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Trade and External Sector

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Trade and External Sector

January, 2013


"India is clearly becoming a more and more important player on the world stage in G20 context, in terms of its role in the global economy. It is very useful for us to exchange ideas and build the basis for future collaboration," as per Mr Ben Bernanke, Chairman, US Federal Reserve.

India is the fifth best country in the world for dynamic growing businesses, according to the Grant Thornton Global Dynamism Index. The index gives a reflection of how suitable an environment it offers for dynamic businesses.

Germany, India's largest trading partner in the European Union, is bullish about its prospects. "India has a huge advantage over a number of countries, as its democratic system provides long-term stability. But India has another asset in its enormous market," said Mr Michael Steiner, Germany's Ambassador to India.

In addition, India is expected to be the second largest manufacturing country in the next five years, as per Deloitte Touche Tohmatsu Ltd (Deloitte).

Capital Inflows

  • India's foreign exchange reserves (Forex) stood at US$ 296,538.8 million as on December 21, 2012. Foreign currency assets aggregated to US$ 261,949.8 billion and the value of gold reserves stood at US$ 27,803.1 million, as per Reserve Bank of India (RBI)
  • The total value of private equity (PE) and mergers and acquisitions (M&As) deals in November 2012 have increased five times to US$ 10.1 billion, highlighted a study by Grant Thornton India
  • The value of announced M&A deals involving Indian companies stood at US$ 43.4 billion last year, a 12 per cent rise compared to 2011. The average deal size for disclosed values rose to US$ 91 million from US$ 76.6 million in 2011, according to a Thomson Reuters research report
  • PE firms have invested US$ 2.5 billion in India across 97 deals in the third quarter (Q3) of 2012, registering four per cent increase in terms of value, as compared to US$ 2.4 billion in Q3 of 2011, according to a study by PricewaterhouseCoopers (PwC)

Foreign Direct Investments (FDI)

The total amount of FDI inflow into India (including equity inflows, 're-invested earnings' and 'other capital') from April 2012 to October 2012 stood at US$ 21,850 million, according to data released by Department of Industrial Policy and Promotion (DIPP). The cumulative amount of FDI equity inflows during April 2012 to October 2012 stood at US$ 14,787 million.

  • The Foreign Investment Promotion Board (FIPB) of India has approved 12 FDI proposals worth Rs 802 crore (US$ 145.82 million)
  • FDI inflows into the services sector of India have registered an increase of 5 per cent to US$ 3.6 billion during April-October 2012
  • The Government of India has raised FDI in micro and small enterprises (MSEs) from 24 per cent to 100 per cent, in order to promote capital investment by foreign multinational companies (MNCs) in small and medium enterprises (SMEs)

Foreign Institutional Investors (FIIs)

FIIs made a net investment of Rs 11,364 crore (US$ 2.07 billion) in the equity market and of Rs 7,851.70 crore (US$ 1.43 billion) in the debt market upto October 12, 2012 in the current year, according to data released by the Securities and Exchange Board of India (SEBI).

SEBI has announced that reinvestment facility for FIIs and sub-accounts will also be applicable for limits acquired even before January 2012.