Question

PMP and IS in manufacturing programme. Explain Pros and Cons.Can productivity increase with this.give me in the form of Essay.word count - 2000 words.

Answer 1

Import substitution is a strategy under trade policy that abolishes the import of foreign products and encourages for the production in the domestic market. The purpose of this policy is to change the economic structure of the country by replacing foreign goods with domestic goods. Post-Independence India adopted the policy of import substitution by imposing heavy tariffs on import duty. The industrial policy that the country endorsed was linked to the trade policy. In the first seven five year plans, trade in India was distinguished by the inward-looking trade strategy. This strategy is known as import substitution with the aim to boost domestic production and shield domestic products from international competition.

Trade Policy

Trade policy can be defined as a goal, rules, standard, goals, and regulations that are involved in trade between countries. These policies are particular to a specific country and are formed by its public officials. A country’s trade policy covers taxes imposed on inspection regulations, import and export, and tariffs and quotas.

Under this policy, the government protects domestic manufacturers from foreign competition. The protection from import is done in two forms:

• Quotas- It specifies the number of goods that can be imported.
• Tariffs- It is a tax that is imposed on imported products; this tax makes imported products more costly and discourages their use.

The purpose of quotas and tariffs is to restrict imports and, hence, protect domestic industry from foreign competition.

Trade Policy on Industry Development

The accomplishments of India’s industrial sector for the first seven five year plans were impressive. The GDP in the industrial sector increased from 11.8 per cent between 1950-51 to 24.6 per cent in the year 1990-91. By the year 1990 Indian Industry saw huge growth and was no longer restricted only to Jute and cotton textile industry.

Also, the promotion of small scale industry gave an opportunity to people who did not have money to start a company and facilitated the development of domestic industries in the electronics and automobile sectors.