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Abstract
India was committed to a highly protective industrial and foreign trade regime since 1951 due to socialistic policy of governance. The protective regime controlled not only entry into industry and capacity expansion but also technology, output mix and import content. Import control and tariff provided high protection to the domestic industry. Industry suffered the ills of low productivity, obsolete technology and processes. Long lead times and high inventories lead to inefficiencies, and high cost which was passed on to the customers by way of price increases. Shortage, scarcity and premium ruled the roost ushering virtually no or little investment in technology and in upgrading processes, which resulted in inferior quality in all sectors.