Economy
External Sector and International Economic Bodies
External Sector and International Economic Bodies — Quick Revision
One-page CGPSC quick revision for the external sector: BoP, reserves, convertibility, FTP 2023, trade deals, IMF, World Bank and WTO in tables.
Balance of payments, trade policy and the three big international economic bodies on one page. For explanations, go back to the chapter.
How to use this sheet
Scan it top to bottom in the week before Prelims. Bold entries are the facts examiners return to most often. Figures marked with a date change every year: check the latest RBI and commerce ministry releases.
Balance of Payments
| Item | Key fact |
|---|---|
| Compiled by | RBI, broadly following IMF BPM6 |
| Current account | Goods + services + primary income (interest, dividends, wages) + secondary income (remittances, grants) |
| Capital account (RBI) | FDI, FPI, ECBs, external assistance, trade credit, banking capital (NRI deposits) |
| FDI vs FPI | 10% or more of equity in a listed company = FDI |
| Overall BoP | Always balances in accounting; “deficit” = fall in reserves |
| Forex reserves | Foreign currency assets, gold, SDRs, Reserve Tranche Position; about $766 billion (week ended 18 Sep 2026) |
| CAD 2025-26 | $25.2 billion, about 0.6% of GDP |
| Record CAD | 4.8% of GDP, 2012-13 |
| Remittances | India the world’s largest recipient; about $135 billion in 2024-25 (RBI) |
Reform Timeline
| Year | Event |
|---|---|
| 1973 | FERA (control, criminal) |
| 1991 | BoP crisis; gold pledged; IMF support; rupee devalued in two steps (July) |
| 1992 | LERMS: dual exchange rate (March) |
| 1993 | Unified, market-determined rate (March) |
| 1994 | Current account convertibility; IMF Article VIII (August) |
| 1997 / 2006 | Tarapore Committees on capital account convertibility (still partial) |
| 1999 | FEMA enacted (civil); in force 1 June 2000 |
| 2004 onward | LRS for residents; now $250,000 per financial year |
Foreign Trade Policy and Trade Deals
| Item | Key fact |
|---|---|
| Law / agency | Foreign Trade (Development and Regulation) Act 1992 / DGFT |
| FTP 2023 | Announced 31 Mar 2023; effective 1 Apr 2023; no end date; target $2 trillion exports by 2030 |
| Four pillars | Incentive to remission; collaboration (States, districts, missions); ease of doing business; emerging areas |
| New Towns of Export Excellence | Faridabad, Mirzapur, Moradabad, Varanasi |
| RoDTEP | From 1 Jan 2021; refunds embedded taxes; replaced MEIS (WTO ruling 2019); extended to 30 Sep 2026 |
| EPCG | Zero-duty capital goods; export obligation 6× duty saved in 6 years |
| Advance Authorisation | Duty-free inputs for exports |
| Export Promotion Mission | Budget 2025-26; Cabinet Nov 2025; ₹25,060 crore (2025-26 to 2030-31); Niryat Protsahan + Niryat Disha |
| SEZ | Kandla EPZ 1965 (Asia’s first); SEZ Act 2005 (in force 2006) |
| Exports 2025-26 | Record $863.1 billion; services nearly half |
| Partners 2025-26 | China largest trading partner and largest deficit; US largest export market |
| Agreement | Status |
|---|---|
| SAFTA | 2006 |
| India–ASEAN goods | 2009 (in force 2010) |
| RCEP | India withdrew 2019 |
| India–UAE CEPA | In force 1 May 2022 |
| India–Australia ECTA | In force 29 Dec 2022 |
| India–EFTA TEPA | Signed Mar 2024; in force 1 Oct 2025; Switzerland, Norway, Iceland, Liechtenstein |
| India–UK CETA | Signed 24 Jul 2025; in force 15 Jul 2026 |
| India–EU FTA | Talks concluded Jan 2026; not yet signed (Oct 2026) |
