What is import substitution?
Import substitution:
It is a government industrialisation policy for development by replacing imports along with domestic production.
- Stage 1: Identify labour intensive domestic industries now met by imports for example textiles, shoes and clothes.
- Stage 2: Import the capital and intermediate goods required to make labour intensive and low capital goods.
- Stage 3: Prevent such infant industries along with quotas and tariffs. Domestic output starts to replace imports.
- Stage 4: Start exporting or make own capital goods.