Globalisation

Globalisation means integrating the domestic economy with the world economy through freer flows of trade, capital, technology and, to a lesser extent, labour. It removes barriers that earlier kept the Indian economy relatively closed to the rest of the world.

Key steps toward globalisation after 1991

• Trade liberalisation — quantitative restrictions (quotas) and licensing on most imports were removed; India progressively cut tariff rates over the 1990s and 2000s.
• Opening to foreign investment — FDI and Foreign Institutional Investment (FII) were permitted in a growing list of sectors.
• Convertibility of the rupee — the rupee was made fully convertible on the current account (for trade transactions), and partially convertible on the capital account.
• Joining/engaging global institutions — India became a founding member of the World Trade Organisation (WTO) in 1995 (successor to GATT), which required it to further reduce trade barriers and align its trade policy with multilateral rules.
• Outsourcing — globalisation enabled India to become a major hub for business-process outsourcing (BPO) and IT-enabled services, since companies abroad could now contract Indian firms to perform services remotely. …