What is the trade-strategy, which India adopted in the first-seven Five-Year Plans?

Correct option is B

The correct answer is (b) Inward-looking trade strategy

• During the first seven Five-Year Plans (1951–1990), India adopted an inward-looking trade strategy, also known as the import-substitution industrialization (ISI) model.

• The main goal was to reduce dependence on imports by developing domestic industries and promoting self-reliance.

• This strategy included high tariffs, quantitative restrictions, and licensing requirements on imports, while encouraging the growth of domestic industries to produce goods locally.

Information Booster:
• The strategy was rooted in Nehruvian socialism and the Mahalanobis model, which emphasized a strong public sector.
• Focus was on heavy industries, with import substitution at the core of industrial policy.
• Foreign trade was highly regulated, and export promotion was not prioritized.
• Resulted in a protected domestic market but also led to low competitiveness.
• Trade liberalization began in the 1990s, especially after the 1991 economic reforms.
• The New Economic Policy (1991) marked a shift toward an outward-looking, export-led trade approach.