EMERGING TRENDS IN INDIA’S FOREIGN TRADE

STRUCTURE OF PRESENTATION

1. Indian Economy: A Snapshot

2. Merchandise Trade: A Perspective

3. Services Trade: Recent Trends

4. India’s Investment Flows

5. Exim Bank: An Overview

2

INDIA: AN EMERGING ECONOMIC POWERHOUSE

World’s 10th largest economy based on nominal GDP in 2013

World’s 3rd largest economy in terms of purchasing power parity (US$ 5.1 trillion in 2013), after USA and China;

expected to cross US$ 6 trillion by 2016

Recovery in real GDP growth; estimated growth rate of 5.4% - 5.9% in FY 2015 [Union Budget 2014-15]

Favorable demographic profile: 64.8% of the population is in the age group of 15 to 59 years

Stable forex reserves, increased at a CAGR of 7.9% over FY 2005 to FY 2014

Sovereign rating: Baa3/Stable (Moody’s), BBB-/Negative (S&P), BBB-/Stable (Fitch)

Ranks 3rd among the most favoured investment destinations in the world (behind China & USA) in UNCTAD’s

World Investment Prospects 2013-15

JBIC Survey on Overseas Business Operations by Japanese Manufacturing Companies:

• Second to China as the most promising country for investment in the long term

• Second to Indonesia as the most promising country for investment in the medium term

Source: IMF, World Economic Outlook Database; IIF; UNCTAD World Investment Prospects Survey 2013–2015

Strong Economic Fundamentals

3

INDIAN ECONOMY – SNAPSHOT

Note: e: estimates; * - Actuals Cumulative value of exports during April-June 2014-15 was US$ 80.1 billion, growing at 9.3% and imports was US$ 113.2 bn, growing at 6.9%

Source: IIF, MOCI, CSO, RBI

PARAMETER FY 2004 FY 2009 FY 2012 FY 2013 FY 2014

GDP (current prices, US$ bn) 617.3 1224.1 1880.3 1858.7 1877.5

GDP Growth (constant prices, %) 8.5 6.7 6.7 4.5 4.7e

Exports – Merchandise (US$ bn) 63.8 185.3 306.0 300.4 312.6

Imports – Merchandise (US$ bn) 78.1 303.7 489.3 490.7 450.1

Exports – Services (US$ bn) 26.9 106.0 142.3 145.7 151.5

Software Exports (US$ bn) 13.3 46.3 62.2 65.9 69.5

Imports – Services (US$ bn) 16.7 52.0 78.2 80.8 78.5

Current Account Balance (US$ bn) 14.1 -28.7 -78.2 -87.8 -32.4

Forex Reserves (US$ bn) (as on end-March) 113.0 252.0 294.4 292.0 304.2

FDI Inflows (US$ bn) 4.3 41.9 46.6 34.3 36.0

FDI Outflows* (US$ bn) 1.9 19.4 10.9 7.1 9.2

4

INDIA’S INTERNATIONAL TRADE

Source: Ministry of Commerce & Industry, Government of India

Towards Increased Global Integration through Trade

India’s total merchandise trade increased from US$ 489

bn in FY 2007 to US$ 763 bn in FY 2014

Fall in Trade deficit to US$ 138 billion in FY2014 from

US$ 190 billion in FY 2013

Policy measures lead to decline in imports during

FY 2014

Exports from India have increased by 9.3% in the first

quarter of FY 2015, to US$ 80.1 billion

The long term policy objective of the Government is to

double India’s share in global trade by 2020

Share of India in world merchandise export – 1.7% in

2013; Rank– 19 (up from 26th in 2007)

