59 A2 Foreign Trade Basic 27Mar

 Qts 1 Explain   Current Account

Under the current account transactions are classified into merchandise (exports and imports) and invisibles.


Qts 2 Explain Capital Account

Under capital account, capital inflows can be classified by instruments (debt/equity) and maturity (short/long-term). The main component of capital account include foreign investment, loans and banking capital.

Qts 3 Explain Non-Debt Liabilities

Includes FDI and Portfolio Investment comprising of FIIS, ADRs/GDRs

Debt Liabilities :Includes External assistance, External Commercial Borrowings (ECBs), trade credit and banking capital (NRIs deposits).


Qts4  Explain Foreign Exchange Reserves in India

It includes: Foreign Currency Assets (FCAs); Gold Stock of RBI; Special Drawing Rights (SDRs); and Reserve Tranche Position (RTP) in the IMF.


Qts 5 Explain Special Economic Zone (SEZ)

 A Special Economic Zone (SEZ) is a geographical region that has economic and other laws that are more free-market oriented than a country's typical national laws. Asia's first Export Processing Zone (EPZ) was set-up in Kandla, India in 1965. The first SEZ policy was announced in April, 2000.

To attract foreign investment in India, SEZ Act, 2005 was enacted with effec from 10th February, 2005.


Qts 6 Explain Foreign Direct Invest (FDI)

 FDI is a type of investment that involves the injection of foreign funds into an enterprises that operates in a different country of origin from the investor.

FDI occurs when a company invests in a business that is located in another country and it is investing not less than 10% of shares belonging to the foreign company.


Qts 7 Explain FII (Foreign Institutional Investment). Foreign portfolio investment occurs, when foreign investment in the form of shares, equities and bonds, is made by a foreign company.

The three main institutions involved in FQI/FII:

(I)The Foreign Investment Promotion Board (FIPB)

(II)The foreign Implementation Authority (FIIA) and

(III)The Secretariat for Industrial Assistance (SIA)...

 Activities/sectors not opened to private sector, viz railways and atomic energy,

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