Abstract. The present study seeks to examine the impact of foreign trade policy on economic growth and thus, annual data regarding export, import and GDP are collected from the annual report of the Reserve Bank of India (RB) over a period from 1970 to 2018 and crossed checked with the data posted on the official website of the RBI. Johansen co-integration test is applied to measure the long run relationship between the variables and the short run dynamic is examined by VECM. Here, dummy variable is used to examine the impact of new economic policy on economic growth for foreign trade policy and it is evident that adoption of NEP in 1991 has positive impact on Indian economic development and it is influential for foreign trade policy.

Keywords: GDP, export, import, Dummy, VECM.