After independence an economy which embark on a programme of development is required to extend its production capacity at a fast rate for which imports of machinery and equipment which cannot be produced in the initial stage at home are essential because such imports help to create new capacity of production. These imports are vital for a developing country. But at the same time it is essential that what we might do is not to reduce or destroy the trade connection we had before with the European countries but to build up new connections in other areas so that the existing trade connections that we have in the European areas would not be so large a proportion of our total foreign trade. Undoubtedly, due to a cute shortage of foreign exchange, extensive borrowing from foreign countries and international institution was necessary to overcome the balance of payment problem which can be managed by increasing foreign trade, steadily. India has a great potential for increasing its foreign tread with Asian countries because the Indian manufacture are readily acceptable in these countries. Similarly. India can import raw materials for her growing industries from these relatively less developed regions. Although India’s foreign trade has become much more diversified and excessive, dependence on OECD countries has declined. However, with the developing counters of Asia there is an improving up trend both in exports and imports. The only concern is that India has to become more and more liberal.

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Keywords: Foreign Trade Policy, FDI, Economy, Export, Import.