CMA Foundation · Fundamentals of Business Economics and Management · Economic and Business Environment
An Indian firm, Kaveri Textiles, can now import machinery with a much lower customs duty and without needing an industrial licence for expansion. Which reform feature does this primarily illustrate?
This illustrates liberalisation of industrial and trade policy. Cutting customs duty and abolishing the need for an industrial licence reduces government control over business decisions and imports, which is exactly what liberalisation under the post-1991 reforms aimed to achieve.
- ADisinvestment of public sector units
- BLiberalisation of industrial and trade policyCorrect
- CNationalisation of key industries
- DImposition of quantitative import quotas
Explanation
Removing licensing requirements and lowering tariffs is liberalisation of industrial and trade policy. Disinvestment concerns selling government stake in PSUs. Nationalisation and quotas move in the opposite, restrictive direction.
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