Since the launch of the major liberalisation programme in the early Nineties, the Indian government has continued to exhibit a general commitment towards regulatory reforms while working toward market openness. This becomes particularly interesting given that during the 1980s India was one of the most protected economies in the world. The level of protection declined substantially with the on set of economic reforms in the 1990s. This is apparent from the trends in the overall tariff rate which indicates that there is a significant decline in the ad valorem tariff rates between 1986-7 and 1993-4, but a significant reduction took place between 1994-95 and 2002-03. At present, India’s average tariff in the manufacturing sector is 12.1 per cent. The Indian Government has taken a consensus view that India’s average tariff may be brought down to a level at par with that achieved by ASEAN. In a similar direction, there are some initiatives to bring tax harmonisation between goods and services as part of which, new goods and services tax (GST) is to be implemented from 2010. Further, the Indian government has allowed foreign investment in most of the sectors including the public sector units. FDI Policy has also been streamlined to accommodate the interests of small and marginal players in the market, for instance, certain sectors which were hitherto reserved only for small scale units are now being opened up for FDI beyond the cap of 24 per cent.1 Similarly, FDI in case of the retail sector would also be opened up with a segmented approach. As part of this, FDI would be first allowed in the electronics and sports good retail, followed by other sectors over a period of three years.2 In most of the sectors, India has adopted an open sky policy for FDI. Even in public sector unit’s strategies, sector partnership is allowed to foreign investment with management control.

(MARKHUB publication)