India’s trade deficit widens to $29.65 billion as exports fall in August

India exports decline: India's exports plummeted by 9.3 per cent in August to $34.71 billion, marking the steepest decline in 13 months amid global economic uncertainties. Simultaneously, the trade deficit expanded to a 10-month peak of $29.65 billion.

According to government data released on Tuesday, imports rose by 3.3 per cent to a record $64.36 billion, driven by a substantial increase in gold and silver imports. 

Gold imports surged to $10.06 billion in August from $4.93 billion a year earlier, while silver imports grew to $727 million from $159 million.

Crude oil imports fall

Despite a drop in crude oil prices, which led to a 32.38 per cent reduction in crude oil imports to $11 billion, this decline did not offset the overall increase in the trade deficit. The drop in oil prices has also contributed to a slowdown in merchandise exports.

The trade deficit for October 2023 stood at $30.43 billion. In July 2023, merchandise exports had already contracted by over 10 per cent, and this trend continued with a 1.5 per cent decline in exports for July 2024.

For the period from April to August of the current fiscal year, exports increased by 1.14 per cent to $178.68 billion, while imports grew by 7 per cent to $295.32 billion. 

The merchandise trade deficit for this period was $116.64 billion, up from $99.16 billion in the same period last year.

Commerce Secretary Sunil Barthwal briefed the media on the data, highlighting that current global challenges are severely impacting exports. 

The slowdown in China, ongoing recessions in the EU and the US, falling oil prices, and rising transportation costs due to the Red Sea crisis are contributing to the difficulties.

Despite these challenges, Barthwal stressed that India's exports have shown positive growth in the first five months of the fiscal year.

Exploring new markets

He pointed out that the commerce ministry is exploring new markets in regions like Africa and focusing on 12 champion service sectors, including education, healthcare, shipping, and transportation, which hold significant potential.

Barthwal stressed that achieving the $2 trillion exports target for goods and services will heavily rely on the services sector, which is less affected by global issues. 

He reassured that the high trade deficit is manageable for an emerging economy like India, drawing parallels with China's past trade deficits and noting that high consumption demand driven by rapid economic growth often requires substantial imports.

Other export sectors that experienced negative growth in August include rice, oil meals, marine products, iron ore, and gems and jewellery. However, exports of electronic goods, pharmaceuticals, and engineering products increased by 7.85 per cent, 4.67 per cent, and 4.36 per cent, respectively.

The estimated value of service exports from April to August 2024 reached $150.18 billion, up from $135.5 billion during the same period last year.

(With PTI Inputs)