The correct option is 1 and 3 only.
Explanation
Liberalisation of foreign trade refers to the relaxation of government restrictions, such as tariffs, quotas, and licensing requirements, to facilitate the free flow of goods and services across national borders. In the Indian context, this marked a paradigm shift from a protectionist regime to an open economy integrated with the global market.
Statement 1 is Correct:
Liberalisation is defined as the removal or reduction of barriers and restrictions set by the government on international trade and investment. This involves dismantling licensing regimes, removing quantitative restrictions (quotas), and lowering customs duties to encourage competitive markets.
Statement 2 is Incorrect:
India did not initiate liberalisation immediately after independence in 1950. From the 1950s until 1990, India followed an inward-looking strategy known as Import Substitution Industrialization (ISI), which protected domestic industries through high tariffs and strict import quotas. The policy of liberalisation was initiated in 1991 as part of the New Economic Policy (NEP) in response to a severe Balance of Payments crisis.
Statement 3 is Correct:
Under the liberalisation policy, trade barriers were significantly reduced but not completely eliminated. While quantitative restrictions on imports were largely removed and tariff rates were slashed (from peak rates of over 150% in 1991 to much lower levels), the government retains the right to impose customs duties and regulate the trade of specific goods for reasons related to national security, environmental protection, and the protection of domestic livelihoods.
Key Takeaway:
The liberalisation of India's foreign trade began with the 1991 Economic Reforms, shifting the economy from a closed, protectionist model (Import Substitution) to a more open, market-oriented framework, although certain regulatory barriers remain.