18

5.3

17

8.8

25

1.1

30

6.0

30

0.4

31

2.6

30

3.7

28

8.4

36

9.8

48

9.3

49

0.7

45

0.1

489.0 467.1

620.9

795.3 791.1 762.7

-118.4 -109.6 -118.7 -183.3 -190.3

-137.5

2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

US$

bill

ion

Exports Imports Total Trade Trade Balance

5

INDIA’S INTERNATIONAL TRADE

Source: RBI and IIF

Increasing Trade Intensity – Trade-GDP Ratio increased from 36.5% to 51.6%

India’s merchandise trade to GDP ratio

increased from 26.6% in 2004-05 to 39.3% in

2013-14

Merchandise export to GDP ratio increased

from 11.8% in 2004-05 to 17% in 2013-14

Services trade to GDP ratio increased to

12.2% in 2013-14 from 9.8% in 2004-05

Services export to GDP ratio stood at 8.1% in

2013-14

6

11.8 17.0

6.0 8.1

26.6

39.3

9.8 12.2

36.5

51.6

% o

f G

DP

Merchandise Exports % GDP Services Exports % GDP

Merchandise Trade % GDP Services Trade % GDP

Total Trade (Merch. + Serv.) % of GDP

INDIA’S SHARE IN GLOBAL MERCHANDISE EXPORTS

Source: WTO

Rankings Country 2005 Country 2007 Country 2010 Country 2012 Country 2013

Global Exports 100.0 Global Exports 100.0 Global Exports 100.0 Global Exports 100.0 Global Exports 100.0

