PRESENTATION ON IMPORT SUBSTITUTING INDUSTRIES

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TABLE OF CONTENT
 Import substituting industries (ISI)
 Types of import substituting industries
 Benefits of import substituting industries
 Objectives of import substituting industries
 Some Import substitution activities
 Shortcomings and limitations of ISI
 Economic survey of Import substituting industries

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 IMPORT SUBSTITUTING INDUSTRIES
 Import substitution industrialization (ISI) is defined as the substitution of a foreign product by
domestic supply.
 It is an economic policy that favors the development of domestic industries and the reduction of
reliance on manufactured foreign imports.
 ISI was a prominent policy in the 20th century for developing countries seeking to reduce their
dependence on developed countries.
 As per the figures of the Trade and Export Promotion Center (TEPC) for the first 11 months of
this fiscal year, the country has been spending Rs13.3 on imports for every rupee of export
earnings.

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TYPES OF IMPORT SUBSTITUTING
INDUSTRIALIZATION
1. Simple substitution
 Under this kind of substitution almost an imitation of import good is sort to be produced in the
country.
 The quality may not be exact to the real product but it is hard to distinguish from real to the
duplicate. The simple substitution is often seen in our country where the exact product is
duplicated and are found in the cheap prizes.
 For example: Nike shoes are imported from other countries now what we do under simple
substitution is that we create a duplicate Nike shoes.

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TYPES OF IMPORT SUBSTITUTING
INDUSTRIALIZATION

2. Alternative substitution
 In this case the substitutes produced indigenous vary in shape and function from the imported
product. But its working is more or less the same.
 Here we do not create the exact duplicate but what we do is apply the techniques of the
product how they are made and how to make the quality product..
 For example: Nike shoes which are imported are not duplicated. We understand the
techniques of the Nike shoes and based on that quality we make our own product.

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BENEFITS OF IMPORT SUBSTITUTING
INDUSTRIES
 Increase in domestic employment.
 Increase economic growth
 Quality focused
 Low prices

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OBJECTIVES OF IMPORT SUBSTITUTING
INDUSTRIES
 To produce our own raw materials to stop the currency to go outward the country.
 To be self sufficient in our own and create a self reliance economy.
 To achieve self-reliance in the production of as many goods as possible.
 To encourage national production and to develop new products to stimulate demand and
import restrictions.
 To reduce the import component and produce the output domestically to encourage the local
seller which helps to increase the employment opportunity.

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SOME IMPORT SUBSTITUTION ACTIVITIES

a. Pharmaceutical Industry
b. Electrical and electronic industry
c. Other imports substituting industries
 Cement industry
 Paper industry
 Sugar industry
 Tobacco industry

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 A. PHARMACEUTICAL INDUSTRY

 The pharmaceutical industry has moved toward the development of more sustainable production
systems, products, and processes.
 Imports of Pharmaceutical products was US$523.59 Million during 2021, according to the
United Nations COMTRADE database on international trade in Nepal.
 According to Department of Drug Administration (DDA), Director General Narayan Dhakal,
only 45 types of medicines are manufactured in Nepal while the remaining are imported from
India and third-world countries.
 In Nepal, the demand for drugs and pharmaceuticals is increasing every year by about 10 percent.

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B. ELECTRICAL AND ELECTRONIC INDUSTRY

 Electrical and electronic industries (EEI) include electrical devices, radio equipment and
telecommunications industries.
 Nepal Imports of Electrical, electronic equipment was US$1.02 Billion during 2021, according
to the United Nations COMTRADE database on international trade.
 The demand for electrical goods is expected to increase with the expansion of the electric
power generation system, telecommunication, and radio and TV broadcasting.
 Also, the total of 1,807 electric vehicles (EVs) were imported into the country in the last fiscal
year 2021/22.

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 C. OTHER IMPORT SUBSTITUTING INDUSTRIES
 Cement industry
 Hetauda and Udayapur have two big cement factories in the public sector.

 Paper industry
 There are about 90 units producing paper and paper products in Nepal.

 Sugar industry
 There are about 3 units producing sugar and other related products exist in the country.

 Tobacco industry
 At present, there are about 78 units operating in Nepal.
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SHORTCOMINGS AND LIMITATION OF ISI

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