International Trade (Part – II)

The EXIM Policy 2002-07 was more liberal, market-oriented and favourable to global trade than the previous trade policies. General Agreement on Trade and Tariff (GATT) and subsequently the World Trade Organization (WTO) came to existence and has played a significant role in the liberalization of the economy. Hence, both statement and reason are correct but reason is not the correct explanation of statement.

In the foreign trade policy 2009-14, the 21 towns were included in the list of Towns of Export Excellence'. All of the given cities were included in that list. In Foreign Trade Policy 2023 four new towns, namely Faridabad (for apparel), Moradabad (for handicrafts), Mirzapur (for handmade car- pet and dari) and Varanasi (for handloom and handicrafts) have been declared as Towns of Export Excellence in addi- tion to the already existing 39 towns. Thus, at present (as per Foreign Trade Policy 2023) the list of towns of export excellence has increased to 43 towns (for various export items).

A closed economy is one that has no trading activity with outside economies. Closed economy is therefore entirely self-sufficient, which means no imports come into the 116. country and no exports leave the country.

Globalization is the word used to describe the growing interdependence of the world's economies, culture, and population, brought about by cross-border trade in goods and services, technology, and flows of investment, people, and information. The process of globalization generally refers to increasing free trade between countries and dismantling barriers in international trade.

Globalization generally means integrating economy of our nation with the world economy through trade, foreign direct investment, capital flows, migration, and the spread of technology. It refers to the free movement of people, goods, services and capital across boundaries. Hence, among the given options, globalization of Indian economy means having minimum possible restrictions on economic relations with other countries.

Globalization of economy include reduction in import duties, abolition of import licensing and free flow of FDI while it does not include disinvestment of Public Sector Equity which is a major step towards privatization and liberalization of the economy.

Globalization is related to foreign investments and large companies. Hence, it has created a sense of optimism among small entrepreneurs in India, is not meaningful. Statements given in other options are correct about globalization.

Liberalization is the process of elimination of the control of the State over economic activities. It provides greater autonomy to the business in decision making and eliminates interference of the government. After India adopted new economic policy in 1991, there has been a drastic change in the economy. An important policy instrument of economic liberalization is the reduction in import duty on capital goods, which makes free flow of capital. Reduction in import duties on capital goods would help the local entrepreneurs to improve technology to face the global markets. Hence, both statements are correct and explain one of the instruments to liberalize the Indian economy.

The first phase of liberalization was initiated in India in 1991 with the adoption of new economic policy under the regime of Prime Minister P.V. Narsimha Rao.

Promotion of multinational companies (MNCs) in India is related to the policy of privatization, globalization and liberalization.