COMMITTEE ON EXPORT STRATEGY FOR 1980s, FINAL REPORT (TANDON COMMITTEE), Ministry of Commerce, Government of India, New Delhi, December 1980.
THE year 1979 marked the end of the Second United Nations Development Decade. ThisJDecade witnessed a near complete collapse of the international monetary system^ the quadrupling of oil prices, unprecedented inflation and recession in almost all major industrialized cmnitlJLfis. Many Third World governments, their power being increasingly undermined by the failure of capitalism to generate development, are desperately searching for an economic strategy that will bring about independent capitalist industrialization. Export-led industfia-lization is becoming an increasingly attractive proposition as a solution to the problem of "stagnation of the domestic market'5 facing the Third World governments — a solution providing an easy "escape route", however illusory.
At the time of independence, Indian planning and development were limited by two inter-connected pressures. First, she was forced to spend large sums of foreign exchange in importing almost all manufactured goods. Second, necessary foreign exchange could be earned only through primary commodity exports to the developed capitalist countries. Butthese exports were continually subject_ to violent swingsjn demand and reduced purchasing power. The lack of foreign exchange, sufficient to^maintain ev^nTminimal levels of growth and consumption, necessitated substantial foreign debt with the resultant continued foreign domination.
Fearful of growing internal pressures for change, and desiring to ensure and expand its position in the economy, the Indian government sought to break out of dependence. Since dependence appeared to rest on a continual lack of foreign exchange and the need to import all manufactured goods, an import-substitution industrialization strategy, it was felt, would lead to replacement of these imports by