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Trade and External Sector

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Trade and external sector

April, 2011

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.

As on March 18, 2010, the foreign exchange reserves of the country reserves stood at US$ 303,506 million, as per Reserve Bank of India’s (RBI) weekly statistical supplement. Further, as per the RBI's supplement, the country's gold reserves were valued at US$ 22,143 million as on March 18, 2010.

India has been ranked at the second place in global foreign direct investments in 2010 and will continue to remain among the top five attractive destinations for international investors during 2010-12, according to United Nations Conference on Trade and Development (UNCTAD) in a report on world investment prospects titled, 'World Investment Prospects Survey 2009-2012'.

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.

A survey conducted by Fidelity and Greenwich Associates among 45 institutions, including central banks, sovereign wealth funds and pension funds in Asia and Europe, showed that India and China remain the favourite investment destination for large foreign institutional investors (FIIs).

Capital Inflows

The buoyancy in capital inflows continued during the second quarter of 2010-11 driven by large inflows under FII investments along with steady inflows under short-term trade credits and external commercial borrowings (ECBs), according to the report, “Macroeconomic and Monetary Developments Third Quarter Review 2010-11”, released by RBI. As per preliminary data, the net capital flow from April-September 2010-11 is projected to reach US$ 36.7 billion.


India attracted FDI equity inflows of US$ 1.04 billion during January 2011. The cumulative amount of FDI equity inflows from August 1991 to January 2011 stood at US$ 143.97 billion, while the amount of FDI inflow into India during the fiscal year 2010-11 (April-January 2010) stood at US$ 17 billion, according to the latest data released by the Department of Industrial Policy and Promotion (DIPP).

Services sector attracted the maximum FDI during April-January 2010 with US$ 2.98 billion. The country received maximum FDI from countries like Mauritius, Singapore, and the US with US$ 6.1 billion, US$ 1.5 billion and US$ 1 billion, respectively, during April-January 2009-10.


According to data released by Securities and Exchange Board of India (SEBI), stocks and bonds worth over US$ 17.19 billion were purchased by the foreign investors from the Indian capital market so far in January 2011, as per a news report published on January 31, 2011.


Exports during February 2011 were valued at US$ 23.59 billion which was 49.7 per cent higher in dollar terms than the level of US$ 15.75 billion during February 2010. Cumulative value of exports for the period April-February 2010 -11 was US$ 208.22 billion as against US$ 158.49 billion registering a growth of 31.4 per cent in dollar terms, according to data released by the Ministry of Commerce and Industry.

Imports during February 2011 were valued at US $ 31.7 billion representing a growth of 21.2 per cent in dollar terms over the level of imports valued at US$ 26.16 billion in February 2010. Cumulative value of imports for the period April-February 2010-11 was US$ 305.29 billion as against US$ 258.74 billion registering a growth of 18.0 per cent in dollar terms.

Exports from special economic zones (SEZs) grew by 56 per cent to US$ 31.78 billion during April-September 2010-11 over the year-ago period. In the first half of 2009-10, the exports from the tax- free enclaves were US$ 20.4 billion. The 122 operational SEZs have provided employment to 620,824 persons, according to the data by Export Promotion Council for EOUs &SEZ (EPCES).