India's External Sector
Performance of India’s External Sector
The external sector has strengthened over the years with balance of payments showing surplus. The large capital flows in 2003-2004 have resulted in a further accumulation of reserves, rendering reserve position comfortable as per various indicators of reserve adequacy.
Foreign Exchange Reserves excluding gold and SDR stood at US$ 129.72 billion on Jan 8, 2005.
Trade liberalization is likely to counter some of the upward pressure on the exchange rate of the rupee.
The Re/$ exchange rate revolved around 44 in the month of January and February 2005
Direction of Trade
The regional shares in sourcing of imports in 2001-02 reveal enhanced shares from all major regions.
At the end of 2002 imports from SAARC region declined by 27.3% due to lower imports from Nepal and Pakistan.
Indo-Pakistan trade also continues to be depressed with decline in our exports by 22.9% in 2001-2002.
China has emerged as India's third highest trading partner. Its share is 5.0% in India's total foreign trade. It further rose to 5.6% in 2004-2005.
UAE has a share of 5.5% in India is total foreign trade.
USA as usual is leading with the total share of 11.1% in 2004-2005.
Prevalence of high international crude oil prices and the consequent gains in terms of trade have increased the share of India's trade with the OPEC region both in imports and exports.
Trade with SAARC region countries currently constitutes around 3% of India's total trade.
Composition of Trade
Export growth has increased in 2003-04 due to major contribution from manufacturing sector.
TRANSPORT OPTIMISATION MANAGEMENT (TOM)
Export of wheat, vegetables and fruits, meat and meat preparation has accelerated..
Exports of products such as marine products, cashew nuts, spices has declined during 2003-2004.
Yet the overall export growth has witnessed a record surge in India’s export.
The products most commonly exported today are manufacturing goods, chemical products, gems and jewelery, agricultural items and textiles.
The rise in imports is also broad based.
The products imported includes gold and silver, consumer goods, capital goods, food and allied products mainly edible oil.
For the period April-November 2004-05 imports were valued at US $ 64265.79 million representing an increase of 34.47% over the level of imports.
Petroleum and petroleum products alone accounted for $20 billion that is 47% of the increase in imports in imports in 2004 (April-Nov).
Equities and Markets
Foreign institutional investors invest in India confidently, efficiently and with maximum returns. A new breed of investors in India helped swell foreign purchases of Indian securities to more than US$ 6 billion in 2003. 15% of the total foreign institutional investment into global emerging markets (equivalent to US$ 34 billion) was pumpedinto India.
Equity market is a market where investors buy and sell securities providing ownership of a company’s share. It focuses on structuring and executing diverse equity financing transactions in the public and private markets for Corporates, Banks, Financial Institutions and the Government. India’s equity market is buoyant.
After the reforms, the markets have become transparent and accessible uniformly to everyone in the country, without bias to caste, religion, gender or location.
Over the second half of the nineties, this showed up in an unprecedented growth in the number of trades that took place on the exchanges from all over the country, the fall in the brokerage fees and the number of depository accounts that were opened.
Millions of people who were once spectators of the stock market now became participants.