NCERT Class 10 Economics — Chapter 4: Globalisation and the Indian Economy

mcqeasy

Which of the following was a key reason for the Indian government to put barriers to foreign trade after Independence?

Official previous-year question

Verified 1 Aug 2026.

Options

ATo comply with the mandates of the World Trade Organisation.
BTo generate revenue solely from customs duties.
CTo protect domestic producers from foreign competition during the nascent stage of industrialisation.
DTo prevent the entry of western culture into India.

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Solution

Correct Option

The correct option is To protect domestic producers from foreign competition during the nascent stage of industrialisation..

Explanation

After gaining independence, the Indian government adopted an inward-looking trade strategy known as Import Substitution Industrialization (ISI). This policy was grounded in the Infant Industry Argument, which posits that emerging domestic industries require protection from established foreign competitors until they achieve economies of scale and technical efficiency.

Option Analysis

To generate revenue solely from customs duties. is Incorrect: While customs duties are a source of government revenue, the primary objective of imposing high tariffs and quantitative restrictions (quotas) was to restrict the volume of imports to support domestic manufacturing, rather than merely to generate fiscal resources.
To protect domestic producers from foreign competition during the nascent stage of industrialisation. is Correct: In the 1950s and 1960s, Indian industries were in a nascent stage. If foreign goods had been allowed free entry, domestic producers would not have been able to compete with the cheaper and higher-quality goods from developed economies. Trade barriers were erected to create a protected market where domestic industries could grow and diversify.
To prevent the entry of western culture into India. is Incorrect: The barriers were economic in nature, aimed at self-reliance and industrial growth. Preventing the entry of western culture was not a stated objective of the trade policy.
To comply with the mandates of the World Trade Organisation. is Incorrect: The World Trade Organisation (WTO) was established in 1995, decades after India's independence. Therefore, compliance with WTO mandates could not have been a reason for policies adopted in the post-independence era (late 1940s and 1950s).

Key Takeaway

Import Substitution Industrialization was the guiding principle of India's early trade policy, aiming to replace foreign imports with domestic production to protect infant industries from global competition.

Your note

More from Chapter 4: Globalisation and the Indian Economy

The term "Containerisation" in the context of globalisation has primarily led to: 1. Huge reduction in port handling costs. 2. Increased time required for the delivery of goods to export markets. 3. Ability to load goods intact onto ships, railways, planes, and trucks. Which of the statements given above is/are correct?

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Which international organisation is primarily mandated to establish rules regarding global trade and ensure their compliance?

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The rapid improvement in which of the following has been the major factor stimulating the globalisation process?

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Which one of the following is NOT a primary factor considered by Multinational Corporations (MNCs) when establishing production units in a country?

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In the context of globalisation in India, which one of the following industries has generally remained resilient compared to others where small manufacturers faced stiff competition?

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Correct Option

The correct option is To protect domestic producers from foreign competition during the nascent stage of industrialisation..

Explanation

Option Analysis

To generate revenue solely from customs duties. is Incorrect: While customs duties are a source of government revenue, the primary objective of imposing high tariffs and quantitative restrictions (quotas) was to restrict the volume of imports to support domestic manufacturing, rather than merely to generate fiscal resources.
To protect domestic producers from foreign competition during the nascent stage of industrialisation. is Correct: In the 1950s and 1960s, Indian industries were in a nascent stage. If foreign goods had been allowed free entry, domestic producers would not have been able to compete with the cheaper and higher-quality goods from developed economies. Trade barriers were erected to create a protected market where domestic industries could grow and diversify.
To prevent the entry of western culture into India. is Incorrect: The barriers were economic in nature, aimed at self-reliance and industrial growth. Preventing the entry of western culture was not a stated objective of the trade policy.
To comply with the mandates of the World Trade Organisation. is Incorrect: The World Trade Organisation (WTO) was established in 1995, decades after India's independence. Therefore, compliance with WTO mandates could not have been a reason for policies adopted in the post-independence era (late 1940s and 1950s).