Hello Prashant,
Both policing and shaping have a common goal: to “rate-limit” exceeding traffic.
How they do it is different though. A shaper will “buffer” the traffic while a policer “drops” the traffic.
A practical example could be an ISP router that is connected to multiple customer routers. Let’s say that the routers are connected with GigabitEthernet links but the customers are only paying for a 100/100 Mbit connection.
The ISP will then use a policer to drop all incoming traffic that exceeds 100 Mbit.
On the customer end, you probably don’t want your traffic to get dropped so you can then configure an outgoing shaper that is configured for 100 Mbit. This will not drop your traffic but buffer it, which guarantees that all traffic is sent and the ISP’s policer won’t drop it.
Hope this helps!
Rene