आयात पर निर्भरता

Import dependence refers to a country's reliance on imports to meet its domestic demand for goods and services. It's important for UPSC GS Paper 3 because it directly relates to India's economy, trade dynamics, and government policies aimed at reducing this dependence and promoting self-reliance.

Import dependence is typically measured by the ratio of imports to GDP or total consumption. High import dependence can lead to trade deficits, currency depreciation, and vulnerability to external economic shocks.

• •Ratio of imports to GDP
• •Trade deficits
• •Currency depreciation
• •Vulnerability to external shocks

Governments can implement policies such as domestic manufacturing promotion, export diversification, import substitution, and protectionist measures like tariffs to reduce import dependence.

• •Domestic manufacturing promotion
• •Export diversification
• •Import substitution
• •Protectionist measures (tariffs)

Import substitution involves producing goods domestically that were previously imported. Historically, India pursued import substitution industrialization to reduce its dependence on foreign goods.

Challenges include the lack of domestic technological capabilities, higher production costs compared to international markets, and the need for significant investment in infrastructure and skill development.

India has historically been highly dependent on imports for oil, electronics, and machinery. The government is now focusing on reducing import dependence in strategic sectors like defense through initiatives like the Production Linked Incentive (PLI) scheme.

The Production Linked Incentive (PLI) scheme aims to boost domestic manufacturing by providing financial incentives to companies for increasing their production. This reduces the need for imports and promotes self-reliance.

Export diversification helps reduce import dependence by generating foreign exchange, which can be used to finance essential imports. It also makes the economy less vulnerable to fluctuations in the prices of specific imported goods.

Reducing import dependence through protectionist measures can conflict with free trade agreements, potentially leading to retaliatory tariffs from other countries and reduced access to global markets.

High import dependence can lead to increased demand for foreign currency to pay for imports, which can put downward pressure on the domestic currency's value, leading to currency depreciation.

Frequently asked aspects include the impact of import dependence on trade deficits, the effectiveness of import substitution policies, and the role of government initiatives like the PLI scheme in reducing import reliance.

Solely focusing on import substitution can lead to inefficiencies, lack of competitiveness, and reduced innovation due to the absence of foreign competition. It can also result in higher prices for consumers.