ABSTRACT
Although India’s trading links with the outside world go back at least two thousand years, they were never an integral part of its domestic economy until about fifteen years ago. The only other period that comes close was the height of British colonialism in the late nineteenth century, when the subcontinent was forced to supply primary products such as jute, cotton, and indigo, and to consume finished British goods. For most of its post-independence history, India emphasized domestic industrialization, especially the development of heavy industries. The aim, stated explicitly and frequently, was to achieve economic self-sufficiency through substituting imports with domestic production.1 It accorded centralized planning a major responsibility for production and distribution, and tried to promote growth through extensive state investments and interventions.2 As typical of import-substitution industrialization (ISI) regimes, it protected nascent industries by putting up high tariff barriers. Its import duties on consumer products were at times the highest in the developing world.
