each surplus tells us about our strengths. And in between those numbers is the real story — of a country still trying to find balance between growth and independence.

Maybe someday, the way you analyze these trade patterns in your IES paper will influence how someone else studies them later.

Until then, just keep reading, thinking, and connecting ideas. Because economics is never about memorizing figures. It’s about understanding the choices behind them.

If you want to go through past papers and real examples, you can check out ArthaPoint Plus – Indian Economic Service Past Year Papers.