According to the government data released on Monday, India’s merchandise trade deficit shrank to $15.60 billion in March. This marks an 11-month low. The last time the deficit was lower was in April 2023 when it came at $14.44 billion.
Analysing The Numbers-
The merchandise imported and exported in March was $57.28 billion and $41.68 billion, respectively. In the preceding month the merchandise imports were $60.11 billion in imports while the exports were $41.40 billion. Services exports totaled $28.54 billion in March, compared to $15.84 billion in imports. In the month of February, services brought in $15.39 billion in imports and $32.35 billion in exports.
The merchandise exports in FY24 saw a 3.11 percent decline to $437.06 billion. Imports on the other hand in FY24, decreased by 5.41 percent to $677.24 billion. The primary factors propelling the growth of merchandise exports in 2023–2024 are engineering items, pharmaceuticals and drugs, iron ore, cotton yarn, fabs, and made-ups, handloom products, ceramics, and glassware.
India is seeing a “positive cycle” in its exports, according to Commerce Secretary Sunil Barthwal. For the second month in a row, the outbound shipments in the fiscal year that concluded in March exceeded $40 billion.
Overall, India’s declining trade deficit will help maintain in its current account deficit at manageable levels. It reflects a better trade trade situation and a is a positive sign for the country’s economy. During the October-December quarter, the deficit decreased to 1.2 percent of the gross domestic product. This trend suggests that India’s trade policies and strategies are potentially becoming more effective in managing its trade imbalances.
However, keeping in mind, the geopolitical situation especially in the middle east. There are concerns regarding how it will affect India, for it relies on middle east for its petroleum imports.
Commenting on this and the fact that despite forecasts indicating a 5% fall in global trade. India’s trade, particularly exports, performed better, commerce Secretary Sunil Barthwal said, “This resilience is noteworthy, especially considering the potential for conflicts to erupt anywhere, anytime.” He further added, “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.”
Furthermore, he stated that, “Policy interventions will only come after we understand the issues traders are facing. Based on that exercise, whatever is needed definitely government will address that.”