Q1 of 11 Page 143

What were the reasons for putting barriers to foreign trade and foreign investment by the Indian government? Why did it wish to remove these barriers?

The barriers to foreign trade and investment are put through imposing a tax on imports.

The Indian Government had to put such trade barrier on foreign trade after Independence. this was necessary to save the producers within the country from the foreign competition. After Independence India was feeble in its economy, there was unemployment at large, and the influx of foreign goods would mean barring own nation’s development. So to boost the indigenous production the government had to take such a step.


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Why do developed countries want developing countries to liberalize their trade and investment? What do you think should the developing countries demand in return?

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