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10% of Gross Industrial Product in the 1970s to approx. 15% by the
beginning of the 1990s. Yet, especially in view of India's high interna
tional standard in areas of nuclear energy, satellite communication and
deep sea research, the volume of foreign trade has remained relatively
small. Thus, the country continues to import many sophisticated technol
ogy products. Although India has vast deposits of oil and gas, oil can be
singled out in terms of its highest position in the import statistics.
The country’s relatively marginal role in international trade rela
tions can be traced back to the strong dominance of import substitution
strategy and the absence of a consistent export promotion strategy till the
mid-eighties. An attempt was made to counter the export slackness in the
traditional as well as in the non-traditional export items, the problem
having been identified as early as the 1950's. But the efforts got trapped
in extensive and complicated instruments of development. These instru
ments were, of course, amended several times which resulted in great
uncertainty. No long-term export promotion strategy was developed.10
The trade policy reforms initiated with Rajiv Gandhias head of the
government in 1985 and continued at the same pace by Prime minister
Rao from 1991 onwards helped intensify the foreign trade transactions.
The key component of Rao's reform program was to by and large
withdraw the state control on industry and foreign trade. In 34 branches
The development of India's trade gap since 1980/81
Source: Katti, V: The Liberalisation of Indian Trade Policy, in: Fasbender, K.
(ed): Indian-European Trade Relations, Humburg 1992, p. 92. The Economist Intelli
gence Unit (EIU): India, Nepal-Country Report 3rd quarter 1933. London, New York
1933
