After independence in 1947, India implemented the strategy of import substitution industrialization (ISI) as an integral part of its economic policy. The rationale was to bolster domestic industrialization and curtail the import of manufacturing goods to developing nations, especially from developed nations. Prominent international economists such as Raúl Prebisch, Gunnar Myrdal, Ragnar Nurkse, and Arthur Lewis supported the idea in the 1950s.

India’s adoption of ISI was seen as a path to growth, enhanced local capacity, and reduced external vulnerabilities. The new government perceived ISI as a way to nurture nascent industries, protect them from foreign competition, and eventually achieve economic self-reliance. Reducing the import of goods that could be produced domestically would promote indigenous industries and save foreign exchange.

However, over the years, many economists, including previously supportive ones, began to develop mixed views about ISI. While ISI spurred initial growth and development, it also led to inefficiencies by causing technological backwardness and hampering competition and integration into the global economy. The protectionist nature of ISI also inadvertently led to the creation of monopolies and reinforced economic inequalities.

In retrospect, while India’s emphasis on ISI during the 1950s fostered a strong base for manufacturing, it also revealed the complexities and trade-offs inherent in such protectionist strategies.