Explanation:

Liberalization of trade and investment regime was initiated under the New Economic Policy to increase the international competitiveness of industrial production and also foreign investments and technology into the economy. The aim was also to promote the efficiency of local industries and the adoption of modern technologies.
• To protect the domestic industries, India was following a regime of quantitative restrictions on imports. This was encouraged through tight control over imports and by keeping the tariffs very high. These policies reduced efficiency and competitiveness which led to the slow growth of the manufacturing sector.
• The trade policy reforms aimed at:

• Dismantling of quantitative restrictions on imports and exports. (An import quota is a type of trade restriction that sets a physical limit on the quantity of a good that can be imported into a country in the given period of time)
• Quantitative restrictions on imports of manufactured consumer goods and agricultural products were also fully removed from April 2001. Hence option 3 is not correct.
• Reduction of tariff rates. Export duties have been removed to increase the competitive position of Indian goods in the international markets. Hence option 1 is correct.
• Removal of licensing procedures for imports. Import licensing was abolished except in case of the hazardous and environmentally sensitive industries. Hence option 2 is correct.