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what is import substitution???

Dear student,

Import substitution is a policy which aims to replace imports with domestic production. It encourages local production. This policy helps in generating employment, reducing foreign exchange demand and making country self reliant in areas like food and defence.

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Import substitution is also known as an inward looking trade strategy which implies discouraging the imports of those goods that could be produced domestically. Import Substitution Strategy not only reduces an economy's dependence on the foreign goods but also provides impetus to the domestic firms.
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