India's Foreign Trade and Industrial Development

Abstract

THE BASIC strategy of export promotion currently in vogue is import liberalization. The objective is to remove every possible obstacle to the production of goods for export. The logic is that the liberal import of machinery and intermediate products would make production for export less expensive, more profitable and hence easier. Whatever way we might look at it, the major beneficiary of a strategy of import-based export production and industrialization is the transnational corporation. We need a different approach to foreign trade as one of the components of industrial development. Foreign trade must become an integral part of the planning process. The basic principle of imports for industrial development and exports bas to be modified, to ensure that import liberalization meets priority needs of industry, not indigenously available or likely to be developed within a short time. Import substitution has not become irrelevant, however fashionable it might be to say so. In our drive to increase our exports of engineering goods, we should not Jose sight of our traditional exports. In the case of nontraditional goods, the need is to bear in mind comparative advantage and build up such thrust areas as are likely to have a continuing and expanding market over a reasonable time-frame. This is what demands unport substitution in certain well-identified thrust areas, in which we have comparative advantage.