Question

“In order to protect domestic industries, India followed the regime of restrictions on imports.”

Briefly outline and discuss such steps taken by the government to promote import substitution policy.

Answer 1

In order to protect domestic industries, India followed the import substitution policy. This policy aimed at substituting imports with domestic production.

The domestic industries were protected from foreign competition by using the following tools:

1. Tariffs: Tariffs are a tax on imported goods that make imported goods dearer and discourage their usage.
2. Quotas: Quotas specify the quantity of goods that can be imported.