Which strategy, widely adopted in India's early economic planning, aimed to reduce foreign dependence and was a significant feature of industrial policy?

The correct answer is Import Substitution.

Key Points

• Import Substitution Industrialization (ISI) was a strategy adopted by India to reduce dependency on foreign products by promoting domestic industries.
• This approach was aimed at building a self-reliant economy by nurturing local industries and reducing import bills.
• It was a significant feature of India's early economic planning, particularly during the 1950s and 1960s, under the guidance of the Planning Commission.
• The strategy involved imposing high tariffs on imports and providing subsidies to domestic industries to encourage local production.

Additional Information

• Globalisation:
  • Globalisation refers to the process of increasing interdependence and connectivity of economies worldwide.
  • It involves the free movement of goods, services, information, and capital across international borders.
  • Globalisation is often associated with liberalisation and deregulation of economies to promote international trade.
• Export Promotion:
  • Export Promotion involves policies and practices designed to encourage the export of goods and services.
  • This strategy aims at increasing foreign exchange earnings and improving the trade balance of a country.
  • Incentives such as tax rebates, subsidies, and financial assistance are often provided to exporters.
• Liberalisation:
  • Liberalisation refers to the relaxation of government restrictions in areas of social, political, and economic policies.
  • In economic terms, it involves reducing tariffs, trade barriers, and restrictions on foreign investment.
  • Liberalisation aims to make economies more market-oriented and competitive.
• Industrial Policy:
  • Industrial policy consists of strategic efforts by the government to encourage the development and growth of specific sectors of the economy.
  • It includes measures like subsidies, tax incentives, and infrastructure development.
  • The goal is to enhance productivity, competitiveness, and employment in targeted industries.