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Unit 14: Tertiary Sector in the Indian Economy

3. At the end of the ……………………, export subsidies were reinstated and augmented and Notes
import policy became very restrictive and complex.
4. The Free Trade & Warehousing Zones (FTWZ) shall be a special category of
…………………… with a focus on trading and warehousing.
5. The …………………… made major changes in the import licensing system by replacing a
large part of administered licensing of imports by import entitlements linked to export
earnings.

Caselet Economic Trade between Australia and India: A Case
Study of Foreign Direct Investment

ustralia and India have had few reasons in the past to develop systematic and
significant levels of economic engagement. This was due to very different positions
Athey have held in the world-system since the Second World War. De-colonization,
the fall of the British Empire, the weak status of the British Commonwealth, and the
realpolitik of the Cold War saw India and Australia located on different parts of the
geo-political and economic world map with small demographic and cultural flows, and
insignificant economic trade. Both countries developed similar economic policy regimes
that were essentially state-led nationalist projects of economic development with
concomitant policies of import-substitution, local industry-subsidization, highly-regulated
financial systems, and high tariffs. The last quarter of the 20th century saw a radical
revision of both nations’ economic strategies, with Australia moving first to drop many of
its trade barriers in the 1970s and ’80s. It is now one of the most open economies in the
world. India’s liberalization programme commenced much later in 1991 but nonetheless
has had a dramatic impact on its economic fortunes and growing status in the world
economy. With these changes there are increasing opportunities for bilateral trade and a
greater economic enmeshment in regional engagements and alignments in the Indian
Ocean and in wider Asian fora. One significant indicator of change in growing Australia-
India economic engagement is to look at Foreign Direct Investment (hereafter FDI).
Currently, the movement of FDI between these two countries is still not very large but has
a strong potential to grow over the short to medium term. This paper looks at the future
prospect of this growth and asserts that, by engaging in areas of comparative advantage,
it will benefit both national economies. Moreover, economic flows are also indicators of
great social and cultural traffic. The movement of FDI between the two countries will not
only encourage greater flow of peoples, especially outward migration from India to
Australia, but also trigger more Australian expatriates living in India (from a very low
base). Greater economic trade promises more cultural exchange.
Source: http://the.sagepub.com/content/105/1/79.abstract
14.2 Foreign Trade (Development and Regulation) Act

This section emphasises on the foreign trade (development and regulation) act. You will also
learn the functions of the director general of foreign trade.

The Act is designed to create and monitor foreign trade by enabling imports into India and
augmenting exports from India; and matters linked therewith. The Act is planned to authorise
the Central government to frame an Export and Import Policy and alter the policy as per
changing conditions. The Act grants the government the authority to execute the policy.

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