India’s January Trade Deficit Shrinks to 9-Month Low

Despite the Red Sea crisis and global economic challenges, India's exports rise by 3.1% year-on-year in January

February 15, 2024

Despite ongoing challenges, exports grew by 3.1% year-on-year, reaching US$ 36.92 billion in January

Key drivers of export growth included petroleum products, engineering goods, iron ore, and electronic goods

Merchandise imports in January increased by 3% year-on-year to US$ 54.41 billion, albeit lower than December 2023 figures

Commerce Secretary Sunil Kumar Barthwal highlighted the need for continued support for exporters amid global challenges

India’s merchandise trade deficit in January contracted to US$ 17.49 billion, marking its lowest point in nine months. Despite disruptions caused by the Red Sea crisis, exports grew by 3.1% year-on-year. This improvement follows the December 2023 trade deficit of US$ 19.80 billion and is the lowest since April 2023, when the gap was US$ 15.24 billion.

Data from the commerce ministry, released on February 15, reveals that India’s exports for January 2024 reached US$ 36.92 billion, a slight increase from US$ 35.80 billion in January 2023 but a decline from US$ 38.45 billion in December 2023. Commerce Secretary Sunil Kumar Barthwal acknowledged the challenges posed by the Red Sea crisis, the global recession, and falling commodity prices. Nevertheless, he emphasized the positive export growth rate achieved.

Israr Ahmed, president (officiate) of the Federation of Indian Export Organisations (FIEO), commended the resilience of the exporting community amidst various challenges. He stressed the need to address Red Sea crisis challenges by ensuring marine insurance availability, a regular supply of containers, and a reasonable increase in freight charges. Ahmed also highlighted the importance of easy and low-cost credit, marketing support, and the conclusion of key trade pacts with the UK, Oman, and the European Union.

The January 2024 merchandise export growth drivers included petroleum products, engineering goods, iron ore, and electronic goods. Petroleum product exports, in particular, increased by 6.57% to US$ 8.21 billion year-on-year.

Despite a 3.0% year-on-year increase in merchandise imports to US$ 54.41 billion in January, they were lower than the December 2023 figure of US$ 58.25 billion. For April 2023-January 2024, India’s goods exports were US$ 353.92 billion (down 4.9%), and imports were US$ 561.12 billion (down 6.7%), resulting in a merchandise trade deficit of US$ 207.2 billion, nearly 10% lower.

Barthwal affirmed the government’s commitment to working with exporters amid a challenging global situation. The overall trade deficit (goods and services combined) is expected to improve by 37.11% in April-January 2023-24, with the merchandise trade deficit narrowing by 9.66% during the same period.

The commerce ministry projects India’s overall exports (merchandise and services combined) in January 2024 at US$ 69.72 billion, showing a positive growth of 9.28% year-on-year. Imports are estimated at US$ 70.46 billion, reflecting a 4.15% increase over January 2023. Services exports are expected to rise by 17.14% year-on-year, while services imports are anticipated to grow at a relatively smaller rate of 8.22% during the same period.

Source: Moneycontrol

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