INDUSTRIALIZATION AND ECONOMIC-GROWTH OF INDIA - INTERACTIONS OF INDIGENOUS AND FOREIGN TECHNOLOGY

The Indian economy was inward-looking and protected from internal and external competition. In the absence of competition, firms did not dev elop the technological capability needed for penetrating the global ma rket. Because of this, Indian firms were inefficient, did not seek acc ess to foreign technology, and did not develop the capability for inte grating with the global economy, even though India has excellent techn ological infrastructure and R&D institutions. Foreign direct investmen t was very low, and imports of capital goods were strictly controlled. Indian industry thus had a very low share in emerging areas where wor ld trade was growing rapidly. The liberalization and globalization pro cesses initiated in 1991 are facilitating many changes. Consequently, in developing countries, the government has to devise policies which i nduce the building-up of technological capability.