Assertion (A): An important policy instrument of economic liberalization is reduction in import duties on capital goods.
Reason (R): Reduction in import duties would help the local entrepreneurs to improve technology to face the global markets.
Which one of the following is correct?

Correct Option (a):

Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation for Assertion (A).

Assertion (A) correctly identifies the reduction in import duties on capital goods as a significant policy instrument within economic liberalization frameworks. Such policies aim to foster domestic industrial growth and integration into the global economy.

Reason (R) accurately explains the rationale behind this policy. By lowering import duties on capital goods (e.g., machinery, advanced technology), the cost for local entrepreneurs to acquire modern production equipment decreases. This facilitates technological upgradation, enhances productivity, and improves the quality of domestic products. Consequently, Indian industries become more competitive and better equipped to operate effectively in global markets.

Therefore, Reason (R) provides a direct and logical explanation for the implementation and objective of the policy instrument mentioned in Assertion (A).

Incorrect Options:

Option (b) is incorrect because Reason (R) clearly explains the purpose and impact of the policy described in Assertion (A).

Options (c) and (d) are incorrect as both Assertion (A) and Reason (R) are factually correct statements. Assertion (A) describes a valid policy tool, and Reason (R) accurately outlines its intended positive effect on domestic industries in the context of economic liberalization.