Which of the following trade policies did India adopt in its first seven (five-year) plans?

Correct option is D

The correct answer is (D) Import substitution

Information Booster:

During its first seven five-year plans (1951–1990), India adopted the policy of import substitution and inward-looking trade strategies. This policy aimed to develop domestic industries and reduce dependence on foreign goods. Key features included:

1. Import Substitution: Encouraging domestic production of goods that were previously imported by imposing high tariffs and import restrictions.
2. Protectionism: Protecting nascent industries by providing subsidies, imposing quotas, and banning imports of certain items.
3. State-Led Industrialization: Emphasizing heavy industries and key sectors under state ownership and control.
4. Foreign Exchange Control: Restricting the use of foreign exchange to control imports and promote self-reliance.
5. Limited Export Promotion: Export activities were secondary, with more focus on fulfilling domestic demand.

This approach aimed to build a self-sufficient economy but eventually faced criticism for inefficiencies, lack of competition, and slow growth, leading to the liberalization reforms in 1991