A significant reduction in imports has led to a noteworthy 31% decrease in India’s trade deficit, reaching its lowest point in five months at $19.4 billion in September.
In New Delhi, data from the Ministry of Commerce revealed a 2.6% decline in India’s exports in September, dropping to $34.5 billion compared to the same month in the previous year. This marks the fifth time in the fiscal year 2024 that exports have seen a year-on-year decline, mainly due to challenges in sectors like gems and jewelry, petroleum, chemicals, and others.
The trade deficit’s reduction can be attributed to the decrease in imports. Over the first half of fiscal year 2024, exports contracted by 8.77% to $211.4 billion, while imports fell by 12.23% to $326.98 billion.
In September, there was a substantial drop in petroleum imports, which decreased by 20.3% to $14 billion, and petroleum exports also fell by 10.6% to $6.49 billion. The gems and jewelry sector experienced a significant decline, with exports dropping by more than 16% to $3.18 billion in September. Commerce Secretary Sunil Barthwal commented on this, stating, “The gems and jewelry segment is feeling the impact of the Russia-Ukraine conflict, and now the Israel-Palestine war could have an adverse effect. However, the extent of the impact remains uncertain unless the situation escalates over time.”
Despite the overall trade decline, several sectors, including non-petroleum and non-gems/jewelry exports, engineering goods, marine products, electronic goods, ceramic products, pharmaceuticals, and iron ore, showed positive growth. Additionally, agricultural exports, including spices, fruits and vegetables, oil seeds, and coffee, also demonstrated growth during April-September 2023.
Following a reconciliation process with Customs, revised data showed that India’s exports for August 2023 were estimated to be higher, at $38.4 billion, indicating a growth of 3.88% compared to the previous year. This revision followed the initial announcement of a 6.8% decline in exports the previous month.
Santosh Sarangi, Director General of Foreign Trade, noted the positive growth in August as the first instance of such progress in the current financial year. The Commerce Secretary expressed optimism, highlighting the resilience of services exports and the diminishing fall in merchandise exports. He anticipates positive export growth for the remaining six months of the year. Additionally, negotiations on the India-UK free trade agreement (FTA) are progressing well, with the government actively working to resolve any remaining differences.