To pursue the objective of globalization, the following measures have been taken:

Convertibility of Rupee: Economy of any country is to make its currency fully convertible i.e. allow it to determine its own exchange rate in the international market without any official intervention.

As a first step towards full convertibility of Rupee, Rupee was devalued against major currencies in 1991.

This was followed by introduction of dual exchange rate system in 1992-93 and full convertibility of the Rupee on trade account in 1993-94. India achieved full convertibility on current account in August 1994. Current account convertibility means freedom to buy or sell foreign exchange for the following transaction:

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1. All payments due in connection with foreign trade, other current business, including services and normal short-term banking and credit facilities.

2. Payments due as interest on loans and as net income from other investments.

3. Payments of moderate amount of ‘amortization of loans or for depreciation of direct investment.

4. Moderate remittances of family living expenses.

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Certain steps towards full convertibility on capital account have also been taken like authorized dealers have been allowed to borrow/invest abroad up to 15% of their unimpaired Tier capital, they have been delegated powers to release exchange for opening of offices abroad, banks fulfilling certain criteria have been permitted to import gold for resale in India and so on.

Full convertibility of capital account in India will still take many more years.

Import liberalization:

As per the recommendation of the World Bank, free trade of all items excepts negative list of imports and exports has been allowed. In addition, import duties on a wide range of capital commodities have been drastically cut down.

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The peak rate of custom duty has been brought down from 150 per cent in early 90’s to just 30 per cent in 2001-02 budget. Tariffs on imports of raw materials and manufactured intermediates have also been reduced.

In addition to the phased reduction of import duties, India, as a member of World Trade Organization (WTO) had also committed itself to the phasing out of quantitative restrictions over a six year period beginning 1997.

This period has been further reduced following the rulings of the Dispute Settlement Body of the WTO against India on an appeal made by the U.S.A. Since April 2001, the quantitative restrictions have been totally removed. Moreover, as a part of the Agreement on Trade Rates Intellectual Property Rights (TRIPs), the Patents (Amendments) Act 1999 was passed in 1999 to provide for Exclusive Marketing Rights (EMRs).

Opening the economy of foreign capital:

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The Government has taken a number of measures to encourage foreign capital to integrate the Indian economy with the global economy. Many facilities and incentives have been offered to the foreign investors and Non- Resident Indians in the new economic policy.

The FDI floodgates have been opened. Foreign Direct Investment up to 26%, 49%, 51%m 74% and even up to 100% has been allowed in different industries.

These include drugs and pharmaceuticals, hotels and tourism, airport, electricity generation, oil refineries, construction and maintenance of roads, rope-ways, ports, hydro- equipment and many more. Even defense and insurance sectors have been partially opened.

Many other measures have also been announced from time to time. For instance, foreign companies have been allowed to use their trademarks in India and carry on any activity of trading, commercial or industrial nature: repatriation of profits by foreign companies has been allowed, foreign companies (other than banking companies) wanting to borrow money or accept deposits are now allowed to do so without taking the permission of the RBI, foreign companies can deal in immovable property in India-restrictions on transfer of shares from on non-resident to another non-resident have been removed, reputed Foreign Institutional Investors (FII) have been allowed to invest in Indian capital market subject to certain conditions, etc. All these initiatives are supposed to integrate the Indian economy with the world economy.