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India's Trade: Protectionism, Substitution - Pros & Cons



  Aug 29, 2023

India's Trade Policies and Industrial Strategy:Protectionism and Import Substitution:Pros and Cons


1. What are the recent trade policy measures introduced by India?

India has implemented licensing requirements for imports of electronic goods, coupled with high tariffs and non-tariff measures in certain sectors. It has also adopted the Production-Linked Incentive (PLI) scheme to stimulate domestic manufacturing.
 

2. How do India's trade policies compare to those of developed economies?

While developed economies often use targeted subsidy programs, India's protectionist policies appear to be more widespread, affecting multiple industries instead of specific sectors.
 

3. What is the objective behind India's recent trade policy actions?

India's measures, such as import restrictions and PLI incentives, aim to bolster domestic manufacturing, particularly in sectors like electronics. The goal is to enhance self-reliance and global competitiveness.
 

4. How does India's trade strategy differ from that of other nations?

India's trade policies have emphasized protectionism and import substitution. In contrast, several Asian economies have successfully integrated into electronics GVCs through preferential tariff policies, reduced barriers for intermediate inputs, and promoting open trade.
 

5. Why is the electronics sector a focal point of India's import restrictions?

The electronics industry is technologically dynamic and holds significant potential for global value chains and trade. However, India's import restrictions could impede its integration into thriving GVCs that rely on open trade.
 

6. How has the experience of Asian economies influenced trade policies in electronics?

Countries like China and some ASEAN members have successfully integrated into electronics GVCs through preferential tariff policies, reduced barriers for intermediate inputs, and promoting open trade.
 

7. What role does trade liberalization play in India's manufacturing competitiveness?

Trade liberalization exposes domestic producers to competition, driving efficiency, specialization, and innovation. A strategic blend of financial incentives and trade openness can enhance India's global manufacturing competitiveness.
 

8. What is the significance of India's Free Trade Agreements (FTAs) in its trade strategy?

India's FTA initiatives have encountered delays and revisions. While FTAs offer trade expansion opportunities, finding a balance between protectionism and open trade is essential.
 

9. How can India ensure global competitiveness in its manufacturing sector?

Combining financial incentives for manufacturing with trade liberalization can foster efficiency, innovation, and competitiveness in India's manufacturing industry.
 

 10. How do recent measures align with India's industrial policy goals?

Recent actions, including import restrictions and incentives, are part of India's broader industrial policy to bolster domestic manufacturing, foster self-reliance, and enhance competitiveness in specific sectors.


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