Question

“India adopted an inward-looking trade strategy during the planning period.”

State any two reasons behind the adoption of this policy.

Hint:

Inward-looking trade aimed at replacing imports with domestic production and at saving foreign exchange.

Answer 1

Step 1: Understand the policy:
An inward-looking trade strategy is also called import substitution.
Under it, India tried to rely on its own production and kept imports low during the planning period.

Step 2: Reason 1 (half mark):
To replace imports with domestic production.
The aim was to make at home the goods that India was buying from abroad, and so build local industry.

Step 3: Reason 2 (half mark):
To save foreign exchange.
Fewer imports meant fewer payments in foreign currency, and the country had little foreign exchange at that time.

Final Answer:
Two reasons for the inward-looking trade strategy: (i) to replace imports with domestic production, and (ii) to save foreign exchange.