Answer:
In
the case of Chinese toys, quotas should be used as trade barriers to a limited
extent to protect the Indian producers of a similar nature of toys which are
being imported. This should be done so that both Indian and Chinese toys
compete on an equal footing in the Indian market. This will lead to a healthy competition
so that the quality of toys will improve.
Also, Indian manufacturers will need 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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