Answer :

In the case of Chinese toys, quotas should be used as trade barriers judiciously to protect the Indian producers of a similar nature of toys which are being imported. It should be used in a manner so that both Indian and Chinese toys compete on an equal footing in the Indian market. This will lead to a healthy and reasonable competition which will improve the quality of toys. Also, it would prompt Indian manufacturers to earn only reasonable profits. If Chinese toys were totally restricted, Indian manufacturers will be tempted to lower their quality and increase prices, thus harming the customers. On the other hand, if there are no quota restrictions on Chinese toys, China will ‘dump’ toys in the market, reducing the sales of the Indian producer and also harming the customer, as then the customer will not have a free choice at a competitive price.

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