Import liberalisation and premature deindustrialisation in India

Abstract

Liberalising imports by reducing tariffs and removing non-tariff barriers has been one of the most important aspects of the economic reforms pursued in India since the 1990s. The idea was to expose domestic enterprises to international competition to enhance efficiency and promote growth. But rather than promoting efficient growth, this paper shows how import liberalisation has damaged the domestic sector. In the absence of adequate government support, the private sector in manufacturing could not perform the role expected of it. Rejuvenation of the manufacturing sector requires a fundamental reorientation of the role of government.