The primary objectives of the extant exchange control regime in India3 are facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India. On the capital account front there has been a conscious policy effort to give precedence to equity flows over debt flows as well as FDI over portfolio flows. 56.
Amongst the emerging market economies, India has a peculiar situation where we have a persistent current account deficit which has to be funded from the capital account surplus.