Q. Consider the following statements regarding the concept of "Import Substitution":

1. It refers to the strategy wherein a country seeks to replace imported goods (primarily finished products) with products that are produced locally.
2. Import substitution is an approach that protects domestic industries from competition by foreign imports.

Which of the above statements is/are correct?
Answer: Both 1 and 2
Notes: Import substitution is an economic policy adopted to encourage local production by reducing reliance on imports. This strategy involves the use of tariffs and quotas to protect domestic industries from foreign competition, enabling them to grow and develop. Hence, both provided statements accurately describe the characteristics and objectives of import substitution policies.