TRADE REFORMS IN INDIA

The document details India's shift from a restrictive, state-led 'socialistic pattern of society' to a liberalized trade regime initiated by a 1991 balance of payments crisis. It examines the reduction of tariffs, the removal of import licensing, and the opening of services sectors like IT, banking, and telecommunications to foreign investment. The author analyzes the resulting growth in GDP and total factor productivity, while noting persistent challenges in the agricultural sector and a widening trade deficit.

• The 1991 balance of payments crisis, combined with the collapse of the Soviet Union and the rise of China, necessitated a shift toward a pro-market and pro-free trade policy.
• India significantly reduced its peak tariff rates for non-agricultural industrial goods from 355% in 1990-91 to an expected 10% in the 2007-08 budget.
• Trade liberalization contributed to an increase in average annual output growth from 4.5% (1978-93) to 6.5% (1993-04), with total factor productivity (TFP) more than doubling from 1.1% to 2.3%.
• The IT industry emerged as a primary beneficiary of economic opening, with software and services exports reaching $31.3 billion in 2006-07.
• India's trade direction shifted toward Asia, with the region's share of exports increasing by 11 percentage points between 1992-93 and 2005-06, while the share of European countries declined.
• Despite overall growth, the agricultural sector's share of GDP declined to 18.5% in 2006-07, and the country faces a burgeoning trade deficit as imports grew faster than exports.
• India has pursued a mix of multilateral negotiations via the WTO and regional/bilateral agreements, such as the 2005 Comprehensive Economic Cooperation Agreement with Singapore.
• Foreign direct investment (FDI) limits were liberalized across various sectors, including 100% ownership for e-commerce and certain infrastructure projects like ports and harbours.

APA

Narayan, D. S. (n.d.). TRADE REFORMS IN INDIA. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2008/04/dttp_pap_narayan_india_20071007.pdf

Chicago

Narayan, Dr. S. TRADE REFORMS IN INDIA. South African Institute of International Affairs, n.d. https://saiia.org.za/wp-content/uploads/2008/04/dttp_pap_narayan_india_20071007.pdf.

Wikipedia

{{cite report |last1=Narayan |first1=Dr. S |title=TRADE REFORMS IN INDIA |publisher=South African Institute of International Affairs |url=https://saiia.org.za/wp-content/uploads/2008/04/dttp_pap_narayan_india_20071007.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{narayanndtrade, author = {Narayan, Dr. S}, title = {{TRADE REFORMS IN INDIA}}, institution = {South African Institute of International Affairs}, url = {https://saiia.org.za/wp-content/uploads/2008/04/dttp_pap_narayan_india_20071007.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }