Barriers on foreign trade and foreign investment were removed to a large extend in India around 1991 . justify the statement.
Answers
The year 1991 is often considered to be synonymous with LPG (Liberalisation, Privatisation and Globalisation) policies.
Around 1991, the Indian government undertook many reforms such as free determination of interest rate by commercial banks, freedom to import capital goods, minimisation of the public sector, and reduction in tariffs for multiple products.
1. The government decided to remove the barriers on foreign trade and foreign investment around 1991 as it was realized that the time had come for Indian producers to compete with producers around the globe.
2. The removal of barriers meant that goods could be imported as well as exported easily and also foreign companies could set up their factories and offices in India. In addition, the government imposed much fewer restrictions of business activity within India who was allowed to take decisions freely.
3. It was also felt that competition would improve the performance of the producers within India as they would have to improve their quality of service in comparison to the foreign competition.