1 Germany 9.2 Germany 9.4 China 10.3 China 11.1 China 11.8

2 USA 8.6 China 8.7 USA 8.4 USA 8.4 USA 8.4

3 China 7.3 USA 8.2 Germany 8.2 Germany 7.6 Germany 7.7

4 Japan 5.7 Japan 5.1 Japan 5.0 Japan 4.3 Japan 3.8

5 France 4.4 France 4.0 Netherlands 3.8 Netherlands 3.6 Netherlands 3.5

6 Netherlands 3.9 Netherlands 3.9 France 3.4 France 3.1 France 3.1

7 UK 3.7 Italy 3.6 South Korea 3.0 South Korea 3.0 South Korea 3.0

8 Italy 3.6 UK 3.2 Italy 2.9 Russia 2.9 UK 2.9

9 Canada 3.4 Belgium 3.1 UK 2.7 Italy 2.7 Hong Kong 2.9

10 Belgium 3.2 Canada 3.0 Belgium 2.7 Hong Kong 2.7 Russia 2.8

11 Hong Kong 2.8 South Korea 2.6 Hong Kong 2.6 UK 2.6 Italy 2.8

12 South Korea 2.7 Russia 2.5 Russia 2.6 Canada 2.5 Belgium 2.5

13 Russia 2.3 Hong Kong 2.5 Canada 2.5 Belgium 2.4 Canada 2.4

14 Singapore 2.2 Singapore 2.1 Singapore 2.3 Singapore 2.2 Singapore 2.2

15 Mexico 2.0 Mexico 1.9 Mexico 1.9 Saudi Arabia 2.1 Mexico 2.0

16 Chinese Taipei 1.9 Spain 1.8 Chinese Taipei 1.8 Mexico 2.0 Saudi Arabia 2.0

17 Spain 1.8 Chinese Taipei 1.8 Spain 1.7 UAE 1.9 UAE 1.9

18 Saudi Arabia 1.7 Saudi Arabia 1.7 Saudi Arabia 1.6 Chinese Taipei 1.6 Spain 1.7

19 Malaysia 1.3 UAE 1.3 India 1.5 India 1.6 India 1.7

20 Sweden 1.2 Malaysia 1.3 UAE 1.4 Spain 1.6 Chinese Taipei 1.6

21 Switzerland 1.2 Switzerland 1.2 Australia 1.4 Australia 1.4 Australia 1.3

22 Austria 1.2 Sweden 1.2 Brazil 1.3 Brazil 1.3 Brazil 1.3

23 Brazil 1.1 Austria 1.2 Malaysia 1.3 Thailand 1.2 Switzerland 1.2

24 UAE 1.1 Brazil 1.1 Switzerland 1.3 Malaysia 1.2 Thailand 1.2

25 Thailand 1.1 Thailand 1.1 Thailand 1.3 Switzerland 1.2 Malaysia 1.2

26 Australia 1.0 India 1.1 Poland 1.0 Indonesia 1.0 Poland 1.1

27 India 0.9 Australia 1.0 Sweden 1.0 Poland 1.0 Indonesia 1.0 7

INDIA EMERGING AS A GLOBAL PLAYER

Source: WTO

0.7

1.7

1.0

1.3

0.9

1.3

1.1 1.2

1.5

1.2

1.0 1.0

0.5

0.7

0.9

1.1

1.3

1.5

1.7

1.9

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

India Australia Brazil Thailand Malaysia Indonesia

India

Australia

Brazil Malaysia

Thailand

Indonesia

Recent trends in global

exports would highlight the

increasing importance of

India as a trading nation

India’s share in global

exports rose from 0.7% in

2000 to 1.7% in 2013

India now ranks as 19th

largest global exporter, up

from 32nd position in 2000

India has overtaken

Australia, Brazil, Thailand,

Malaysia and Indonesia,

among others

8

INDIA’S EXPORT: SHIFTING SOUTHWARDS

India’s Export Destinations 2003-04 (US$ 63.8 bn) India’s Export Destinations 2013-14 (US$ 312.6 bn)

Direction of exports moving towards the Southern countries Share of Asia, Africa and LAC regions increased sharply from 54% in 2003-04 to 64% in 2013-14; Of this, share of Asia

region rose from 46% to 50% during this period Future trade flows to be geared towards the developing nations (buttressed by GOI policies)

Source: Ministry of Commerce & Industry, Government of India

Europe 18.7%

Africa 10.0%

North America

13.4%

LAC 4.0%

Asia 49.7%

CIS & Baltics 1.1%

Others 3.2%

Europe 24.5%

Africa 6.0%

North America

19.2%

LAC 1.8%

Asia 46.4%

CIS & Baltics 1.6%

Others 0.4%

9

INDIA’S IMPORT: SHIFTING SOUTHWARDS

India’s Import Sources 2003-04 (US$ 78 bn) India’s Import Sources 2013-14 (US$ 450.1 bn)

Direction of imports also moving towards the Southern countries, particularly Asia, Africa and LAC

Share of Asia, Africa and LAC regions increased sharply from 40% in 2003-04 to 76% in 2013-14; Of this, share of Asia region rose from 35% to 61% during this period

Source: Ministry of Commerce & Industry, Government of India

Europe 15.7%

Africa 8.2%

North America

5.6%

LAC 7.3%

Asia 60.9%

CIS & Baltics 1.7%

Others 0.6%

Europe 24.0%

Africa 4.1%

North America

7.4% LAC

1.5%

Asia 34.8%

CIS & Baltics 1.6%

Others 26.6%

10

INDIA’S EXPORT COMPOSITION

India’s Export s Composition 2003-04 (US$ 63.8 bn) India’s Export s Composition 2013-14 (US$ 312.6 bn)

The composition of India’s export basket has witnessed a marked change over the past

There is a sharp increase in exports of petroleum products which accounted for 20.1% of India’s total exports in 2013-14 up from 5.6% witnessed in 2003-04

Source: Ministry of Commerce & Industry, Government of India

Agri & allied prdts 11.5%

Ores & minerals

3.7% Leather &

mnfrs 3.4%

Chemicals & related

products 15.6%

Engineering goods 16.5%

Gems & jewellery

16.6%

Electronic goods 2.8%

Textiles 19.1%

Petroleum products

5.6%

Others 5.3%

Agri & allied prdts 12.4%

Ores & minerals

1.8%

Leather & mnfrs 1.8%

Chemicals & related

products 14.0%

Engineering goods 19.7% Gems &

jewellery 13.2%

Electronic goods 2.5%

Petroleum products

20.1%

Textiles 9.7%

Others 4.9%

11

INDIA’S INCREASING SHARE IN GLOBAL EXPORTS

Source: Trade Map

HS Code

India’s Top 20 Export Items 2009 2013

All products 1.4% 1.7%

27 Mineral fuels, oils, and it products 1.3 2.1

71 Pearls and precious stones 10.5 8.1

87 Vehicles other than railway or tramway 0.7 1.0

29 Organic chemicals 2.1 2.8

84 Machinery and equipments 0.5 0.6

30 Pharmaceutical products 1.2 2.3

10 Cereals 3.5 9.1

52 Cotton 8.2 17.4

85 Electrical and electronic equipment 0.6 0.4

72 Iron and steel 1.5 2.5

62 Articles of apparel, accessories, not knit or crochet 3.8 4.4

73 Articles of iron or steel 1.8 2.4

61 Articles of apparel, accessories, knit or crochet 3.4 3.4

39 Plastics and its articles 0.6 1.0

03 Fish, crustaceans and molluscs 1.8 4.8

02 Meat and edible meat offal 1.3 4.0

63 Other made textile articles and worn clothing 5.6 8.4

88 Aircraft, spacecraft, and its parts 0.6 1.8

23 Residues, wastes of food industry and animal fodder 3.1 4.4

89 Ships, boats and other floating structures 4.3 3.0

India’s top 20 export items (HS-2

digit level) account for 79% of

India’s global exports

Over five years, India’s share in

global exports increased from 1.4%

to 1.7% in 2013

Major commodities that have

registered a significant growth in

their share in global exports

include: mineral fuels, oils and its

distillation products;

