Foreign Trade (1947–90)
1 Quick Explanation 1–3 min
Trade policy aimed at import substitution and protecting domestic industry.
Exports were seen as a means to pay for essential imports — not a growth driver.
2 Detailed Notes
Key idea
Trade strategy
- Import substitution: produce domestically what was imported; protect via tariffs & quotas.
- Export promotion was limited; exports needed to earn forex for imports of capital goods.
- Import licensing and high tariffs restricted consumer imports.
Key points
Composition of trade
- Imports: machinery, capital goods, petroleum, fertilisers.
- Exports: tea, jute, cotton textiles, iron ore, spices.
- Later (1980s): readymade garments, gems & jewellery, engineering goods gained share.
Important
Why BOP pressure
Frequent balance of payments crises (1974 oil shock, 1991 crisis) because oil imports rose while exports grew slowly.
Example
Effects
Import substitution built self-reliance in many goods but kept domestic industry inefficient and consumers got limited variety at high prices.
In One Minute
1947–90 trade: import substitution + protection. Exports to pay for imports. Frequent BOP crises (1991) from slow exports and costly oil imports.
Important for Exam
- ⭐ Import substitution meaning (1–3 marks).
- ⭐ Composition of India's trade.
- ⭐ BOP crises and the 1991 crisis context.
- ⭐ Why trade was not export-led.
Watch & Learn
Watch on YouTubeFOREIGN TRADE - INWARD LOOKING TRADE STRATEGY - INDIAN ECONOMY 1950-1990 - CLASS 12
by Rajat Arora
Why watch? Import substitution and trade composition.
Open on YouTube Watch on YouTubeFOREIGN TRADE - INWARD LOOKING TRADE STRATEGY - INDIAN ECONOMY 1950-1990 - CLASS 12
by Rajat Arora
Why watch? Simple definition with examples.
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