In India, during the first seven plans, trade policy was characterized by an inward-looking trade strategy. Technically, this strategy is called:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Import substitution
During the first seven plans India chose to make at home what it used to buy abroad: instead of importing vehicles, for example, industries were encouraged to make them in India, protected from foreign competition by tariffs and quotas. Replacing imports by domestic production in this way is the inward looking trade strategy called import substitution.
Why the other options are incorrect
Option (1) Foreign competition promotion — Incorrect. There is no such strategy.
Option (2) Import promotion — Incorrect. There is no such strategy.
Option (4) Export promotion — Incorrect. Export promotion is an outward looking strategy that pushes the sale of goods abroad. India gave no serious thought to promoting exports until the mid-1980s.
Note: A same/similar question was asked in CUET (UG) in the papers below.
| 2026 | 2025 | 2024 | 2023 | 2022 |
| 21-05 S2 | – | – | 16-06 S3* | – |
* A similar question.
NCERT (2025-26): “2.5 Trade Policy: Import Substitution … In the first seven plans, trade was characterised by what is commonly called an 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: 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.…” |