TRADE DEFICIT WITH CHINA DIPS TO $48.66 BILLION

INDIA’S TRADE DEFICIT WITH CHINA DIPS TO $48.66 BILLION 

India’s trade deficit with China fell to $48.66 billion in 2019-20 on account of the decline in imports from the neighbouring country, according to government data

Exports to China in the last financial year stood at $16.6 billion, while imports aggregated at $65.26 billion, the data showed

Foreign Direct Investment (FDI) from China in India dipped to $163.78 million in the previous fiscal, according to the data

From April 2000 to March 2020, India attracted FDI worth $ 2.38 billion from China

As per the amended FDI policy, a company or an individual from a country that shares a land border with India can invest in any sector only after getting government approval

Foreign direct investment (FDI) is an investment in the form of a controlling ownership in a business in one country by an entity based in another country

FDI is the sum of equity capital, long-term capital, and short-term capital as shown in the balance of payments

Increase in FDI may be associated with improved economic growth due to the influx of capital and increased tax revenues for the host country

Direct investment excludes investment through purchase of shares (if that purchase results in an investor controlling less than 10% of the shares of the company)

FDI usually involves participation in management, joint-venture, transfer of technology and expertise. Stock of FDI is the net cumulative FDI for any given period

Types: Horizontal FDI arises when a firm duplicates its home country-based activities at the same value chain stage in a host country through FDI, Platform FDI Foreign direct investment from a source country into a destination country for the purpose of exporting to a third country, Vertical FDI takes place when a firm through FDI moves upstream or downstream in different value chains i.e., when firms perform value-adding activities stage by stage in a vertical fashion in a host country

India : Foreign investment was introduced in 1991 under Foreign Exchange Management Act (FEMA), driven by then finance minister Manmohan Singh

In 2015, India emerged as top FDI destination surpassing China and the US. India attracted FDI of $31 billion compared to $28 billion and $27 billion of China and the US respectively 

Sectors that attracted higher inflows were services, telecommunication, construction activities and computer software and hardware

Mauritius, Singapore, US and UK were among the leading sources of FDI.