pharmaceutical products; cereals;

cotton; Fish and crustaceans; meat

and edible meat offal; other made

textile articles and aircraft,

spacecraft, and parts 12

INDIA’S MAJOR TRADING PARTNERS

Top Export Destinations (FY 2014, US$ bn) Top Import Sources (FY 2014, US$ bn)

Source: Ministry of Commerce & Industry, Government of India

6.8

7.5

8.0

9.8

12.2

12.5

12.7

14.9

30.5

39.2

Japan

Germany

Netherlands

UK

Saudi Arabia

Singapore

Hong Kong

China

UAE

USA

Total Exports: US$ 312.6 billion

14.3

14.9

15.7

17.2

18.5

19.4

22.3

29.1

36.5

51.0

Nigeria

Indonesia

Qatar

Kuwait

Iraq

Switzerland

USA

UAE

Saudi Arabia

China

Total Imports: US$ 450.1 billion

13

INDIA’S TRADE BASKET

Top Export Items (FY 2014, US$ bn) Top Import Items (FY 2014, US$ bn)

Note: ** including plantation and marine products

Source: Ministry of Commerce & Industry, Government of India

1.0

5.6

5.7

7.7

30.4

38.9

41.1

43.8

61.6

62.7

Carpets

Ores and minerals

Leather & manufactures

Electronic goods

Textiles and Garments

Agriculture & allied products**

Gems and Jewellery

Chemicals & related products

Engineering goods

Petroleum products

Total exports: US$ 312.6 billion 9.1

9.3

13.5

16.4

20.2

24.0

31.0

33.4

49.1

165.1

Artificial resins, etc.

Edible oil

Metaliferrous ores & metal scrap

Coal, coke and briquettes

Chemicals (organic & inorganic)

Pearls & precious stones

Electronic goods

Gold & silver

Capital goods

Petroleum crude & products

Total Imports: US$ 450.1 billion

14

INDIA’S TRADE IN SERVICES

Total Trade in Services Software Exports

Source: Reserve Bank of India (RBI)

10

6.0

96

.0

12

4.6

14

2.3

14

5.7

15

1.5

52

.0

60

.0

80

.6

78

.2

80

.8

78

.5

54

.0

36

.0

44

.0

64

.1

64

.9

73

.0

158.0 156.0

205.2 220.5 226.5 230.0

2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

US$

bill

ion

Exports Imports Trade Balance Total Trade

46.3 49.7

53.1

62.2 65.9

69.5

2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

US$

bill

ion

15

INDIA’S SHARE IN GLOBAL SERVICES EXPORTS

Source: WTO

Rankings Country 2005 Country 2007 Country 2010 Country 2012 Country 2013

Global Exports 100.0 Global Exports 100.0 Global Exports 100.0 Global Exports 100.0 Global Exports 100.0

