Write a brief note on trade and investment policy reforms. How did it lead to economic growth?OR
What was the purpose of liberalisation of trade and investment in 1991?
What was the purpose of liberalisation of trade and investment in 1991?
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Liberalisation of trade and investment was initiated to increase international competitiveness of industrial production and also the flow of foreign investments and technology into the economy. Prior to these reforms, in order to protect domestic industries, India was following a regime of quantitative restrictions on imports and restrictions of foreign investments.The trade policy reforms aimed at:
- Dismantling of quantitative restrictions on imports and exports.
- Reduction of tariff rates.
- Removal of licensing procedures for imports. Liberalisation led to economic growth by increasing the level of investment in the country.
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