trade policy for India with increasing imports and exports?

Question

If you are an adviser to the Indian government. Until now, government policy in India has been to severely limit imports into India, resulting also in a low level of Indian exports. The government is considering a policy shift to much freer trade. (a) What are the three strongest arguments that you can offer to the Indian government about why the policy shift to freer trade is desirable for India? (b) Which groups in India will be the supporters of the policy shift toward freer trade? Which groups will be the opponents?

Answer 1

As answered in your other question:

Argument in favor:
1. World is so integrated now that if we continue to restrict imports then we will have to face stronger resistance and consequences will be restrictions on our exports by other countries/ alliances.

2. By restricting imports we are encouraging inefficiencies in our industry. Though earlier that kind of support may have been desired however now this kind of biased support is not doing any good. Money by this protectionism is not going towards increasing efficiency or developing industry instead this is going in pocket of industrialist.

3. With Indian industrialist going across world for acquisition and developing business, with what face we can restrict imports and also why common man should pay more for something which will be available cheaper if import is not restricted. Let industry compete and show its strength.

Main supporter: Common Man and efficient industrialist
Main Opponent: Industrialist who have tasted blood of license raj and politician who will loose their strength of manipulating economy.

Answer 2

A freer trade policy can be advocated on the following grounds:
1. It facilitates equilibrium in the composition and direction of trade. We tend to select the best trade partners and select the best merchandise and services which we can sell with price-production advantage.
2. It promotes specialization in areas of production where we will have the most powerful natural leverage.
3. I will promote mobility of capital and also labor, including specialized and trained manpower.
It is easy to see from above that proponents of free market economy would support a freer trade thesis. Also, those who champion state intervention and controlled systems are likely to oppose the shift in policy toward freer trade.