The Foreign Trade Policy (FTP) is a policy framework that defines the government’s strategy for promoting trade and investments in the country. The FTP of India underwent several structural changes during the 1990s, which were crucial for the economic development of the country. Some of the significant changes during this period are:
- Liberalization of trade: The FTP during the 1990s focused on the liberalization of trade policies to promote international trade. The government reduced import tariffs, removed quantitative restrictions on imports, and simplified export procedures to promote free trade.
- Export-oriented policies: The government introduced export-oriented policies to increase the competitiveness of Indian products in the global market. These policies provided several incentives and subsidies to exporters, such as duty-free imports of capital goods, tax exemptions, and reduced interest rates on export credit.
- Foreign Investment: The government allowed foreign direct investment (FDI) in several sectors to attract foreign investment and promote technology transfer. The government also introduced policies to simplify the approval process for FDI and provide a more conducive environment for foreign investors.
- Exchange rate reforms: The government introduced several exchange rate reforms to improve the competitiveness of Indian exports. The government allowed the rupee to depreciate against the US dollar, which made Indian exports cheaper in the international market.
- Reduction of export barriers: The government reduced several barriers to exports, such as restrictions on exports, and simplified the procedures for obtaining export licenses.
- Special Economic Zones (SEZs): The government introduced policies to promote the development of SEZs, which are geographically defined areas that are treated as foreign territories for the purposes of trade and investment. The SEZs provided several incentives and subsidies to promote exports and attract foreign investment.
Overall, the structural changes in the FTP during the 1990s were crucial for promoting international trade, attracting foreign investment, and improving the competitiveness of Indian exports. These changes also led to significant economic growth and development in the country.