India’s trade deficit narrows to 5-month low of $19.37 billion in Sept

New Delhi: India’s merchandise trade deficit narrowed to $19.37 billion in September, the lowest in five months, as imports dipped by 15 per cent year-on-year largely due to decline in crude oil and commodities prices in the international markets, as per data released by the Ministry of Commerce and Industry on Friday.

Merchandise exports from India declined by 2.6 per cent to $34.47 billion in September as compared to $35.39 billion recorded in the same month last year. India’s imports fell from $63.37 billion in September 2022 to $53.84 billion in September 2023, a year-on-year decline of 15 per cent.

September trade deficit is sharply lower on a year-on-year as well as sequential basis. It is 30 per cent lower when compared with the $27.98 billion trade deficit recorded in September 2022. In August, trade deficit stood at $24.16 billion, the highest in 10 months.

There has been a sharp decline in India’s exports since the beginning of the current financial year. Cumulatively, India’s exports in the first six months of the current fiscal is $211.4 billion, which is 8.77 per cent lower when compared with the same period last year.

However, the pace of decline has narrowed. “Our falling export trend is reversing as green shoots show up. For the remaining six months, there should definitely be positive growth in our exports,” said Commerce Secretary Sunil Barthwal.

Highlighting the positive sign in exports, Barthwal said non-petroleum and non-gems & jewellery merchandise exports posted a year-on-year increase of 1.86 per cent in September.

Engineering goods exports jumped by 6.8 per cent to $8.91 billion in September from $8.34 billion recorded in the same month last year.

“While part of this growth is on account of a favourable statistical base, the rise in engineering shipments' value certainly brings much-needed relief for the industry,” said Arun Kumar Garodia, Chairman, Engineering Export Promotion Council of India.

Electronic goods exports surged by 27.6% to $13.11 billion during April-September 2023 as compared to $10.27 billion recorded in the corresponding period of last year.

A sharp decline in imports has helped in narrowing the trade deficit. Merchandise imports for the period April-September 2023 declined to $326.98 billion as against $372.56 billion recorded in the same period last year, posting a drop of 12.23 per cent.

“Last year, due to the Russia-Ukraine conflict, prices of several commodities including soya oil, petroleum products, iron & steel had all shot up, which have come down significantly now. The fall can thus be attributed to this sharp decline in prices," said Director General of Foreign Trade Santosh Sarangi.

The merchandise trade deficit narrowed to $115.58 billion in the first six months of the current fiscal from $140.83 billion recorded in the corresponding period of last year.

India’s overall exports (merchandise and services combined) declined by 1.20 per cent to $63.84 billion in September, while the overall imports dipped by 13.67 per cent to $68.75 billion during the month under review. Overall trade deficit narrowed to $4.92 billion in September as against $15.03 billion recorded in the same month last year.