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Trade and External Sector

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Trade and External Sector

December, 2010

The trade and external sector of the country witnessed heightened momentum due to the growth in exports, increase in capital inflows and addition in the foreign exchange reserves.

The foreign exchange reserves of the country reached US$ 279.1 billion as on the end of March 2010. As on November 26, 2010, the reserves stood at US$ 293,979 million, as per RBI’s weekly statistical supplement. Further, as per the RBI's supplement, the country's gold reserves were valued at US$ 21,668 million as on November 26, 2010.

The 'OECD Investment Policy Reviews: India 2009' report hails India as both a major destination for foreign direct investment (FDI), and a major source of FDI. The report adds that India has become a major global player with high economic growth rates and its performance in the past year has been particularly impressive in view of the global collapse in FDI flows. Further, as per the World Investment Report 2009 India has been named as one of the top five most attractive locations for FDI for 2009-11.

Meanwhile, in the month of November 2010, India Inc's mergers and acquisitions (M&As) deal value stood at US$ 2,765 million, up from US$ 530 million in October this year, according to global consultancy firm Grant Thornton. The total value of domestic deals in November 2010 was US$ 0.46 billion as against US$ 0.21 billion in 2009.

Inbound deals were worth US$ 1.51 billion, while, the total value of outbound deals, Indian firms acquiring businesses abroad, was at US$ 0.80 billion during the month. A sector wise analysis shows that power and energy sector cornered 45 per cent of the total M&A deal pie, followed by banking and financial services which accounted for 18 per cent and mining and textiles (15 per cent), Grant Thornton added.

Capital inflows

As per the report, "Macroeconomic and Monetary Developments Second Quarter Review 2010-11", the net surplus in the capital account in the first quarter of 2010-11 exceeded the levels of the previous two quarters, as well as the financing need in the current account. The net capital flow from October-December 2010 is projected to reach US$ 14.7 billion, while the figure would touch US$ 16.1 billion during January-March 2011.


India attracted FDI equity inflows of US$ 2.1 billion during September 2010. The cumulative amount of FDI equity inflows from August 1991 to September 2010 stood at US$ 140 billion, while the amount of FDI inflow into India during the fiscal year 2010-11 (April-September 2010) stood at US$ 2 billion, according to the latest data released by the Department of Industrial Policy and Promotion (DIPP).

Services sector attracted the maximum FDI during April-September 2010 with US$ 2 billion. The country received maximum FDI from countries like Mauritius, Singapore, and the US with US$ 3.8 billion, US$ 1.1 billion and US$ 724 million, respectively, during April-September 2009-10.


The total inflows of foreign institutional investors (FIIs) have crossed the record US$ 38.76 billion mark so far in 2010, as per a news report published on December 2, 2010. According to data available with Securities & Exchange Board of India (SEBI), FIIs have made investments worth US$ 4.11 billion in equities and invested US$ 667.71 million into the debt market.


India’s exports during October 2010 were valued at US$ 17.9 billion registering a growth of 21.3 per cent in dollar terms than the level of US$ 14.8 billion during October 2009. Cumulative value of exports for the period April-October 2010 was US$ 121.3 billion as against US$ 95.7 billion, registering a growth of 26.8 per cent in dollar terms, over the same period last year.