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Measures of India towards globalization

The following measures have been taken by India to achieve the objective of globalisation.
  • ƒConvertibility of rupee: Full convertibility of rupee refers to allowing the currency to determine its exchange rate in the international market, without any official intervention. India achieved full convertibility on current account in August, 1994. To achieve full convertibility on capital account, many steps have been taken, for instance, certain banks have been permitted to import gold for resale in India, limit on banks’ investment from/in overseas markets has been raised, authorized dealers are allowed to issue international credit cards. Current Account Convertibility means freedom of buying or selling of foreign exchange for the following:
    • …All payments due related to foreign trade, other current account business, and normal short term banking and credit facilities
    • …Payment due as interest on loans and as net income from other investments
    • …Payments of moderate amount of amortization of loans or for depreciation of direct investment
    • …Moderate remittances for family living expenses
  • ƒImport liberalisation: As per the recommendation of the World Bank, free trade of all items is allowed except on the negative list of import and exports. For a wide variety of capital commodities, the import duties have been reduced. The rate of custom duty has also been reduced from 150% in early 90’s to 10% in 2007-08. Quantitative restrictions on foreign trade have been removed. Patents (amendments) Act, 1999, was passed to provide for Exclusive Marketing Rights (EMRs).
  • ƒPermission for inflow of foreign capital: In the new economic policy, Foreign Direct Investment (FDI) has been allowed in different levels in different industries like Drugs and pharmaceuticals, -100%, Private banking sector - 74%, Defense production insurance - 26% & Telecom sector-74%. These include drugs and pharmaceuticals, hotels and tourism, airport, electricity generation, oil refineries etc. Even defence and insurance sectors have been partially opened.
  • ƒFacility for foreign entrepreneurs: Foreign Companies have been allowed to use their trademarks in India and carry on any activity of trading, commercial or industrial nature. They can also borrow money or accept deposits without obtaining the permission of RBI. However, this facility is for non-banking companies only.

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