In this article we will discuss about the Import Substitution in India. After reading this article you will learn about: 1. Subject-Matter of Import Substitution 2. Measures Adopted for Import Substitution 3. Achievements.
Subject-Matter of Import Substitution:
Considering the difficulties in the balance of payments position in our country the Government of India introduced various import restriction measures along with the policy of “import substitution”. The term ‘Import Substitution’ means a policy of replacements or substitution of imports by domestic production.
Here the substitution of imports by indigenously produced goods can serve the two definite objectives of saving precious foreign exchange and achieving self-reliance. The policy of import substitution in India has passed three phases.
In the first phase, this policy covered the area of domestic production of consumer goods; in the second phase it replaced the import of intermediate and capital goods including imported raw materials, components, spare parts, chemicals etc. and in the final phase at present we are trying to shift from imported technology to indigenous technology.
Measures Adopted for Import Substitution:
The Government of India has adopted a number of measures for encouraging import substitution in order to curtail the mounting import bill of our country. The devaluation of rupee in 1966 was an indirect step in this direction.
The purchase policy of the supplies department of the Government has been oriented towards import substitution and accordingly the imported purchases of the Government out of the total purchase has declined from 41 per cent during the First Plan to 12 per cent only in 1968-69.
Again the policy of import control and tariffs has been encouraging import substitution since the inception of Third Plan. In recent years import duties on machineries, motor vehicle spare parts, pharmaceutical chemicals etc. have been imposed.
With the increase in the volume of production and improvement in its quality about 300 items have now been deleted from the “Open General Licence” (OGL) list and every year some items were deleted as in 1984-85, 53 items were excluded from OGL. Steps are being taken to produce more import substitute products indigenously.
Achievements of Import Substitution:
In the mean time we have achieved self-sufficiency in many products and also reduced the dependence on import to a considerable extent. In respect of sugar mill machinery, light engineering goods like bicycles, sewing machines, electronic goods for audio-visual aids, chemicals like soda ash, caustic soda, bleaching powder etc., 10 per cent self sufficiency has been attained.
On the other hand, increase in the domestic productions of fertilizers, iron and steel, railway wagons, diesel engines, newsprint, paper and paper board and crude mineral oil have lessen the pressures on our import bill considerably.
Further, the recent devaluation of rupee by 18 per cent in July 1991 has already made imports much costlier for us and thus we may hope that this step will indirectly help us to enhance the possibility of import substitution of many other commodities in the years to come.
Moreover, the Exim Policy introduced in the country in 1991 and also subsequent changes in the Export-import Policy, 1992-97 would also help the country to implement this policy of import substitution in near future.