Strong FDI inflows and build-up of foreign exchange reserve buffers have helped India meet its external financing requirements despite domestic capital market facing sizeable outflows of foreign portfolio investment. 15. As a few advanced economies are on the path of monetary policy normalisation, there has been global portfolio rebalancing away from EMEs, including India.
Another factor that has repercussions for India’s external sector is the recent developments around Brexit. There are consequential policy challenges for India which enjoys strong trade and investment relations with UK and the EU. We will carefully weigh the challenges and opportunities that lie ahead and undertake appropriate policy responses. 16.