How did India's trade policy reforms post-1991 impact the import of capital goods ?
Show answer & explanation
Correct answer: B
Explanation
Answer: Reduced tariffs and removed licensing
Explanation: After the 1991 Economic Reforms in India, India significantly liberalized its trade policy: Tariffs (import duties) were reduced → Made capital goods cheaper to import
Import licensing was largely abolished → Businesses no longer needed government approval for most imports
This made it easier for industries to import modern machinery and technology, boosting industrial growth and productivity.
Additional Key Facts
Reforms were initiated under P. V. Narasimha Rao (PM) and Manmohan Singh (Finance Minister).
Focus areas: Liberalization, Privatization, Globalization (LPG).
Capital goods imports helped:
Improve industrial efficiency
Encourage foreign investment
Enhance export competitiveness
Potential Exam Questions and Answers
Q. Who was the Finance Minister during the 1991 economic reforms?
Ans: Manmohan Singh
Q. What does LPG stand for in the context of economic reforms?
Ans: Liberalization, Privatization, Globalization