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Trade & Export Policy and External Sector

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Trade & Export Policy and External Sector

July, 2013


India symbolises a vibrant nation with a growing economy, offering huge opportunities and possibilities. India ranked 66th among 142 countries in the Global Innovation Index 2013 and first in the Central and South Asia region in the innovation efficiency ratio, according to a report by Cornell University, INSEAD, World Intellectual Property Organisation and Confederation of Indian Industry (CII).

Recently, India became a member of the Enterprise Europe Network (EEN)—the 54th country to do so—in a bid to facilitate the flow of trade, investment and technology between small and medium enterprises (SMEs) in India and the European Union (EU), according to a CII newsletter on Micro, Small and Medium Enterprises (MSME) Business. The network collaborates with local business entities to enable SMEs to make the most of the European marketplace.

Further, with an investment of US$ 11 billion, Indian companies have created more than 100,000 jobs in the US, according to a US India Business Council (USIBC) report titled, 'Investing in America, How India Helps Create American Jobs'.

Capital Inflows

India's foreign exchange reserves (Forex) stood at US$ 284.64 billion as on March 22, 2013. Foreign currency assets aggregated to US$ 255.28 billion and the value of gold reserves stood at US$ 22.84 billion, as on June 28, 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 May 2013 were valued at US$ 3.16 billion with 73 deals, as compared to US$ 2 billion with 66 deals in May 2012, according to the data released by Grant Thornton.

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$ 293.64 billion, 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$ 195.60 million.

Seven FDI proposals for investment in the Indian pharmaceutical companies were cleared by the Foreign Investment Promotion Board (FIPB). Currently, 100 per cent FDI in pharmaceutical sector is permitted through automatic approval route in the new projects, but the foreign investment in the existing pharma companies requires FIPB approval. Earlier, the Government of India had approved 16 FDI proposals worth Rs 16.47 billion (US$ 274.02 million), based on the recommendations of FIPB.

Moreover, the Telecom Commission has approved upto 100 per cent FDI in the telecommunication sector in India. The move will allow some of the companies to structure their holdings more transparently without having Indian joint venture (JV) partners.

Foreign Institutional Investors (FIIs)

The FII inflows ranked second highest at US$ 25.8 billion during the one-year period ending March 2013. FIIs infused US$ 10 billion in Indian markets in the January-March 2013 period.

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