At the time of independence India became exporter of primary products like raw silk, cotton, wool, sugar, Indigo, jute, etc and importer of finished consumer goods like cotton, silk and woollen clothes and capital goods like light machineries produced in the factories of Britain. This was all due to the restrictive policies of the colonial government in India.

Britain maintained a monopoly control over India's exports and imports and more than half of India's foreign trade was restricted to Britain and some other countries with which India was allowed to do foreign trade were China Sri Lanka (Ceylon), Iran (Persia).