Foreign Trade Policy During Planning Period

Date : 5.5.2020
Sub  : Economics
Class : 12
Day   : 2
Period : 5
Time    : 10:45am - 11:25am

Learning Outcomes

• Meaning of Import Substitution Policy
• Meaning of Export promotion policy
• Objective of Import substitution Policy
• India's Foreign Trade After Independence

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Today we shall be studying the Foreign Trade Policy during the Planning period

Import Substitution Policy : It means the stratergy of replacing imports by domestic production.It automatically reduces the burden of imports.

Objectives of Import Substitution Policy

• To save scarce foreign exchange for import of essential goods
• To achieve self reliance in the production of goods like foodgrains, primary raw materials, ect
• To use foreign exchange for the import of machinery etc needed in the process of development.

India's Foreign Trade After Independence

1. Volume and value of Foreign Trade : Volume refers to the size of the import and exports of a nation.It was difficult to find the actual or physical goods that were imported and exported because there are so many goods that are imported and exported.So they were measured in Money terms.The sum of these money values constitute the Value of Trade.

    2.  Composition of Trade : It refers to the type of goods that are exported and imported.

                                             After Independence the share of manufactures in the country's                                                         export increased,whereas agriculture and allied products                                                                   declined.

Agricultural products included -- tea , coffee, spices,  tobacco, oil cakes, etc

Manufactured products include -- gems , jewellery, textile fabric and manufactures of leathered goods.

   3. Direction of Trade : It indicates the countries with which a country trades.It indicates where a country exports go and where the imports come from.

After our Independence , India went for Non Alignment Policy . As a result our trade relations became diversified.

India also expanded its trade relation with countries like The USA and West Europe.

Forign Trade Policy : The government protected the domestic industries from foreign competetion during 1950-90.

The protection took place in the form of Tariffs and Quotas.

Tariffs refer to taxes on the imported goods.They make imports costlier.

Quotas refer to the maximising quantity of goods that can be imported.

Tariffs and Quotas restrict imports and hence protect the domestic producers from Foreign competetion.

The Policy of import substitution is commonly called Inward looking trade stratergy.

Please go through the video link given below to understand the concept better.

https://www.youtube.com/watch?v=SyVIQ82Ukkk