The exim policy announcement declares what India has been forced to accept because of US intransigence with regard to permitting India to maintain some QRs for reasons of balance of payments vulnerability. Restrictions on 714 out of 1429 items have put out of the restriction from April 1st. it is worthwhile to mention here that this aboliduing of restriction is not merely a quantitative change rather it is a qualitative change because of the following reasons –

Firstly, they include items transactions, in which affect the livelihood of poor people of India. Secondly, they include commodities the production of which has been reserved for the small-scale sector on employment and distributive considerations. Finally, the list of 1429 includes a number of items for which there exists a put up demand among India’s well to do, the release of which in the wake of this round of liberalisation would result not just in more conspicuous consumption, but consumption that would be more profligate in the use of foreign exchange than has been true hitherto.

The concept of special economic zones (SEZ) is nothing new. It’s an export enclaves into which duty-free inspectors are to permitted and in which foreign investors are permitted to set up firms with up to 100 percent equity holding. In practice, this would merely amount to the creation of large sized free trade zones (FTZ), as its reflected in the fact that two such proposed FTZs are to be commented to SEZs.

Further, if we examine the kind of FDI flow into India in wake of liberalisation, we find three types of investment: Firstly, participations of foreign partners in many joint ventures have increased due to relaxation of FERA. Secondly, multinationals, in many cases, take over the domestic companies with very large market and thirdly, investment in infrastructural sector comes due to government concession. It is worth noticing that no such categories excepting last one is healthy for the economy.

It should be clear that a lot of these inflows are not even into green field projects and all of them are targeted at the domestic rather than export market. There is no reason to expect a shift from such FDI inflows to more export oriented flow.