Import substitution was central to India’s trade policy during the country’s initial phase: planned development. It became more extreme after the mid-1960s, when a devaluation of the rupee prompted political backlash against the government and stricter controls on trade. In the words of Arvind Panagariya, socialism struck back “with a vengeance.” Toward the end of the 1970s, however, the harmful effects of protectionism—including low productivity, increased costs, and obsolete technology—began to loom large among policymakers. In 1976, the government reintroduced its Open General License (OGL) list of imports that did not require a license from the Ministry of Commerce. These items still came under the purview of certain rules—concerning actual user condition and industrial licensing—in the sector they were used in. To submit a report on this import liberalization, with the goal of improving industrial performance, the government established the Alexander Committee, which guided trade reforms after the renewal of the OGL regime. It was chaired by Commerce Secretary P. C. Alexander, and its members included R. N. Malhotra (Additional Secretary, Department of Economic Affairs); M. R. Shroff (Additional Secretary (Banking), Department of Economic Affairs); K. V. Seshadri (Chief Controller of Imports and Exports); Bimal Jalan (Economic Adviser, Ministry of Industry); P. K. Kaul (Additional Secretary, Ministry of Commerce); G. S. Sawhney (Member—Customs, Ministry of Finance); Vijay Kelkar (Economic Adviser, Ministry of Commerce, Member-Secretary); and V. R. Panchamukhi (Chief, Research & Analysis Division, Trade Development Authority).

In its report, the committee suggested that the OGL list be expanded to include more goods produced outside the country. Imports would be classified as banned, restricted (requiring a license), or OGL (not domestically available, not requiring a license, and subject to actual user condition, requiring that only the designated end-user, such as an industrial firm, could use the imported goods). It stated that licenses should be phased out, first by supplanting them with equivalent tariffs and then by slowly reducing these tariffs. The value of imports in promoting domestic development ought to be recognized, instead of viewing them as a threat to be controlled. The report also stated that the director general of foreign trade must responsible for managing exports and imports to suit the developmental needs of the country, the director general of technical development and other entities related to licensing must be revamped, and export subsidies must be gradually lowered to make exports competitive. The number of capital goods on the OGL list increased from 79 in 1976 to 1,170 in 1988 and 1,339 by the early 1990s. The number of intermediate goods on the list rose similarly, and OGL status came with customs-tariff exemptions. This laid the groundwork for the eventual modernization of domestic industry (including exports) by improving the supply of crucial noncompetitive inputs.

The report addressed the inefficiencies of protectionism, recommending the expansion of the OGL list to include more goods, a phased transition from import licensing to tariffs, and gradual tariff reductions. It emphasized the role of imports in boosting industrial performance and competitiveness while advocating reforms in export management and reduced reliance on subsidies. These measures aimed to modernize domestic industry and promote competition.