India's economic activity from 1941 to 1991
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The History of India’s Trade and Economic Activity from 1947 to 1991India is now a growing economy and a very powerful worldwide player to be. Economically speaking, it is the third most important country in Asia (the country being one of the economic tigers), and the twelfth largest economy in the world. In order to reach this level, the country had to go through a lot of changes and adjustments since 1947.
Right after the decolonization of India from Britain in 1947, the economy of the country took a direction which is more to be associated with a mixed economy, comprising mainly of state owned businesses. Protectionism became a motto, and government the one to dictate business rules. In other words, the country strongly limited both imports and exports of goods and services and was hostile to any kind of foreign direct investment from any company. The Coca Cola Company experienced this policy and temporarily left the country in 1977 rather than revealing its formula to the government or transferring the ownership as required under the Foreign Exchange Regulation Act enforced at that time. This act aimed to protect, secure and develop the interests of the country, but it just happened to be synonymous with big burden and high risk for foreign companies. Just like Coca Cola, foreign companies were running the risk to face ultimatums or other situations such as confiscation, expropriation or domestication besides other trade barriers (tariffs). As a result this turned out to be harmful for India itself as well, as isolationism resulted in an economic deterioration notably due to a widening current account deficit. Indeed, there is one thing that India couldn’t help importing in a very large quantity of: oil.
In 1991, India understood it was time for a change. Under Manmohan Singh’s influence, the minister of economy, the country started its journey to privatization and liberalization. Step by step, the country would liberate itself from the shackles of