Trade Deficit Narrows To 20-Month Low At $15.2 Billion
India's trade deficit eased to $15.2 billion in April from $18.4 billion a year earlier.
India's trade deficit fell to the lowest since September 2021 on lower exports and imports.
The merchandise trade deficit eased to $15.2 billion in April from $18.4 billion a year ago, according to a press release by the Ministry of Commerce and Industry.
Merchandise exports fell 12.7% year-on-year to $34.66 billion in April 2023.
Merchandise imports fell 14.1% year-on-year to $49.9 billion in April 2023.
The annual decline in the merchandise trade deficit in April was primarily driven by non-oil items, with the fall in crude oil prices being partly absorbed by higher volumes, said Aditi Nayar, chief economist at ICRA.
According to Rajani Sinha, chief economist at CareEdge, while India’s merchandise exports continued to contract for the third straight month, the weakness in labour-intensive items such as textiles, garments, leather products, gems and jewellery is particularly concerning.
"Given the weak global growth outlook, we expect overall merchandise exports to contract by 5% in FY24," Sinha said. While imports fell partly due to lower prices of global commodities, what is worrisome is that non-oil and non-gold imports—a reflection of domestic demand, have contracted on an annual basis for the fourth consecutive month.
Trade deficit is expected to narrow further, with current account deficit expected to reduce to 1.6% of GDP in FY24 from an estimated 2.1% in FY23, Sinha said.
Non-petroleum and non-gems & jewellery exports in April fell 9.2% to $25.76 billion.
Non-petroleum, non-gems & jewellery (gold, silver & precious metals) imports in April fell 12.5% to $31.49 billion.
India’s overall exports- merchandise and services, is estimated to have risen 2% to $65.02 billion, while overall imports are estimated to have fallen 7.92% to $66.4 billion.
Key Export Items
Engineering goods exports stood at $9 billion, down 7.2% year-on-year.
Petroleum product exports were at $6.5 billion, 17.6% lower than a year earlier.
Gems and jewellery exports were at $2.4 billion, 30% lower on an annual basis.
Organic and inorganic chemical exports were at $2.1 billion, 17.8% lower on an annual basis.
Drugs and pharmaceutical exports were at $2.3 billion, 10.5% higher from over a year earlier.
Key Import Items
Petroleum, crude and product imports were down 13.9% over a year earlier at $15.2 billion.
Imports of coal, coke and briquettes were 28.5% lower than a year ago at $3.5 billion.
Electronic goods imports were at $6.4 billion, down 5.7% over a year earlier.
Machinery, electrical and non-electrical goods were at $3.9 billion, up 15.2% over a year ago.
Gold imports stood at $1 billion, 41.2% lower than a year ago.