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Liberalisation in India is a reform adopted to accelerate the industrial growth and socioeconomic development of the country. The main objective of liberalisation is to permit Indian and foreign entrepreneurs to enter the power, road, and communication as well as in the petroleum sector so that the Central and State governments can lay greater emphasis on the social and economic development programmes. The salient features of the policy of liberelisation are as under:
1. Under liberalisation the new Industrial Policy, July 1991, was adopted to remove the bureaucratic control, which was a barrier in the industrial development of the country. In fact, liberalisation means deregularisation of the industrial sector by cutting down the minimum administrative interference in the operation, instead, letting the market forces operate through the profit motive of the producers and free competition among them to regulate and guide the future development of the sector.
2. Under the policy of liberalisation, the requirement of industrial licensing has been abolished for all industries except for 16 products, namely, (i) aerospace equipments, (ii) alcohol, (iii) asbestos, (iv) chamois leather, (v) coal and lignite, (vi) consumer electric goods, (vii) defence equipments, (viii) electric equipments, (ix) drugs and pharmaceuticals, (x) fur-skin, (xi) hazardous chemicals, (xii) industrial explosives, (xiii) paper and pulp, (xiv) petroleum and natural gas, (xv) plywood, and (xvi) sugar.
3. The liberalisation has opened the economy to direct foreign investment with 51 per cent equity, and started with the process of reducing government subsidies.
1. Abolition of restrictions on most import and export items.
5. Substantial reduction in import tariffs and almost complete removal of restrictions on foreign investments.
6. Disinvestment of shares of public undertakings to reduce government share holding to 51 per cent. This will improve the efficiency of the public sector as the decision-making process will be efficient and prompt.
differentiated economic management like relaxation in certain basic restrictions applicable to the rest of the economy; and free inflow of foreign capital.