In the late 1950s and 1960s, Pakistan protected its consumer goods industries with tariffs and direct import controls. India also followed such a policy between 1950 and 1990. What is the policy of replacing imports with domestic production called?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Import substitution
Import substitution means replacing imports with domestic production. The government protects home industries from foreign competition through tariffs (taxes on imports) and quotas (limits on the quantity imported).
Pakistan used it in the late 1950s and 1960s for consumer goods. India used it in its first seven plans.
Denationalisation and disinvestment move ownership towards private owners, and dual pricing was a Chinese reform measure.
This question uses Comparative Development Experiences of India and its Neighbours and Indian Economy 1950-1990 together.
NCERT (2026-27): “8.2 Developmental Path—a Snapshot View … In the late 1950s and 1960s, Pakistan introduced a variety of regulated policy framework (for import substitution-based industrialisation). The policy combined tariff protection for manufacturing of consumer goods together with direct import controls on competing imports. …” Indian Economy 1950-1990: “2.5 Trade Policy: 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: 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. …” |