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Trade & Export Policy and External Sector

October, 2013

Introduction

India stood highest with 142 points, followed by UAE (132 points) and Indonesia (127 points) on the HSBC Trade Confidence Index. "The HSBC Trade Confidence Index reports a positive outlook for world trade prospects over the next six months, as companies expect demand to increase," as per the HSBC Global Connections Report.

India has estimated infrastructure spending at US$ 1 trillion in the 12th Five Year Plan (2012-17). India is set to increase its share of infrastructure-related imports from 67 per cent now to 71 per cent by 2030. India is also expected to become the third-largest exporter of intermediate goods by 2030, from its current position at 11th place.

India symbolises a vibrant nation with a growing economy, offering huge opportunities and possibilities.

Capital Inflows

India's foreign exchange reserves (Forex) stood at US$ 277,727.3 million as on October 4, 2013. Foreign currency assets aggregated to US$ 249,324.6 million and the value of gold reserves stood at US$ 21,765.4 million, as on October 4, 2013, according to the weekly statistical data released by Reserve Bank of India (RBI).

In addition, the total mergers and acquisitions (M&A) and private equity (PE) deals in the month of August 2013 were valued at US$ 2.84 billion with 68 deals, according to the data released by Grant Thornton. The top 5 M&A sectors were identified as oil & gas, telecommunication, cement, real estate and IT & ITeS.

Moreover, India also received US$ 3.25 million venture funding in the solar sector during the third quarter of 2013-14.

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 April 2013 stood at US$ 301.787 million, according to data released by Department of Industrial Policy and Promotion (DIPP). The cumulative amount of FDI equity inflows during April 2000 to April 2013 stood at US$ 200.335 million.

The Government of India has approved three FDI proposals amounting to Rs 38.09 crore (US$ 6.20 million). In addition, 15 FDI proposals were approved amounting to Rs 2,000.49 crore (US$ 325.82 million), based on the recommendations of Foreign Investment Promotion Board (FIPB).

Foreign Institutional Investors (FII)

FIIs have invested Rs 13,000 crore (US$ 2.12 billion) in the Indian stock market during September 2013, after the announcement of new measures to boost the economic growth by Mr Raghuram Rajan, Governor, RBI.

Investments in the Indian markets (equity, debt and derivatives) through participatory notes (P-Notes) increased to Rs 1.48 trillion (US$ 24.10 billion) at the end of July 2013, according to the data released by Securities and Exchange Board of India (SEBI).

FII will now be able to enter the Indian markets faster and get themselves registered more quickly with the regulator. SEBI has given its nod to the suggestions of the Chandrasekhar Committee, which include lower Know Your Client (KYC) requirements for entities backed by governments and doing away with the need for registration with the regulator.

The foreign portfolio investors (FPIs) will get all the tax benefits available to FIIs. They will also not have to fulfill the KYC norms separately for opening bank accounts, according to the Ministry of Finance.