Social Science (087) — AI-generated practice question

Trade barrier is a restriction set up by the government to regulate foreign trade — controlling what kinds of goods and how much of each can enter the country. Tax on imports (tariff) is a common example.

Example: The Indian government can impose a tax on imported Chinese toys. This raises their price in Indian markets, making them less attractive to buyers. As a result, imports from China reduce automatically, and Indian toy-makers face less competition and are able to prosper.

After Independence, India used such barriers to protect its newly developing industries from foreign competition, allowing only essential imports like machinery, fertilisers, and petroleum.

Source: Liberalisation of foreign trade and foreign investment policy, Chapter 4

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• 1 mark for defining trade barrier correctly (restriction/regulation on trade; tax on imports is a barrier).
• 1 mark for explaining how it works (tax → higher price → reduced imports).
• 1 mark for linking it to protection of domestic producers (Indian toy-makers benefit / post-Independence context).
• Use the Chinese toys example directly — it's from the textbook and examiners expect it.
• Avoid writing about liberalisation or WTO in detail; that's beyond the scope of this question.