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Trade and External Sector

April, 2013

Introduction

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

"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.

Moreover, the overseas direct investment by Indian companies has increased by 179 per cent in January 2013 to record US$ 3.30 billion as against US$ 1.18 billion in January 2012.

Capital Inflows

India's foreign exchange reserves (Forex) stood at US$ 293,366.8 million as on March 22, 2013. Foreign currency assets aggregated to US$ 260,415.3 million and the value of gold reserves stood at US$ 26,292.3 million, as per weekly statistical data released by the Reserve Bank of India (RBI).

The total merger and acquisitions (M&A) and private equity (PE) deals in the month of January 2013 were valued at US$ 1.15 billion (73 deals), as per data released by Grant Thornton India. The total value of domestic deals in the month of January 2013 was US$ 650 million as compared to US$ 530 million during the corresponding month in 2012.

Foreign Direct Investments (FDI)

The total amount of FDI inflow into India (including equity inflows, 're-invested earnings' and 'other capital') from April 2000 to January 2013 stood at US$ 284,039 million, according to data released by Department of Industrial Policy and Promotion (DIPP). The cumulative amount of FDI equity inflows during April 2000 to January 2013 stood at US$ 189,962 million.

The Government of India has approved 12 FDI proposals amounting to Rs 2,609.27 crore (US$ 478.50 million), based on the recommendations of Foreign Investment Promotion Board (FIPB).

Foreign Institutional Investors (FIIs)

FIIs made a net investment of US$ 232.03 million in the equity market and of US$ 458.7 million in the debt market as on April 2, 2013, according to data released by the Securities and Exchange Board of India (SEBI).

The Ministry of Finance has raised the FII limit in Government Securities and corporate bonds by US$ 5 billion each, to attract long-term investments into the debt market.

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

RBI has raised the ceiling for FII holdings in Government Securities (G-Secs) and corporate bonds by US$ 5 billion each, to attract foreign funds into the bond market.