India’s goods trade deficit slims on big dip in imports

Official data shows that trade deficit in March fell by nearly 17% compared with month before

India’s goods trade deficit narrowed by nearly 17% in March compared with the previous month, official data showed on Monday, as imports fell steeply and exports rose, though only marginally. The deficit fell to $15.6 billion in March, down from $18.71 billion in February, and $16.02 billion in January, commerce ministry data showed. This is the lowest it’s been in 11 months—the last time the deficit was narrower was in April 2023 when it came in at $14.44 billion. The March figure exceeded economists’ expectations of the deficit coming in at $18.55 billion, according to a Reuters

poll.

Goods exports rose marginally to $41.68 billion in March, from $41.40 billion in February amid the slow pace of pickup in global trade during 2024, following a contraction in 2023 that was driven by the lingering effects of high energy prices and inflation.

Geopolitical challenges such as conflicts in West Asia and Ukraine and the Red Sea crisis further impacted trade.

The total value of merchandise imports fell to $57.28 billion in March, down from $60.11 billion in the previous month.

Meanwhile, services exports in March stood at $28.54 billion, down from $32.15 billion in the previous month.

Services imports rose marginally to $15.84 billion in March from $15.39 billion in February.

For FY24 as a whole, India’s merchandise exports stood at $437.06 billion, down from $451.07 billion during the previous fiscal. Goods imports fell to $677.24 billion from $715.97 billion recorded during the same period.

India’s services exports stood at $339.62 billion in FY24, up from $325.33 billion in the previous fiscal, while imports fell to $177.56 billion from $182.05 billion in the same period

The overall trade deficit, including merchandise and services, shrank to $78.12 billion in FY24 from $121.62 billion in FY23.

During FY24, the main drivers of merchandise export growth included electronic goods, drugs and pharmaceuticals, engineering goods, iron ore, cotton yarn/fabric, handloom products, and ceramic products & glassware, the commerce ministry said.

However, the overall export of refined petroleum products and jewellery declined during FY24.

Commerce secretary Sunil Barthwal said India’s trade, especially exports, fared better despite predictions of a 5% decline in global trade. “This resilience is noteworthy, especially considering the potential for conflicts to erupt anywhere, anytime,” Barthwal said.

“We are used to these regional conflicts. It started with the Ukraine-Russia war, which was much larger in terms of impact on trade. Then the Suez Canal issue came up and now Iran-Israel conflicts. So, whenever these conflicts happen, we start monitoring the trade and start the stakeholder consultation to find a solution for it,” he said.

“The policy intervention will come only after the assessment of its impact on trade. Based on the exercise and whatever is needed, the government will take remedial action to address the issue.” As things stand, Indian exports have been impacted by a slowdown in global growth.

The tightening of interest rates due to nagging inflation, especially in advanced Western economies, has led to a slowdown in business, investment and trade. Meanwhile, conflicts in Ukraine and West Asia have threatened to push up commodity oil prices, leading to greater inflationary pressures.

However, global goods and merchandise trade are expected to recover gradually during 2024, following a downturn in 2023 due to high energy prices and inflation, the World Trade Organization (WTO) said earlier this month.

$41.68 bn Total worth of goods exports from India in March

$57.28 bn India’s total value of merchandise imports in March