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CBSE Class 10 - Social Science: Globalisation and the Indian Economy - Foreign Trade and Interaction of Markets

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Why did the Indian Government put barriers to foreign trade and foreign investments after independence? Analyse the reasons.

Why had Indian government put barriers to foreign trade and foreign investment after independence? Explain.


The Indian government had put barriers on foreign trade and investments after Independence. It was done to protect the interests of the producers and small industrialists in the country from foreign competition. It was feared that the producers will not be able to survive the wealthy foreign companies immediately after Independence. In 1991, the government felt that the time has come to allow foreign companies to invest in Indian markets. This would also force Indian producers to improve the quality of their goods and services. Hence, the government removed the barriers on foreign trade to a large extent.

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Solution Concept: Foreign Trade and Interaction of Markets.
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