Foreign Trade of India : 1991-2014

Foreign trade is considered as a catalyst agent for sustaining and accelerating economic growth. The world economy has changed rapidly both in horizontal and vertical spectrum. The changes in the world economy have made it clear that no nation can isolate itself completely from the rest of the world and survive. The recent explosion of the information technology has generated new waves of dynamism and reduced virtually the entire world into a global village. This process of increasing economic integration and growing economic interdependence among the nations of the world is widely known as globalisation. Trade is an outstanding feature of internationalisation of economic system. All the factors of production are not adequately available in a country. Hence, for grafting their varied needs, countries engage in international trade. International trade mitigates the disadvantages of disproportionate geographical distribution of productive resources. International trade decidedly increases the exchangeable value of possessions, means of enjoyment and wealth of the countries concerned. For about 40 years (1950-1990), foreign trade of India suffered from strict bureaucratic and discretionary controls. Beginning 1991, the Government of India introduced a series of reforms to liberalise and globalise the Indian economy. India's approach to openness has been cautious, contingent on achieving certain preconditions to ensure an orderly process of liberalisation and ensuring macroeconomic stability. The broad approach to reforms in the foreign trade sector was laid out in the Report of the High Level Committee on Balance of Payments (Chairman: C Rangarajan), 1993. The major trade policy changes in the post-1991 period have included simplification of procedures, removal of quantitative restrictions, substantial reduction in the tariff rates, liberal inflows of private capital, shift towards market-determined exchange rate, focus on export growth and entering into regional trade agreements (RTAs). In view of the growing importance of foreign trade in the Indian economy, this book provides a comprehensive description and analysis of post-1991 developments in India's foreign trade.