Liberalization to strengthen India’s incorporation in global value chains


Liberalization in India can be improved with the help of structural changes. This can strengthen India’s incorporation in global value chains and it will also speed up the Indian economy’s recovery after the COVID-19 pandemic.   

Earlier the Interaction Monetary Fund has stated that the uncertainties created by the negative impact of the COVID-19 pandemic had adverse effects on economy boosters like investment and human capital and this could affect mid-term growth.  

Promoting privatization, enhancing income boosting steps and improving expenditures efficiency were the steps suggested to tackle the problem.   

India has drawn a sky-high amount of Foreign Direct Investment or FDI, despite the pandemic situation.   

Policies to improve liberalization of Foreign Direct Investments in the defence sector, agricultural sector, insurance sector, telecom sector, etc. have helped India in recent years for achieving its drive.  

The policies also strengthened the present account financing mix and helped to contain external exposure.   

The future of Foreign Direct Investment Liberalization lies in the chemical and pharmaceutical industry, biotechnology, digital media and defence sector. Tremendous progression can be achieved by supporting these sectors.   

The essential supports demanded by these sectors include- labour reforms, land reforms and such structural changes. Also, steps to reduce informality, improve administration, to make the regulatory framework and laws reliable must be taken.  

If the administration, regulatory framework and laws are modernized, that itself will provide transparency and protects the public interest.  

Trade and investment liberalization is important and adequate steps must be taken.  

Diminishing custom duties or tariffs on intermediate commodities will be a progressive way to support backward linkages. This can increase the competition in the export of automobiles, industrial machinery, electronics, chemicals, pharmaceuticals, etc.  

Structural incentive schemes for indigenous production and liberalization of firms in non-strategic sectors will be an aid to FDI.  

The pandemic gave an unpredicted shock to the livelihoods of people. Substantial policy measures were taken by the government to pacify their condition.   

“The Indian authorities have responded with fiscal policy, including scale-up support to vulnerable groups, monetary policy easing and liquidity provision, and accommodative financial sector and regulatory policies.”, said Alfred Schipke.  

No one is secure until all are secure. The fear and uncertainties resulting from the pandemic are still in the air. Structural reforms are something that we look forward to. 

Follow and connect with us on Facebook, LinkedIn & Twitter


Please enter your comment!
Please enter your name here