To bring about economic reforms India had framed foreign trade policy. This policy regulates India’s trade with other countries.
Challenges faced by the foreign trade policy of India:
- India needs to control import of certain products so that it can protect domestic production from competition by foreign goods.
- Ensure enough imports of technology, machines, spare parts as well as, resources to help increase domestic production and import substitution.
- Control imports of those goods that are not needed for India’s development. This would help to save foreign exchange.
- Encourage exports so that earning of foreign exchange can be increased. This will help to make payment for items that we import.
- Many Indian goods could not compete against the quality of foreign goods. Hence it was difficult to increase the exports.
- Promote export of goods produced by small scale sector.
- The challenges of foreign trade are different from those of domestic trade as foreign trade involves foreign exchange.
- The foreign trade policy of India was formulated and amended from time to time so that India could deal with the above challenges in the best possible manner.
