The term “imperial preference” was applied to the

Imperial preference referred to a protectionist tariff system within the British Empire that granted preferential—typically lower—duties or exemptions—to imports from within the Empire. The policy aimed to favour intra‑imperial trade by giving fiscal advantages to British and colonial goods over foreign competitors, and was applied through tariff arrangements that benefitted Britain’s exports to its dominions and colonies [1]. In the Indian case this translated into special fiscal privileges for British manufactures in the Indian market—British goods enjoyed lower tariffs or concessions while Indian products faced disadvantageous duties—thereby reinforcing colonial economic dependence [1]. Therefore option (1) correctly describes the term.

Sources

1. [1] https://en.wikipedia.org/wiki/Imperial_Preference
2. [2] Rajiv Ahir. A Brief History of Modern India (2019 ed.). SPECTRUM. > Chapter 7: The Revolt of 1857 > Karl Marx, in 1853 > p. 169