Globalisation: Productivity, Efficiency and Growth

and Growth An Overview N S SIDDHARTHAN IIIIIIntroduction IntroductionIntroductionIntroductionIntroductionIntroduction India began liberalising its economy and, in particular, its manufacturing sector over a decade ago. One of the objectives of liberalisation has been to make Indian industries more efficient and globally competitive. Towards this end, the government of India has been pursuing three sets of reforms: one, disbanding the complex network of industrial controls, industrial licensing and permits system; two, liberalising foreign trade and currency transactions and three, instituting several measures to facilitate foreign direct investment (FDI) inflows. These measures were launched in the year 1991 and the liberalisation process is still continuing. It was argued that the removal of entry and licensing barriers would expose Indian firms to international competition and compel them to improve their efficiency and productivity and introduce new processes and products. Trade reforms aimed at exposing Indian firms to global markets will compel them to produce better quality goods. Removal of import restrictions and currency transactions will enable them to import better quality materials, components and technology. FDI inflows will have technology and productivity spillover effects and would improve the productivity of Indian firms.