| India–US | Interim framework 6 Feb 2026; first tranche of BTA under negotiation (Sep 2026) |
IMF, World Bank and Other Banks
| Item | Key fact |
|---|---|
| Bretton Woods | July 1944, New Hampshire, USA; 44 nations; Keynes and White |
| IMF | Washington, D.C.; 191 members; MD Kristalina Georgieva |
| India at IMF | Quota about 2.75%, votes about 2.63%, 8th largest; India’s Governor = Union Finance Minister |
| SDR | 1969; USD, EUR, CNY, JPY, GBP; renminbi from 1 Oct 2016; ~$650 bn allocation Aug 2021 |
| IMF reports | World Economic Outlook, GFSR, Fiscal Monitor, External Sector Report |
| World Bank Group | IBRD 1944, IFC 1956, IDA 1960, ICSID 1966, MIGA 1988 |
| India not a member of | ICSID |
| WB president | Ajay Banga (since June 2023) |
| WB reports | World Development Report, Global Economic Prospects; Doing Business ended 2021 → B-READY |
| CHIRAAG (Chhattisgarh) | $100 million, approved Dec 2020; tribal households, eight southern districts |
| ADB | Manila, 1966 |
| AIIB | Beijing, operations 2016; India 2nd-largest shareholder; president Zou Jiayi (from 16 Jan 2026) |
| NDB | Shanghai; BRICS; Fortaleza 2014; first president K.V. Kamath |
| BIS | Basel, 1930; “central bank of central banks” |
WTO
| Item | Key fact |
|---|---|
| GATT | 1947 (in force 1948); India an original party |
| Uruguay Round | 1986–94 |
| Marrakesh Agreement | 15 April 1994 |
| WTO | 1 Jan 1995; Geneva; 166 members; DG Ngozi Okonjo-Iweala (2nd term from Sep 2025) |
| Principles | MFN (Art I), National Treatment (Art III), S&DT |
| Amber box | Trade-distorting; AMS; de minimis 10% developing, 5% developed |
| Blue / Green / Development box | Production-limiting / non-distorting / Art 6.2 input and investment subsidies — all uncapped |
| Peace clause | Bali 2013; extended 2014 until permanent solution; India first to invoke (2020, rice) |
| GATS Mode 4 | Movement of natural persons |
| TRIPS | Patents 20 years; India product patents 2005 |
| TFA | In force 22 Feb 2017 |
| Fisheries subsidies | MC12 2022; in force 15 Sep 2025 |
| Appellate Body | Non-functional since Dec 2019 (US block); India not in MPIA |
| Conferences | Singapore 1996 · Seattle 1999 · Doha 2001 · Bali 2013 · Nairobi 2015 · Geneva 2022 · Abu Dhabi 2024 · Yaoundé 2026 |
| MC14 | No consensus on major issues; e-commerce moratorium lapsed (March 2026) |
Don’t Confuse
| This | vs | That |
|---|---|---|
| Remittance: current account | vs | NRI deposit: capital account |
| Devaluation (fixed rate, deliberate) | vs | Depreciation (market) |
| Current account convertibility: full (1994) | vs | Capital account convertibility: partial |
| FERA 1973: criminal | vs | FEMA 1999: civil |
| Advance Authorisation: inputs | vs | EPCG: capital goods |
| DGFT: trade policy | vs | DGTR: anti-dumping |
| IMF: BoP support, European head | vs | World Bank: development, American head |
| IBRD: middle-income | vs | IDA: poorest, concessional |
| MFN: between partners | vs | National treatment: foreign vs domestic |
| Bali 2013: peace clause | vs | Nairobi 2015: end of farm export subsidies |
Favourite MCQ trap
“India is a member of all five World Bank Group institutions.” Wrong. India is not a member of ICSID. A close second: “Green box subsidies are capped.” Wrong. Only the amber box is capped.
Second favourite trap
“The WTO was established in 1994.” The Marrakesh Agreement was signed in April 1994; the WTO came into being on 1 January 1995. Similarly, FEMA was enacted in 1999 but came into force in 2000.
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