Industry: Chapter test

Young start-ups rarely have the fixed assets or long cash-flow records that banks ask for as security. The CGSS answers this by having the Credit Guarantee Fund for Startups, managed by NCGTC, promise to cover a large share of a lender's loss if a DPIIT-recognised start-up defaults. With that cover, banks, eligible NBFCs and SEBI-registered AIFs can extend collateral-free working capital, term loans and venture debt. The start-up must not be in default or classified as an NPA. The lender pays an annual guarantee fee to the fund. The scheme neither buys shares nor insures deposits; deposit insurance is DICGC's role, and equity support comes through the Fund of Funds. Interest subsidies for micro and small enterprises belong to other schemes in the MSME domain.

SFURTI, started in 2005-06 and revamped in 2014-15, organises traditional industries and artisans into clusters. It funds common facility centres, raw material banks, design and skill development and marketing support, so that artisans can compete and earn more. Credit guarantees, export insurance and quality certification belong to other schemes.

SISFS was notified by DPIIT as S.O. 414(E) on 21 January 2021, with ₹945 crore to be disbursed from 1 April 2021 through selected incubators. It targets the seed gap, the stage after an idea and before VC money. Hence its age test is much stricter than the DPIIT definition: the start-up must be DPIIT-recognised and incorporated not more than two years before applying, so statement 2's ten-year window is wrong. The support has two windows: up to ₹20 lakh as a grant for proof of concept, prototypes or product trials, released against milestones, and up to ₹50 lakh for market entry, commercialisation or scaling through convertible debentures or debt-linked instruments. Other conditions include a technology-led business model, no more than ₹10 lakh of support from other government schemes, and Indian promoters holding at least 51 per cent.

SISFS uses incubators as intermediaries. An Experts Advisory Committee constituted by DPIIT selects incubators and sanctions each one a grant of up to ₹5 crore, released in instalments; the incubator then evaluates start-ups through its own seed management committee and disburses the grant or debt to them. This design draws on the incubator's mentoring and due-diligence capacity, so Statement-I is correct. Statement-II is also a real eligibility rule: the incubator must be a legal entity, operational for at least two years, with seating for at least 25 individuals and at least five start-ups physically incubated. But Statement-II is a quality filter for incubators; it does not explain why the scheme routes money through incubators at all. The reason lies in leveraging incubators' screening and mentoring. Both are true, and II does not explain I.

Para 5 of S.O. 2046(E) (8 May 2025) lists three classes of eligible lending or investing institutions: scheduled commercial banks and financial institutions; RBI-registered NBFCs with an external rating of BBB and above from an RBI-accredited agency and a minimum net worth of ₹100 crore; and SEBI-registered AIFs, which is how venture debt funds come in. The two NBFC conditions are cumulative. An NBFC rated BBB with ₹150 crore of net worth meets both. One rated BB, which is below investment grade, with only ₹50 crore of net worth fails both tests, so it cannot join. The scheme also says that if a member NBFC is later downgraded below BBB, it gets no fresh guarantee cover until its rating is upgraded again, which shows the rating test applies continuously, not just at entry.

The CGSS was first notified in October 2022 and replaced by S.O. 2046(E) of 8 May 2025. It guarantees loans that lenders give to DPIIT-recognised start-ups without collateral. The Credit Guarantee Fund for Startups is managed by NCGTC, a company set up in March 2014. The 2025 revision raised the ceiling per borrower from ₹10 crore to ₹20 crore and set cover at 85 per cent of the amount in default for loans up to ₹10 crore and 75 per cent above that. It also cut the annual guarantee fee to 1 per cent for start-ups in the 27 Champion Sectors. Lenders are not limited to banks: scheduled commercial banks and financial institutions, RBI-registered NBFCs rated BBB and above with net worth of at least ₹100 crore, and SEBI-registered AIFs are all eligible member institutions.

The idea, developed by the economist Dani Rodrik (2015), notes that in many developing countries the share of manufacturing in employment and output has started to fall at income levels far below those at which Britain, the United States or East Asian economies began to deindustrialise. India's manufacturing share has stayed well below East Asian peaks while services grew faster, so workers moved from farms largely to services and construction. This is why policy since 2011 (National Manufacturing Policy, Make in India, PLI) has tried to raise the manufacturing share.

