GLOBAL TRADE RELATIONS:
Foreign trade was subject to import tariffs, export
taxes and quantitative restrictions, while foreign direct investment (FDI) was
restricted by upper-limit equity participation, restrictions on technology
transfer, export obligations and government approvals; these approvals were
needed for nearly 60% of new FDI in the industrial sector. The restrictions
ensured that India FDI averaged only around $200 million annually between 1985
and 1991; a large percentage of the capital flows consisted of foreign aid,
commercial borrowing and deposits of non-resident Indians.
Since liberalisation, the value of India's international
trade has increased sharply, with the contribution of total trade in goods and
services to the GDP rising from 16% in 1990–91 to 43% in 2005–06. In 2006–07, major export commodities included engineering
goods, petroleum products, chemicals and pharmaceuticals, gems and jewellery,
textiles and garments, agricultural products, iron ore and other minerals.
Major import commodities included crude oil and related products, machinery,
electronic goods, basic electronics, gold and silver. In November 2010, exports increased 22.3%
year-on-year to  85,063 crore (US$16.16 billion), while
imports were up 7.5% at 125,133 crore (US$23.78 billion). Trade deficit
for the same month dropped from 46,865 crore (US$8.9 billion) in 2009 to 40,070 crore (US$7.61 billion) in 2010.
BALANCE OF PAYMENTS
Due to the global late-2000s recession, both Indian
exports and imports declined by 29.2% and 39.2% respectively in June 2009. The
steep decline was because countries hit hardest by the global mainly US recession, such
as United States and members of the European Union, account for more than 60%
of Indian exports.
FOREIGN DIRECT INVESTMENT:
As the fourth-largest economy in the world in PPP terms,
India is a preferred destination for FDI; India has strengths in
telecommunication, information technology and other significant areas such as
auto components, chemicals, apparels, pharmaceuticals, and gold jewellery India. Despite a
surge in foreign investments, rigid FDI policies were a significant hindrance.
However, due to positive economic reforms aimed at deregulating the economy and
stimulating foreign investment, India has positioned itself as one of the
front-runners of the rapidly growing Asia-Pacific region. India has a large
pool of skilled managerial and technical expertise. The size of the
middle-class population stands at 300 million and represents a growing consumer
market.
In March 2005, the government
amended the rules to allow 100% FDI in the construction sector, including
built-up infrastructure and construction development projects comprising
housing, commercial premises, hospitals, educational institutions, recreational
facilities, and city- and regional-level infrastructure. Some banned commercials were also being soled in India. Despite a number of
changes in the FDI policy to remove caps in most sectors, there still remains
an unfinished agenda of permitting greater FDI in politically sensitive areas
such as insurance and retailing. The total FDI equity inflow into India in 2008–09
stood at 122,919 crore (US$23.35 billion), a growth
of 25% in rupee terms over the previous period.
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FORIEGN RELATIONS
