PRE- REFORMS PERIOD:

This period is also called per-economic liberalization era. It is the period from India’s
Independence to 1991 and it can be divided into three parts:

1. The period 1951-61 (Import substitution and import restriction oriented trade
policy):
This period includes first and second five year plans. This policy was restrictive and export
policy was not very clear because the need for promoting export was not risen at that time.
During that time however the foreign trade situation was quite satisfactory. There were not
many efforts for export promotion or import substitution expect on an ad hoc basis. The
policy design was inward looking instead of outward looking i.e., import promotion in export
promotion.1

2. The period 1961-80 (Import substitution cum export promotion oriented trade
policy):

It is since the inception of the third plan that export promotion policies started receiving
serious attention from the government of India. But it increased the pressure on the balance
of payments in the form of repayments and loan servicing charges.

The two main objectives of the foreign trade policy of India were;
i. Maximization of exports earnings to ease the foreign exchange situation
ii. Maintenance of imports at the barest minimum consistent with the requirements
of defence and development

Import restriction were relaxed between 1954 and 1956. The heavy imports of capital iron and
steel etc. necessitated import restriction. Import licenses and quotas were used foe reducing
imports. As a result of the policy of import restriction and import substitution, the imports
steadily went down for some years in 1969-70. Exports also showed some dynamism over this
period. As a result the import policy of 1970-71 was further liberalised. Then the trade
development authority was set up in July 1970 to help enterprises in building up their exports. In
1
https://www.ibef.org/economy/trade-and-external-sector
1970 some countries suspended their aids due to the war with Pakistan. It necessitated reduction
imports. The oil crisis in 1973 and the consequent deterioration in the country’s balance of
payments led the government to tighten the controls on imports.2

2
https://www.exim-policy.com/