Economic Survey- External Sector

“Exports and Imports of India”

 C o n c e pt u a l C la r it y

M o r e E x p o r t s = M o r e Fo r ex
How?

U S Ta p e r i n g = C a p i t a l o u t f l o w s f r o m I n d i a
How?

D i s a d va n ta g e o f F D I i n B O P ?
 M o r e E x p o r t s = M o r e Fo r ex
C o n c e pt s:
How?

Indian Company The deals are made “Banana” sells shoes

“Banana” Exports in USD $$$ worth Rs 70,00,000. In
“shoes” Globally USD $$$ worth $100,000.

The Importer Pays in USD

$$$ to “Banana”

RBI gets Forex of SBI contacts RBI and asks ”Banana’s” Banker i.e. SBI
$100,000 in its for Rs 70,00,000 and take receives USD $ 100,000 in
reserves. $100,000 since “Banana” “Banana” company’s
wants Rupees (INR), not account.
USD $$$
 C o n c e pt s: U S Ta p e r i n g = C a p i t a l o u t f l o w s f r o m I n d i a
How?

What is US Impacts on India

Tapering???
The Yield on Indian Govt’s
The Fed decides to STOP Buying Bonds. bonds rise. Higher cost of
As demand for Bonds goes down, the Borrowing
price falls and the yield goes up. (price
of bond is inverse to yield on bond) FIIs withdraw investments
from India. Less
The Fed decides to raise “policy rates” investment affects growth,
to tackle rising Inflation. Rise in stock markets
Interest Rates = higher returns to FIIs
in USA = capital flight of FIIs from Flight of Capital = more
India demand for USD $$$ =
depreciation of INR =
Imports become expensive
 C o n c e pt s: D i s a d va n ta g e o f F D I i n B O P ?

How is FDI BAD for

BoP?

Net International Investment Position = As FDI rises, Capital Flow

difference between rises to India = Good for
1. Financial liabilities of residents to BOP
non residents. FDI, FPI = purchase
of Equity in an Indian company. The
Income on this Equity is liability for As FDI becomes old,
Indian Company. income on investment
2. Financial Assets of Indian residents starts flowing out of India
abroad = ODI, OPI as returns on investment =
Bad for BOP
C o n c e pt s: D i s a d va n ta g e o f F D I i n B O P ?
 I n d i a ’s E x p o r t s o f G o o d s

Ratio of Commodity Exports in total

Exports = 47%

India Imports Crude petroleum but

Exports Refined Petroleum, Oil and
Lubricants = 15% of total exports

Agri Exports = 14% of total Exports

 I n d i a ’s E x p o r t s o f G o o d s

Where are we Exporting???

 I n it i at i v e s to B o o st E x p o r t s

RoDTEP - Remission of Duties and Taxes on Exported Products

Taxes and Duties should not be Exported

Reimburse multiple duties and taxes incurred by an exporter in

the process of manufacture and distribution of exported
products.

Provides a Level Playing Field to Domestic Industry Abroad

Example- Electricity Duty, VAT, Fuels used in transport, Stamp

duty, Mandi Tax
 I n it i at i v e s to B o o st E x p o r t s

PLI – Production Linked Incentive Scheme

Outlay of Rs 1.97 lakh

crore.

Government incentives that

are directly linked to
manufacturing performance.
The more goods companies
manufacture in India the
better incentives they will
get. The incentives are of
diverse types: subsidies,
monetary benefits, etc.
 I n it i at i v e s to B o o st E x p o r t s

Developing District as Export Hub:

Identify Unique products in every district

with export potential. For ex- GI Tag based
products

Setup District Export Promotion Committees

(DEPC) to identify
 I n it i at i v e s to B o o st E x p o r t s

Infusion of capital in EXIM Bank:

Exim Bank extends Lines of Credit (LOCs) to overseas financial

institutions, regional development banks, sovereign governments
and other entities overseas, to enable buyers in those
countries to import developmental and infrastructure projects,
equipment, goods and services from India, on deferred credit
terms

Govt has infused capital of Rs 750 crore in EXIM Bank

 I n it i at i v e s to B o o st E x p o r t s

Capital Infusion in ECGC:

ECGC provides Insurance cover to banks against risks in export

credit lending to exporters

Govt has infused capital of Rs 4400 crore in ECGC to increase

its capacity to underwrite risks
 I n it i at i v e s to B o o st E x p o r t s

Efficient Logistics Ecosystem to Boost Exports:

Efforts have been made to make an efficient, competitive and

resilient logistics ecosystem in India

UNESC for Asia

Pacific- Global survey
on digital and
sustainable trade
facilitation.
India’s score improved
from 78 in 2019 to
90.3 in 2021.
 I n it i at i v e s to B o o st E x p o r t s

PM Gati Shakti National Master Plan (NMP):

Connect various economic zones.

Done by inter-ministerial planning and execution on projects

like Bharatmala, Sagarmala, Inland Waterways, UDAN etc

Example- ISRO’s spatial planning tools can be used for

Geoinformatics and Space Applications
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I n d i a ’s S e r v i c e E x p o r t - I m p o r t R a t i o
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