Social Science (087) — AI-generated practice question

Policy Change: The removal of trade barriers (liberalisation) starting around 1991, and continued into the early 2000s, allowed goods to be freely imported into India without heavy taxes or restrictions.

Why small producers were more severely affected:
Large MNC brands have advanced technology, modern production methods, vast resources, and worldwide networks that allow them to produce cheaply and competitively. Small Indian manufacturers lack these advantages. When cheaper foreign goods flooded the market — as seen with Chinese toys replacing Indian toys in 70–80% of shops — small producers suffered heavy losses as buyers shifted to cheaper imports. They could not upgrade or compete, unlike large companies which invested in newer technology and even emerged as MNCs themselves.

Source: Globalisation and the Indian Economy, Foreign Trade and Integration of Markets / Impact of Globalisation in India

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• 1 mark for correctly identifying liberalisation/removal of trade barriers as the policy change.
• 2 marks for explaining why small producers were hit harder: focus on lack of resources, technology, and capital compared to MNCs/large firms. Use the toy example as evidence — it directly shows small producers losing market share.
• Examiners expect you to contrast small producers with large/MNC brands explicitly.
• Avoid vague statements; ground your answer in textbook examples (Chinese toys, garment industry).