Explain how liberalisation of trade and investment policies, initiated in India around 1991, helped the process of globalisation.
Generated by claude-sonnet-4-6 · 2026-06-26 13:25 · grounding rag
Model Answer
Before 1991, the Indian government put barriers such as taxes and quotas on imports to protect domestic producers. In 1991, liberalisation removed or reduced these barriers, allowing:
- Free flow of foreign trade: Goods and services could move more easily between India and other countries.
- Increased foreign investment: MNCs could now invest freely in India, setting up production units and expanding operations.
- Greater integration: Removal of restrictions connected India's markets with global markets, attracting more MNCs.
This opening up accelerated the process of globalisation by linking India's economy closely with the rest of the world.
Source: Chapter 4 — Globalisation and the Indian Economy, Summing Up
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Explanation
- The examiner expects you to: (1) state what barriers existed before liberalisation, (2) explain what liberalisation did (removed/reduced barriers), and (3) link it clearly to globalisation (more trade + more foreign investment = greater integration).
- "Liberalisation" and "barriers to trade and investment" are key terms — use them explicitly.
- The textbook's Summing Up directly states: "liberalisation of trade and investment has facilitated globalisation by removing barriers to trade and investment" — mirror this language.
- Do not write about WTO or SEZs in detail; they are separate points and would waste word count here.