Question

What are the ways in which domestic industries be protected?

Answer 1

Following are the ways to protect domestic industries.

Import substitution :
Import substitution implies discouraging the imports of those goods that could be produced domestically. By discouraging the imports it provided a protective environment to the domestic producers. This protection was achieved by imposing various barriers in the form of tariffs and quotas on the imports of goods. The rationale for providing the protection was that the domestic industries were still at an infant stage. Thus, they required protection so that they can grow and develop and become competent enough before they face foreign competition

Expansion of Cottage and other Small-Scale Industries:

IPR -1956 promoted the role of cottage and small scale industries by increasing employment opportunities and making use of available human and resources and reducing- regional inequalities in industrial development. Also, various subsidies and tax deductions were provided to small scale industries.

Inclusive industrial growth of various regions :

Providing tax concessions and loans at cheaper rates to domestic industries to ensure inclusive growth and thereby protecting them from the threat of competition imposed by MNC's.