GS3 › External Sector and Trade

Revision note: Foreign Investment, External Debt and Forex Reserves

  • FDI ≥ 10% equity (Mayaram 2014) – stable; FPI < 10% – hot money; FEMA 1999; DPIIT policy; SEBI registers FPIs
  • Routes: automatic vs government (FIPB abolished 2017; FIF Portal); prohibited sectors: lottery, gambling, chit funds, Nidhi, real estate business, tobacco
  • Caps: defence 74% auto; insurance 74%; telecom 100%; multi-brand retail 51%; print media 26%; Press Note 3 (2020) land-border countries
  • Gross FDI peak ~$85 bn (2021–22); net FDI fell to ~$0.4 bn in 2024–25; sources Mauritius, Singapore, US
  • External debt ~$736 bn (Mar 2025), ~19% of GDP; short-term ~18–19%; reserves/debt ~90%
  • Reserves peak ~$705 bn (Sept 2024); components FCA, gold, SDR, reserve tranche; 4th largest; ~11 months import cover
Revision card summarising Foreign Investment, External Debt and Forex Reserves
One-page visual summary of the key points to revise.

Source: https://upscprep.in/upsc/gs3/external-sector-and-trade/foreign-investment-external-debt-and-forex-reserves/ · UPSCPrep.in

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