IBH ASSIGNMENT

Protectionism is defined as when the government levies taxes on imported goods, import
quotas, and other legislation in order to limit imports from other countries while not
affecting domestic trade or business. It boosts domestic manufacturing and service
production. Trade protectionism has a long history in India. Even in the early 1990s, when
significant liberalisation changes were undertaken, policymakers made sure to create
exemptions. Other than steel, which has traditionally been protected due to its political
sensitivity, Indian protectionism has been applied in other industries. In 2018, the
government raised import duties over 19 items, including leather footwear, consumer
electronics, diamonds, and jewellery. However, these commodities accounted for only 2.8%
of India's total import bill in the previous fiscal year, casting doubt on the effectiveness of
the measure. Since the beginning of that year, the government had forcefully pushed India
toward increasing protectionism, raising levies on a range of product lines. Prior to
liberalization , import substitution shown that such tariff increases are futile.
Imports were significantly liberalised and levies were decreased after 1991. However, India
has recently reversed its two-and-a-half-decade-long policy of tariff reduction in favor of
protectionism. The government emphasise import substitution as a primary goal, arguing
that India's "infant" domestic businesses must be protected. However, even the established
car industry has requested precautions. Protectionist policies are supported on the basis
that they will allow domestic enterprises to grow into strong competitors and sustain
themselves. Increasing tariffs just to protect industries, on the other hand, creates an
environment for business that is costly and uncompetitive. In the long run, protectionism
will have a negative impact due to the inability to compete worldwide for expensive
domestic goods and the diminished benefit to consumers from competition. In this sense,
the current level of protectionism would assist safeguard domestic producers from
international competition while also securing rising domestic sectors.