Capital Incentives And Innovation

**Capital-augmenting technological progress:** This refers to technological advancements that increase the productivity of existing capital goods. In this case, replacing wooden ploughs (a less efficient capital good) with steel ploughs (a more efficient capital good) increases the productivity of the plough itself. Steel ploughs can till more land, last longer, and require less maintenance compared to wooden ploughs.

* **Statement I is incorrect:** India's share in global merchandise trade is only 1.8% and 4% in global services. India plans to increase its export share in global trade from 2.1% to 3% by 2027 and 10% by 2047. * **Statement II is correct:** The PLI scheme is open to both domestic and international manufacturers. Samsung as well as Indian firms such as Dixon Technologies, UTL, Neolyncs, Lava International, Optiemus Electronics and Micromax are also expanding their factories to take advantage of the PLI scheme.