Foreign trade is an important constituent of any economy. Since 1991, a series of reforms and liberalizations have been taking place with both positive as well as negative effects. This article evaluates liberalization of Indias foreign trade with respect to export, import, Indias share in world trade, balance of payments, trade deficit and FDI.

During the preindependence era one could export or import goods as per business opportunities without requiring any permission from RBI or other administrative ministries. Keeping this in mind, the Imports and Exports (Control) Act was enacted in 1947. To supplement this Act, other measures were taken and a number of acts were passed in different years such as the Foreign Exchange Regulation Act, 1947, the Tea Act, 1953 and the Customs Act, 1962.

India by and large had practiced restrictive policy for imports to conserve foreign exchange, protect domestic industry and encourage imports substitution. The policy had been largely dictated by the position of foreign exchange reserves. Soon after the independence when there were large reserves of wartime exports, the import policy was made less restrictive and import of consumer products was allowed. As these reserves were used up, large funds were required for the imports of raw materials and capital goods for establishing new industries. Therefore, import restrictions were made more stringent and all imports required prior approval and license. The conditions remained more or less the same and the import of consumer products was very restrictive till the process of liberalization started in mid1991. Since then exports have been more or less free of restrictions.

As shown in Table 1, India's share in the world exports has continuously decreased up to 1980 but the trend reversed in 1990 just before the initiation of the liberalization process. It is important to note here that the exports decreased by 44% in 1960 but went up by almost 24% in 1990. Though exports have generally been free from restrictions, the decrease in India's share in world exports during 19501970 was due to the Imports and Exports (Control) Act, 1947, the Foreign Exchange Regulation Act, 1947 and the Customs Act, 1962.

Treasury Management Magazine, Foreign Trade, Liberalization, Consumer Products, Domestic Industry, World Trade Organization, WTO, Global Markets, Agricultural Export Zones, Special Economic Zones, SEZs, Liberalized Exchange Rate Management System, LERMS, Foreign Equity Investments, Foreign Direct Investments, FDIs, Foreign Trade Policies.