Question

Why did the Indian government restrict foreign trade and foreign investment between 1947 - 1991? Explain.

Answer 1

1. Promoting Self-Reliance: After gaining independence, India pursued a protectionist policy in order to establish self-reliance. international trade and investment restrictions shielded domestic businesses from international competition, boosting growth in sectors such as steel and textiles.
2. Preventing Economic Exploitation: The government hoped to avoid colonial-style exploitation by foreign firms. Policies such as import licensing and high tariffs provided resource control while prioritising local development, as evidenced by the expansion of public sector firms such as SAIL. These policies sought to build a strong, independent economy while limiting global integration.