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Question

What measures have been taken for globalisation of Indian economy?

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Solution

The following measures have been taken for globalisation of Indian economy:
(i) Increase in Equity Limit of Foreign Investment: Equity limit, in general, has been raised from 40% to 51. Also, in 47 high priority industries and in export trading houses, Foreign Direct Investment (FDI) is allowed upto the extent of 100%
(ii) Partial Convertibility: It means sale and purchase of foreign currency at a price determined by the market forces fo demand and supply.
It is called partial convertibility because it is allowed 100% in current account transactions but it is only 51% for capital account transactions.
(iii) Liberal foreign Trade Policy: A long term liberal trade policy has been implemented which encourages free trade policy has been implemented which encourages free trade among countries.
(iv) Reduction in Tariffs: Customs duties have been reduced drastically. Prior to 1991customsom duties were as high as 400% but after 1991, the maximum rate of duty is just 10%.
(v) Withdrawal of Quantitative Restrictions: The quantitative restrictions on all import items have been totally withdrawn from 2001, in conformity with the guidelines issued by the World Trade Organisation (WTO).


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