India’s trade policy: Which way now?

Abstract

This paper delineates the changes in India’s trade policy regime in the larger context of India’s changing development strategy. What started as protection during “planning for industrialization” in an economy with binding foreign exchange constraint in the 1950s evolved to a relatively open economy with lesser barriers to trade. The process of change in the trade sector has been sequential over a relatively long period of time, the process being complemented by wide-ranging policy shifts in other sectors of the economy. However, there is an evidence of rising market-driven entry barriers, which is often thought to impact the trade sector adversely. Along with this, the process of trade policy changes has been reversed with rise in tariff barriers across some sectors in the recent period, which is a cause for concern especially in the context of improving competitiveness of tradeables and growing integration of the domestic economy with the world economy.