In what way trade policy reforms will contribute to enhancing India’s competitiveness in the international market? Elucidate.
The major reforms in trade policy stopped up the transitional process of Indian economy towards globalization by encouraging exports and permitting imports of essential inputs as well as capital goods. A major objective of the EXIM policy (1992-97) and the subsequent changes introduced during the last five years was to phase out quantitative restrictions in the form of licensing and other discretionary controls. To continuously scale down the tariff bears is another significant objective. These objectives have been met:
- Quantitative restrictions on imports of capital goods and most intermediate inputs have been eliminated.
- A large number of items covering 1487 tariff lines whose import is otherwise restricted, are now allowed to be imported under freely trade-able special imports license.
- Custom duty rates have been substantially cut down across the board.
- Since 1992, imports are regulated through a limited negative list.
- In December 1995, more than 3000 tariff lines covering raw materials, intermediates and capital goods are free of import licensing requirements.
These reforms are focused on liberalization, openness, transparency, and globalization with a basic thrust on outward orientation focusing on export promotion activity and improving competitiveness of Indian industry to meet global market requirements.