India has always been an investor-friendly and liberal nation. Investors across the globe have retained faith in the resilience of the Indian economy and hence have been increasing their holdings in Indian companies. The country has aligned itself well with global patterns to accept foreign institutional investments (FIIs), capital inflows and foreign direct investments (FDI) with open arms. The Government also, has always played vital role in formulating external policies and foreign trade regulations and hence, has stayed an active member on the global stage when it comes to bilateral talks and strategic alliances.
India enjoys numerous well-cemented trade relations across the developed world including the US and the UK. While UAE appears to be the most significant trading partner, relations with Saudi Arabia are also developing in terms of volume and priority. Within Asia, India has bonded well with Malaysia, Vietnam and Indonesia and trade volume with these countries is anticipated to grow at around 11 per cent over the next five years.
According to the Reserve Bank of India (RBI)'s weekly statistical supplement, India's foreign exchange reserves or forex reserves stood at US$ 287.62 billion for the week ended July 6, 2012. Foreign currency assets (FCAs), the biggest component of the forex reserves, aggregated to US$ 254.63 billion and the value of gold reserves stood at US$ 25.76 billion for the week. The value of special drawing rights (SDRs) was calculated at US$ 4.35 billion, and India's reserves with the International Monetary Fund (IMF) came out to be US$ 2.87 billion.
India received FDI worth US$ 1.33 billion in May 2012 while cumulative inflows for April-May 2012-13 stood at US$ 3.18 billion.
The sectors which attracted huge FDI inflows during the 2-month period of 2012-13 are: services (US$ 754 million), pharmaceuticals (US$ 401 million), metallurgical industries (US$ 314 million), construction (US$ 181 million), housing and real estate (US$ 132 million) and power (US$ 100 million).
Mauritius infused highest inflows worth US$ 1.13 billion, followed by Netherlands (US$ 409 million), the UK (US$ 378 million), Singapore (US$ 231 million), Japan (US$ 132 million) and Cyprus (US$ 177 million).
The Government has recently cleared 14 FDI proposals worth Rs 1,584.11 crore (US$ 281.64 million) based on the recommendations of Foreign Investment Promotion Board (FIPB).
FIIs have displayed intense optimism in India's growth prospects as the country remained relatively insulated from the global economic meltdown; thanks to strong domestic consumption, focus on infrastructure development and robust banking system.
According to a UN report, India is the third most favoured destination for investment after China and the US for major global companies. The report further anticipates that foreign investments in India could increase by more than 20 per cent in 2012-13.