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was a decline in the growth of industry. Moreover, a fall in the demand for consumer goods and a cutback in overall private and public investment gradually led to downturn in overall export levels. However, despite these tough challenges the government had to face, the performance of the domestic economy seemed to have improved significantly towards the mid 1990s and early 2000. There was a surge in FDI activity and the majority of domestic industries were beginning to experience higher productivity and growth rates.

In addition, another important factor is operating in an open economy with very low barriers to entry, which can also trigger different reactions with regards to the response of domestic industry interacting with global markets and facing foreign competition. For several decades the domestic industries of India were under the heavily protected umbrella of the government. Therefore when trade liberalisation and other free trade measures were introduced, local firms were faced the huge challenge of dealing with intense foreign competition. In addition, the quality level of goods manufactured by local firms were generally of a very low standard in comparison to international products, hence it became an even more difficult challenge for manufacturing firms to re-establish their products in order to rival their counterparts. In addition to these obstacles faced by the economy in light of the trade liberalisation era, international competition also had adverse effects on the levels of exports of domestically manufactured goods. In return, this would also have an impact on the balance of trade for the exporting country, since the goods produced locally may not be desired in foreign markets; therefore imports may exceed exports and can to a trade deficit. Nevertheless, import liberalisation measures have since helped the majority of domestic industries to enhance their methods of production by improving technology and acquiring new methods of production. In addition, a rise in FDI activity in domestic markets has also helped local firms benefit from spill over effects.

Furthermore, during the initial stages of trade liberalisation period the lack of investments made on research and development by local firms were very low. Hence the majority of manufacturing firms were unable to gain comparative advantage when competing against foreign industries that produce similar products. Moreover, if local firms engage in research and development activities, they are more likely to accumulate new innovations that could help improve their efficiency and productivity levels. In addition, the use of new methods and technology can also provide domestic industries with the opportunity to produce highly specialised goods that are more distintictive. Furthermore, the use of natural resources and the relatively cheap labour can also be a driving factor for local firms to cut back on production costs and increase output. One of the socioeconomic benefits of liberalisation era has been that a mere 300 million people were helped from poverty, Doing Business in India report (2009). This helped the start up of Small and Medium sized Enterprises (SMEs) in the rural areas where poverty was high, hence more job opportunities were created for the local people. Moreover, there has been a general increase in the本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。