Post -Liberalized Foreign Trade and Foreign Investment in India

Dr. Kewal Krishan .


The assignation of Prime Minister Indira Gandhi (1984) and Rajiv Gandhi (1991) crushed the International Investors confidence on the unstable Indian economy. The Crises of BOP compelled India to follow the bail out conditions of IMF and to open its closed economy to the entire world, by adopting the policies of liberalization in 1991. Under liberalization the structured economic reforms were initiated in the trade, investment, deregulations, privation, tax reforms etc., these reforms encouraged the competitions and globalization was slowly embraced. The main objective of the then Govt. was to transform the Indian economic system from socialization to capitalization, so as to achieve high economic growth and industrialize the nation for its well being. However, NDA Government slows down the speed of liberalization due to coalition politics and vested political interests, but could not de-regulate the liberalization. Liberalization has changed the scenario of Indian trade and investment as many advantages are explored in these sectors. The impacts of liberalization have been seen in the foreign trade and foreign investment in India in post liberalized periods, as its imports, exports and foreign investments were reported in US$ millions 300609, 182235 and 51167 respectively in the year 2009-10, showing huge advancement from the 1991-92. Indian economy became the second largest growing economy of the world after China.  Due to liberalization India reached to 124th rank out of 179th rank of economic freedom index in 2009 under PPP terms. This shows that India is stepping toward complete liberalization. This research paper tries to show the trends and interrelationship between foreign trade & foreign investment, Imports & Exports and FDI & FPI in Post liberalized periods (1992-93 to 2009-10).The role of foreign investment in curving deficit BOT has also highlighted.


BOP- Balance of Payment, Govt. - Government, NDA- National Democratic Alliance, GDP- Gross Domestic Product, FDI- Foreign Direct Investment, FPI- Foreign Portfolio Investment , BOT- Balance of trade, IMF- International Monetary Fund.

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