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Indian Economy 1950-1990

Question
CBSEENEC11008768
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Evaluate inward looking trade strategy adopted by Government during 1950-91.

Or

Give the outline of Government's trade policy that protected the domestic industry from foreign competition.

Or

Explain import substituting industrialisation during 1950-90.

Solution

Inward looking trade strategy : In the first seven plans trade was characterised by what is commonly called inward looking trade strategy. Technically this strategy is called import substitution.

This policy aimed at replacing or substituting imports with domestic production. For example, instead of importing vehicles made in a foreign country, industries would be encouraged to produce them in India itself. In this policy, the government protected the domestic industries from foreign competition. Protection from imports took two forms : 1. Tariffs and 2. Quotas.

1. Tariffs : Tariffs are a tax on imported goods. They make imported goods costlier and discourage their use.

2. Quotas : They specify the quantity of goods that can be imported.

The effects of tariffs and quotas is that they restrict imports and therefore protect the domestic firms from foreign competition.

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