gellyfish's code is the way to solve this problem, but I'll point out a couple mistakes in your code to help you avoid them in the future.

print F2 <TAG>;
You want to put TAG in quotes. The line should be print F2 "<TAG>";

This is something that using warnings would have helped you catch. Your program is attempting to read a line from the filehandle TAG, and print that to filehandle F2.
# ./test.pl Name "main::TAG" used only once: possible typo at ./test.pl line 9. readline() on unopened filehandle TAG at ./test.pl line 9. readline() on unopened filehandle TAG at ./test.pl line 9. readline() on unopened filehandle TAG at ./test.pl line 9. readline() on unopened filehandle TAG at ./test.pl line 9.

Also, although it isn't broken in your example, your regular expression can use some work. You are matching anything that isn't ">", and then using it in a numerical comparison. This will be a problem if you capture something non-numeric. A better idea would be to write your regex like this:
if($file =~ /<ins cnt="(\d+)">/) { for ($x=0; $x < $1; $x++) { print F2 "<TAG>"; } }
What I changed:

In reply to Re: Recursive insertion of tags by swkronenfeld
in thread Recursive insertion of tags by rsriram

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