1. The government decided to remove the barriers on foreign trade and foreign investment around 1991 as it was realized that the time had come for Indian producers to compete with producers around the globe.
2. The removal of barriers meant that goods could be imported as well as exported easily and also foreign companies could set up their factories and offices in India. In addition, the government imposed much fewer restrictions of business activity within India who was allowed to take decisions freely.
3. It was also felt that competition would improve the performance of the producers within India as they would have to improve their quality of service in comparison to the foreign competition.
NOTE – The Indian government, immediately after independence, had put barriers on foreign trade and investment in India in order to protect the producers within India from foreign competition. This was done to provide the Indian producers with an opportunity to grow and expand their industries.
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