What was the main rationale for the policy of import substitution during the first seven Five Year Plans?
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. To protect infant domestic industries.
During the first seven Five Year Plans, India adopted an Inward Looking Trade Strategy known as Import Substitution.
The primary rationale was to protect "infant" domestic industries from foreign competition. By restricting imports through tariffs and quotas, the government aimed to foster self-reliance (Atmanirbharta) and prevent the drain of scarce foreign exchange.
It was believed that domestic producers needed a protected environment to grow before they could compete globally.