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India: More Prominent Role in the World

CapitalNew Delhi
Population1.31 billion
CurrencyIndian rupee (1 INR = 0.0155 USD as of 27 June 2017)
Official languageHindi, English
Form of governmentFederal republic


Major Merchandise Exports (% of total, 2016/2017)* Major Merchandise Imports (% of total, 2016/2017)*
Engineering goods (24.3%)Petroleum products (24.9%)
Gems & jewellery (15.7%)Electronic goods (12.0%)
Petroleum products (11.4%)Gold & silver (8.4%)
Top Three Export Markets (% of total, 2016)Top Three Import Markets (% of total, 2016)
USA (16.2%)China (17.3%)
United Arab Emirates (11.8%)USA (5.9%)
Hong Kong (5.1%)United Arab Emirates (5.5%)

* Fiscal year (April-March)
Source: Economist Intelligence Unit

Political Highlights

India is a federal republic governed under a parliamentary system. The ruling National Democratic Alliance (NDA) coalition has been in office since 2014 and is led by the centre-right Bharatiya Janata Party (BJP), which also governs many large and important states in central and western India. The prime minister, Narendra Modi, is proving to be the country's most dominant political leader in decades and is well placed to win a second five-year term at the parliamentary election in 2019. The high popularity of Modi and the BJP helped bringing political stability to the country.

Externally, India’s relationship with Pakistan over disputed Kashmir area appeared to have worsened in recent years, with occasional cross border exchanges of fire between Indian and Pakistani forces. The bilateral ties are expected to remain prone to similar spats as long as the dispute over Kashmir remains unresolved. Meanwhile, India is seeking to take an increasingly prominent role on the world stage over the coming years. It focuses on developing relations with countries in Southeast Asia (except with Pakistan) and is pushing for greater integration and hoping to reinforce trade ties with Germany, France, Spain and Russia.

Economic Trend

Economic Indicators2015
Nominal GDP (USD bn)2,0892,2622,514*2,6902,811
Real GDP growth (%)*7.68.0
GDP per capita (USD)1,6001,7101,880*1,9902,050
Inflation (%)
Budget balance (% of GDP)-3.9-3.5-3.3*-3.4-3.2
Current account balance (% of GDP)-1.1-0.5-1.8*-2.2-2.1
Government debt (% of GDP)51.950.350.4*49.348.1
External debt (% of GDP)22.920.218.8*17.818.0

* Estimates ^ Forecasts
Source: Economist Intelligence Unit

India’s real GDP grew by 7.1% in FY2016-17 (April 2016-March 2017), predominately driven by private consumption and government expenditure, as the world’s fastest growing major economy. Gross-fixed investment remained bogged down by stress on banks' and corporate balance sheets. Government banned the circulation of 500 and 1,000 rupee notes to strike against corruption caused immediate cash crunch, and activity in cash-reliant sectors was affected.

Outlook remains bright in FY2017-18, as economic fundamentals are strong and reform momentum continues. New bankruptcy law launched in 2016 introducing a new insolvency and resolution regime for India, speeding up and simplifying the process of corporate liquidations and debt recovery. These reforms will likely increase the formalisation of the economy and attract more foreign investments.

Downside risks in India’s economy remain. Rising crude oil prices will push up trade deficit. The normalisation of monetary policy in the US may also induce capital outflows from India’s debt market, putting downward pressure on the rupee. Weaknesses in corporate financial positions and public bank asset continued. As a result of the sharp rise in non-performing assets and write-offs, banks are not able to pass on the benefit of policy rate cuts to borrowers, especially those in the retail sector and SMEs.

Chart: Hong Kong total exports to India
Chart: Hong Kong total exports to India

Hong Kong-India Trade

Total exports from Hong Kong to India increased by 35.9% from HK$116,702 million in 2016 to HK$158,635 million in 2017. The top three export categories to India were: (1) non-metallic mineral manufactures (+40.3%), (2) telecommunications, audio & video equipment (+12.8%), and (3) non-ferrous metals (+235.9%), which represented 81.8% of total exports to India.

HKECIC Underwriting Experience

HKECIC imposes no restrictions on covering Indian buyers. Currently, the insured buyers in India are mainly small and medium-sized companies to listed companies. The Corporation recorded six payment difficulty cases and two claim cases in the past 12 months (from March 2017 to February 2018), involving cameras & optical goods, electrical appliances, textiles, toys, and miscellaneous products.

Content provided by Picture: Hong Kong Export Credit Insurance Corporation
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