1 USA 14.7 USA 14.1 USA 14.3 USA 14.6 USA 14.6

2 UK 8.1 UK 8.3 UK 6.9 UK 6.5 UK 6.2

3 Germany 6.4 Germany 6.4 Germany 6.4 Germany 6.1 Germany 6.2

4 France 4.8 France 4.3 France 5.0 France 4.9 France 5.0

5 Japan 4.3 Japan 3.7 China 4.2 China 4.3 China 4.4

6 Spain 3.7 Spain 3.7 Japan 3.6 India 3.3 India 3.3

7 Netherlands 3.6 China 3.5 Spain 3.2 Japan 3.3 Japan 3.1

8 Italy 3.5 Italy 3.2 Netherlands 3.0 Spain 3.1 Spain 3.1

9 China 2.9 Netherlands 3.2 India 3.0 Netherlands 3.0 Netherlands 3.1

10 Hong Kong 2.5 Ireland 2.7 Hong Kong 2.7 Hong Kong 2.8 Hong Kong 2.9

11 Ireland 2.3 India 2.5 Ireland 2.5 Ireland 2.6 Ireland 2.6

12 Belgium 2.2 Singapore 2.4 Italy 2.5 Singapore 2.5 Singapore 2.5

13 Canada 2.2 Hong Kong 2.4 Singapore 2.4 South Korea 2.5 South Korea 2.4

14 Singapore 2.2 Belgium 2.1 Belgium 2.4 Italy 2.4 Italy 2.4

15 India 2.0 South Korea 2.1 South Korea 2.2 Belgium 2.3 Belgium 2.2

16 Switzerland 1.9 Switzerland 1.9 Switzerland 2.1 Switzerland 2.0 Switzerland 2.0

17 South Korea 1.9 Canada 1.9 Canada 1.9 Canada 1.8 Luxembourg 1.7

18 Denmark 1.7 Luxembourg 1.9 Luxembourg 1.6 Luxembourg 1.6 Canada 1.7

19 Sweden 1.7 Sweden 1.8 Denmark 1.6 Sweden 1.6 Sweden 1.6

20 Austria 1.7 Denmark 1.8 Sweden 1.6 Denmark 1.5 Denmark 1.5

16

INCREASING SHARE IN SERVICES EXPORTS

Source: WTO

Australia

Brazil Malaysia

Thailand

Indonesia

India

1.1

3.3

0.9

1.3 1.3

1.1 0.9

0.8

0.6 0.8

0.3 0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

India Thailand Australia Malaysia Brazil Indonesia India has emerged as a

major global player in

services exports

India’s share in global

services exports rose from

1.1% in 2000 to 3.3% in

2013

India now ranks as 6th

largest global exporter, up

from 25th position in 2000

India way ahead of

Thailand, Australia, Brazil,

Malaysia and Indonesia,

among others

Software exports account

for nearly 46% of India’s

services exports (2013) 17

INDIA’S DIRECT INVESTMENT FLOWS

Foreign Direct Investment Inflows & Outflows

Note: FDI Outflows include Equity, Loan and Guarantee Issued

Source: Reserve Bank of India (RBI)

FDI inflow into India increased to

US$ 36 bn in 2013-14, as compared

to US$ 34.3 bn in 2012-13

FDI outflow from India also

increased to US$ 36.9 bn in 2013-

14, against US$ 26.9 bn in 2012-13

41.9

37.7 34.8

46.6

34.3 36.0

17.1 18.0

43.9

30.9

26.9

36.9

2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

US$

bill

ion

FDI Inflows FDI Outflows

18

INDIA’S FOREIGN DIRECT INVESTMENT FLOWS

India’s FDI Inflows – FY 2014 (US$ 24.3 bn)*

Sector-wise FDI Inflows

Note : *- data is for FDI equity inflow Source: DIPP

Top FDI Investing Countries

Services sector

9%

Construction 5% Telecom

5%

Computer Software & Hardware

5%

Pharma 5%

Automobile industry

6%

Chemicals (other than fertilizers)

4%

Power 5% Metallurgical

Industries 2%

Hotel & Tourism

2%

Others 52%

Singapore 25%

Mauritius 20%

UK 13%

Netherlands 10%

Japan 7%

Germany 4%

USA 3%

Cyprus 2%

Switzerland 2%

France 1%

Others 13%

19

INDIA’S FOREIGN DIRECT INVESTMENT FLOWS

India’s FDI Outflows – FY 2014 (US$ 36.9 bn)

Sector-wise FDI Outflows Regional FDI Outflows

Note: FDI Outflows include Equity, Loan and Guarantee Issued

Source: Reserve Bank of India

Netherlands 26%

Singapore 14%

Mauritius 12% British Virgin

Island 10%

Mozambique 7%

USA 6%

UAE 5%

UK 4%

Switzerland 3%

Azerbaijan 2%

Cayman Island

2%

Others 9% Transp.,

storage & communicatio

n services 28%

Manufg. 24%

Agriculture & mining

21%

Wholesale, retail trade, restaurants

& hotels 10%

Financial, ins. &

business services

8%

Construction 5%

Others 4%

20

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