GENERAL KNOWLEDGE

Detailed explanation-1: -Import substitution is a strategy under trade policy that abolishes the import of foreign products and encourages production in the domestic market. The purpose of this policy is to change the economic structure of the country by replacing foreign goods with domestic goods.

Detailed explanation-2: -Import substitution industrialization is an economic theory adhered to by developing countries that wish to decrease their dependence on developed countries. ISI targets the protection and incubation of newly formed domestic industries to fully develop sectors so the goods produced are competitive with imported goods.

Detailed explanation-3: -Import Substitution Strategy not only reduces an economy’s dependence on the foreign goods but also provides impetus to the domestic firms. Government provides various financial encouragements, incentives, licenses to the domestic producers to produce domestically the import substituted goods.