Mention any two reasons for putting barriers to foreign trade by the Indian government

Barriers to foreign trade and foreign investment were put by the Indian government to protect domestic producers from foreign competition, especially when industries had just begun to come up in the 1950s and 1960s. At this time, competition from imports would have been a death blow to growing industries. Hence, India allowed imports of only essential goods.

Later, in the 1990s, the government wished to remove these barriers because it felt that domestic producers were ready to compete with foreign industries. It felt that foreign competition would in fact improve the quality of goods produced by Indian industries. This decision was also supported by powerful international organisations.

The Indian government, after Independence, had put barriers to foreign trade and foreign investment. (i)This was considered necessary to protect the producers within the country from foreign competition. (ii)Industries were just coming up in the 1950s and 1960s, and competition from imports at that stage would not have allowed these industries to come up. (iii)Starting around 1991, some farreaching changes in policy were made in India. The government decided that the time had come for Indian producers to compete with producers around the globe.(iv)It felt that competition would improve the performance of producers within the country since they would have to improve their quality. (v)This decision was supported by powerful international organisations.

Thus, barriers on foreign trade and foreign investment were removed to a large extent.

It is important to note that it was not just India but Governments of all developed countries, had extended protection to its domestic producers through various measures, during the early stages of development.
After Independence, the Indian Government had imposed many barriers to foreign investment and foreign trade.
The Indian Government imposed barriers as they believed it was important to safeguard the Indian producers from competition given by international companies.
In the 1950s and 1960s, industries were coming up in India and external competition due to imports at that stage would not have been conducive for development of domestic industries in India.
Hence, Indian Government permitted imports of only important items such as petroleum, fertilisers, machinery etc.

Many important policy changes were done by the Government of India, starting from around 1991.
The then Government of India had come to a decision that it was time to open competition for Indian producers with producers across the globe.
With more global competition the domestic producers would be forced to improve the quality and performance of their products.
International organisations which were very powerful supported this decision of the Government of India.
Thus, to a large extent the barriers on foreign investment and foreign trade were removed.
This meant that foreign companies could set up offices and factories in India easily, and that goods could be exported and imported easily.

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