The sectoral weights in the 2022-23 series are Manufacturing 76.062, Mining and quarrying 11.053, Electricity and gas supply 10.865, and Water supply, sewerage and waste management 2.020. Mining therefore stays second, but only narrowly ahead of electricity and gas, whose weight rose from about 8 in the old series because gas supply was added and renewable power is now a separate sub-index. Basic metals, at 9.198, is the largest group within manufacturing, not a separate sector.

The Labour Bureau compiles this data (c). The Labour Bureau, under the Ministry of Labour and Employment, with offices at Shimla and Chandigarh, collects statistics on industrial disputes, closures, retrenchments and lay-offs. It also compiles the Consumer Price Index for Industrial Workers (CPI-IW), used to set dearness allowance. Option (a) is wrong: the Central Statistics Office, now part of the NSO, handles national accounts and GDP. Option (b) is wrong: DPIIT compiles the Wholesale Price Index and the index of eight core industries. Option (d) is wrong: NTMIS tracked technical manpower supply.

Notice that the Labour Bureau now also runs the Quarterly Employment Survey. The Periodic Labour Force Survey (PLFS), by contrast, comes from the NSO.

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Statements 2 and 3 are correct (b). Statement 1 is wrong: the EPF scheme covers only establishments with 20 or more workers, and members earning within the wage ceiling (₹15,000 a month), so not every casual worker is covered. Statement 2 is right: labour laws on working hours and overtime apply to all workers, including casual ones. Statement 3 is right: the Code on Wages, 2019 lets the government notify that an establishment or industry must pay wages only by cheque or into the worker's bank account.

Notice the four labour codes: Wages (2019), Industrial Relations, Social Security, and Occupational Safety, Health and Working Conditions (2020). They merged 29 central labour laws and came into force in November 2025. The e-Shram portal registers unorganised workers.

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Only statement 2 describes the lender of last resort (b). As lender of last resort, the RBI gives emergency funds to a basically sound bank that faces a sudden shortage of cash, so that panic does not spread to other banks and the system stays stable. The Marginal Standing Facility is one such window. Statement 1 is wrong: the RBI does not lend directly to trade or industry bodies. Statement 3 is wrong: lending to governments through ways and means advances is its role as banker to the government, not as lender of last resort.

Notice the idea came from Walter Bagehot's Lombard Street (1873): lend freely to solvent banks, against good collateral, at a penalty rate.

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Both statements are correct (c). The Quality Council of India, set up in 1997, is an autonomous body formed jointly by the Government of India and industry bodies ASSOCHAM, CII and FICCI (1). It works as India's national accreditation system, through bodies such as NABL (laboratories), NABH (hospitals) and NABCB. Its chairman is appointed by the Prime Minister on the industry's recommendation (2). DPIIT (formerly DIPP) is its nodal department.

QCI also runs ZED certification for MSMEs and checks cleanliness rankings under Swachh Survekshan. Notice how it differs from BIS: QCI accredits the bodies that check quality, while BIS sets standards and issues product marks.

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Indian coal has a high ash content, so steel plants import most of their coking (metallurgical) coal, mainly from Australia, and also from the USA, Russia and others (c). Saltpetre (a) is used for explosives and fertilisers, and rock phosphate (b) for phosphatic fertilisers; neither is needed for steel, so (d) also fails.

India is the world's second-largest steel producer and aims for 300 million tonnes of capacity by 2030 under the National Steel Policy 2017. Notice how this import dependence links steel, trade and energy security, which is why coal washeries and Mission Coking Coal matter.

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Purchase and sale of government securities by the RBI is correct (c). Open Market Operations are the RBI's buying and selling of government securities in the market to manage liquidity. Buying securities pays out money and adds liquidity; selling them absorbs money. (a) is wrong: banks borrowing from the RBI happens through the repo window or Marginal Standing Facility. (b) is wrong: bank lending to industry is ordinary credit, not OMO. (d) fails because (c) is correct.

Notice the variants: 'Operation Twist' (2019–20) bought long-term and sold short-term bonds at the same time, and G-SAP (2021) was a pre-announced bond-buying programme. OMOs are part of quantitative monetary tools, with CRR and SLR. Trap: (a) is a liquidity tool too, but not OMO.

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