Economics · Economic Reforms of 1991
The shift in India's trade policy post-1991 from import substitution to export promotion and liberalization involved a fundamental change in the management of imports. Which of the following policy actions represents the most significant liberalization measure taken to dismantle the pre-existing 'License Raj' in foreign trade?
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- 1The transfer of the power to set import tariffs (customs duties) from the Ministry of Finance to the Directorate General of Foreign Trade (DGFT).
- 2The adoption of a freely floating exchange rate regime, enabling the value of the Indian Rupee to be entirely determined by market forces, thus eliminating all RBI intervention.
- 3The complete removal of Quantitative Restrictions (QRs) (non-tariff barriers) on all imports, especially consumer goods, as part of India's commitment to the World Trade Organization (WTO).✓
- 4The abolition of the Export-Import (EXIM) Policy regime, replacing it with a simple, automated system for all outward bound goods.
Correct answer
The complete removal of Quantitative Restrictions (QRs) (non-tariff barriers) on all imports, especially consumer goods, as part of India's commitment to the World Trade Organization (WTO).
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