Assertion:In the first seven plans, trade was characterised by an import substitution strategy on one hand and export promotion on the other.

Reasoning: The government aimed at protecting the domestic industries from foreign competition in the first seven plans by way of quotas and tariffs.

Assertion (A) is not true but Reasoning (R) is correct.

The correct answer is Option 4: Assertion (A) is not true but Reasoning (R) is correct.

Assertion:In the first seven plans, trade was characterised by an import substitution strategy on one hand and export promotion on the other. This is false. It is correct that, in the first seven plans, trade was characterised by what is commonly called an inward looking trade strategy or import substitution strategy. However, there was no serious thought given to promote exports until the mid-1980s.

Reasoning: The government aimed at protecting the domestic industries from foreign competition in the first seven plans by way of quotas and tariffs. This is true. In this policy the government protected the domestic industries from foreign competition. Protection from imports took two forms: tariffs and quotas. Tariffs are a tax on imported goods; they make imported goods more expensive and discourage their use. Quotas specify the quantity of goods which can be imported. The effect of tariffs and quotas is that they restrict imports and, therefore, protect the domestic firms from foreign competition.