BOT · BOP · Exchange Rate · FEMA · FDI/FPI/FII — BPSC / BSSC
Foreign Trade: Exchange of goods and services between two or more countries.
| Term | Condition |
|---|---|
| Trade Surplus | Exports > Imports |
| Trade Deficit | Exports < Imports |
| Top Export Destinations | Top Import Sources |
|---|---|
| 1. United States of America | 1. China |
| 2. United Arab Emirates | 2. Russia |
| 3. Netherlands | 3. United Arab Emirates |
| Top Exported Goods | Top Imported Goods |
|---|---|
| Petroleum Products | Gems and Jewellery |
| Pharmaceuticals | Petroleum Oil and Mineral Fuels |
| — | Gold, Electrical Machinery and Equipment |
A systematic record of all economic transactions between residents of a country and the rest of the world during a given period.
| Component | Details |
|---|---|
| Current Account | Import-export of tangible (goods) and intangible (services) items; unilateral transfers (gifts, donations, remittances); direct impact on income, production, and employment |
| Capital Account | Financial transactions — FDI, FII, External Commercial Borrowings, Foreign Aid, NRI Deposits, Banking Capital, short-term trade deposits; no direct impact on income, production, employment |
Foreign Exchange Rate: The rate at which one country's currency is exchanged for another's. E.g., $1 = ₹87.
Convertible/Floating Exchange Rate: Free from government interventions.
Deliberately reducing the value of one's own currency in terms of foreign currencies.
Liberal policy in relation to this, but rupee is not fully convertible on the capital account.
Facilitates foreign trade and payments.
Debt Trap: Taking another loan to pay off current debt obligations.
Investment made by a company or individual of one country into business interests located in another country — involves capital goods.
Investments through shares and mutual funds, etc.
| Sector | FDI Limit |
|---|---|
| Multi-brand retail | 100% |
| Single-brand retail | 100% |
| Telecom, Defence Products | 100% |
| Petroleum refinery | 49% |
| Civil aviation | 49% |
| Railway-related projects | 100% |
| Courier services and Insurance | 100% |
| Power exchange | 49% |
| Public sector banks | 20% |
| Private sector banks | 74% |
| Topic | Key Fact |
|---|---|
| Foreign Trade | Exchange of goods and services between two or more countries |
| Balance of Trade (BOT) | Only tangible goods | Trade Surplus: Exports > Imports | Trade Deficit: Exports < Imports |
| India's Top Trading Partners (2024–25) | China, USA, UAE |
| Top Export Destinations | USA, UAE, Netherlands |
| Top Import Sources | China, Russia, UAE |
| Top Exported Goods | Petroleum Products, Gems & Jewellery, Pharmaceuticals |
| Top Imported Goods | Petroleum Oil & Mineral Fuels, Gold, Electrical Machinery |
| Foreign Trade Policy 2023 | Issued by Ministry of Commerce & Industry | Effective: 1 April 2023 |
| FTP 2023 Target | Exports of 2 Trillion USD by 2030 |
| Import Substitution Policy | Inward-looking Trade Strategy |
| Dumping | Selling goods abroad below cost/domestic price |
| BOP — Definition | Systematic record of all economic transactions between residents and rest of world |
| BOP Current Account | Goods + Services + Unilateral transfers | Direct impact on income/employment |
| BOP Capital Account | Financial transactions | FDI, FII, ECB, Foreign Aid, NRI Deposits |
| Current Account Deficit | Value of imports > Value of exports |
| Twin Deficits | Current Account Deficit + Fiscal Deficit |
| Exchange Rate System in India | Managed exchange rate since 1993 | Based on market demand & supply | RBI intervenes |
| Currency Devaluation | Deliberately reducing own currency value | Imports costlier, Exports cheaper |
| Foreign Exchange Reserve Components | Foreign assets, Gold reserves, IMF Reserve Fund, SDR |
| Rupee Convertibility — Tarapore I | S.S. Tarapore Committee (I) — 1997 |
| Rupee Convertibility — Tarapore II | S.S. Tarapore Committee (II) — 2006 | Not fully convertible |
| FEMA | 1999 | Replaced FERA (1973) | Effective: 1 June 2000 |
| FDI — Greenfield | Development of new unit / infrastructure |
| FDI — Brownfield | Investment in an already existing unit |
| FDI Restrictions | Lottery, Betting, Chit funds, Real Estate, Railway Ops, Nidhi Co., Gambling, Tobacco |
| FPI | Less than 10% shares | Highly volatile | Unsafe investment |
| FII | Investments through shares and mutual funds |
| Debt Trap | Taking another loan to pay off current debt obligations |
| Public Sector Banks FDI Limit | 20% |
| Private Sector Banks FDI Limit | 74% |