India–EU

Explanation

Statement 1 is correct. Carbon leakage is the phenomenon whereby production shifts to jurisdictions with less stringent climate regulations, undermining the environmental effectiveness of stricter policies. CBAM addresses this by applying a carbon price to imports of covered goods equivalent to what EU producers pay under the EU Emissions Trading System (EU ETS), ensuring competitive parity. Statement 2 is incorrect. The legal obligation to purchase and surrender CBAM certificates rests with the authorised EU importer, not with the exporting country's government. While exporters may bear part of the cost indirectly — through reduced prices, renegotiated contracts, or lost orders — the formal compliance obligation is on the EU side of the transaction. This is a fundamental design feature of CBAM: it is a border measure applied by the EU to its own importing entities. Statement 3 is correct. Embedded (or 'embodied') emissions accounting under CBAM extends beyond direct (Scope 1) emissions from the production facility itself. It encompasses the carbon intensity of raw material inputs and the electricity consumed in manufacturing — making supply-chain emissions data from upstream suppliers essential. This is precisely why Indian MSMEs find compliance challenging: they depend on suppliers — including steel mills and electricity utilities — for emissions data they cannot independently generate.

Explanation

Statement 1 is correct. Harmonised System (HS) codes are the internationally standardised numerical codes maintained by the World Customs Organization (WCO) that classify traded products into specific tariff lines. In FTA negotiations, negotiating parties identify which HS codes will attract reduced or zero duties — this is what 'agreeing on tariff lines' means in practice. Any India–EU FTA in wind energy components would proceed exactly this way. Statement 2 is incorrect. KfW (Kreditanstalt für Wiederaufbau) is Germany's national development bank — a bilateral development finance institution wholly owned by the German federal and state governments. It is not a multilateral institution, it has no structural relationship with the World Bank Group, and its bilateral financing arrangements (such as with Indian public-sector banks like SBI or Exim Bank) do not require World Bank board approval. Confusing KfW with multilateral DFIs such as the International Bank for Reconstruction and Development (IBRD) or the International Finance Corporation (IFC) — both World Bank Group entities — is a common error. Statement 3 is correct. 'Friend-shoring' is an established concept in international trade and economic security policy, referring to the deliberate reorientation of trade and investment flows toward geopolitically aligned or trusted partners. The India–EU wind energy supply-chain partnership, explicitly framed around 'supply-chain resilience' between 'two democracies,' is a textbook instance of this principle — India providing manufacturing scale and cost-effectiveness, the EU providing technology, together reducing dependence on potentially adversarial or conflict-disrupted supply chains.

Explanation

All three pairs are correctly matched. The India–EU Trade and Technology Council (TTC) is a high-level ministerial forum established to coordinate digital and technology governance, trade in critical goods, and supply-chain resilience between India and the EU — it is not a research-funding body but a strategic coordination mechanism. The India–EU Agreement on Science and Technology Cooperation is the foundational bilateral treaty that provides the legal and institutional basis for joint R&D collaboration, researcher exchanges, and cooperative projects. Horizon Europe is indeed the EU's flagship multi-year research and innovation programme; non-EU countries may become 'associated' with it, allowing their researchers, institutions and industries to participate in funded collaborative calls on nearly equal terms with EU member states. India's association with Horizon Europe was built directly on the TTC and the S&T Agreement, making all three elements of the India–EU partnership architecture correctly described.