India’s trade deficit is facing limited near-term challenges due to ongoing geopolitical uncertainties, but it remains an important area to monitor, according to a recent outlook report by Crisil. The report also points out that despite potential disruptions, there is a forecast for better trade growth this year by key multilateral organizations, which is encouraging news for Indian exports. In April, India’s exports recorded positive growth despite disruptions in global trade routes and uneven global growth, while imports saw steeper growth, leading to a wider trade deficit.
India’s services exports have been growing well, making the country the fourth largest exporter of digitally delivered services after the US, UK, and Ireland. India now accounts for more than a fifth of international trade in services, with digitally delivered services exports reaching USD 257 billion, a 17 per cent increase year-on-year. The report highlights that India’s merchandise exports grew 1.1 per cent year-on-year to USD 34.99 billion, while merchandise imports surged 10.3 per cent year-on-year to USD 54.09 billion. Lower gems and jewellery shipments were a drag on export growth, while core exports remained positive but slowed to 1.3 per cent year-on-year compared to 9.1 per cent in March.
The high growth in merchandise imports was driven by a surge in oil and gems & jewellery imports, with core import growth remaining softer. In April, crude oil and gold prices rose sharply, contributing to import growth. Oil prices increased to USD 90.1 per barrel from USD 85.4 per barrel in March, while gold imports doubled to USD 3.1 billion from USD 1.5 billion. As a result, the merchandise trade deficit widened to USD 19.1 billion from USD 15.6 billion in March and USD 14.4 billion in April last year. In March, India’s services exports declined 1.4 per cent year-on-year, while imports softened to 2.1 per cent, keeping the services trade surplus stable at USD 13.42 billion.
Overall, the outlook for India’s trade deficit faces limited near-term challenges from ongoing geopolitical uncertainties, but remains an important area to monitor. Despite potential disruptions, there is a forecast for better trade growth this year, offering encouraging news for Indian exports. In April, India’s exports saw positive growth despite disruptions in global trade routes and uneven global growth, while imports experienced steeper growth, leading to a wider trade deficit. India’s services exports have been performing well, making the country the fourth largest exporter of digitally delivered services. The country now accounts for more than a fifth of international trade in services, with digitally delivered services exports reaching USD 257 billion, a 17 per cent increase year-on-year.
India’s merchandise exports grew 1.1 per cent year-on-year to USD 34.99 billion in April, while merchandise imports surged 10.3 per cent year-on-year to USD 54.09 billion. Lower gems and jewellery shipments impacted export growth, while core exports remained positive but slowed to 1.3 per cent year-on-year compared to 9.1 per cent in March. The high growth in merchandise imports was led by a surge in oil and gems & jewellery imports, with core import growth remaining softer. Crude oil and gold prices rose sharply in April, contributing to import growth. Oil prices increased to USD 90.1 per barrel from USD 85.4 per barrel in March, while gold imports doubled to USD 3.1 billion from USD 1.5 billion. As a result, the merchandise trade deficit widened to USD 19.1 billion in April.
In March, India’s services exports saw a 1.4 per cent decline year-on-year, while imports softened to 2.1 per cent, keeping the services trade surplus stable at USD 13.42 billion. Overall, the report emphasizes the importance of monitoring India’s trade deficit in the face of ongoing geopolitical uncertainties, while highlighting the potential for better trade growth this year. India’s trade deficit continues to be influenced by a combination of factors, including disruptions in global trade routes and uneven global growth. Despite these challenges, the country’s services exports have been performing well, making it a significant player in the international trade of digitally delivered services. India’s merchandise exports and imports also saw notable growth in April, with lower gems and jewellery shipments impacting export growth, and a surge in oil and gems & jewellery imports driving import growth. The sharp rise in crude oil and gold prices contributed to the widening of the merchandise trade deficit in April.
Looking ahead, the report suggests that monitoring India’s trade deficit will be crucial in navigating the ongoing uncertainties in the global economy. Despite potential disruptions, the forecast for better trade growth this year by key multilateral organizations offers hope for Indian exports. In April, India’s exports showed positive growth despite challenges in global trade routes, while imports experienced significant growth, leading to a wider trade deficit. The report also highlights the country’s strong performance in the services sector, with India becoming the fourth largest exporter of digitally delivered services. With digitally delivered services exports reaching USD 257 billion, India accounts for more than a fifth of international trade in services. While merchandise exports grew by 1.1 per cent year-on-year in April, imports surged by 10.3 per cent, driven largely by a rise in oil and gems & jewellery imports. The report underscores the importance of monitoring India’s trade deficit in light of the current geopolitical landscape, while also acknowledging the potential for growth and resilience in the country’s export sector.
