Growth in India’s merchandise exports fell to 2.6 per cent year-on-year in June from 13.5 per cent in May, amid muted overseas demand.
In terms of value, exports plummeted to a seven-month low in June to $35.2 billion, data released by the commerce department showed.
Merchandise imports expanded by 4.9 per cent to $56.18 billion due to a jump in imports of items such as petroleum products, electronic goods, and metals, among others.
The trade deficit narrowed to $20.98 billion in June, compared to a seven-month high of $22 billion in May, but widened from $19.2 billion in June last year.
Commerce secretary Sunil Barthwal said that if global inflation falls and growth sustains, then trade will also sustain. However, India will have to remain cautious of the existing geopolitical conflict or a new one if it arises.
“Going by the ongoing situation, we will be crossing $800 billion total exports (goods and services) during the current financial year. Quarterly figures are quite optimistic. Services exports are growing in a sustained manner,” Barthwal told reporters in a briefing.
Non-petroleum and non-gems and jewellery exports, an indication of a clearer parameter of exports’ health, grew 8.5 per cent to $27.43 billion. The main drivers of the growth were engineering goods (10.27 per cent), electronic goods (16.91 per cent), drugs and pharmaceuticals (9.93 per cent), organic and inorganic chemicals (3.32 per cent), and textiles (3.68 per cent).
“If you look at our strategy, we are focusing on 20 countries of significance and we are looking at six major sectors of the economy so that we can take advantage of growth factors in these sectors and these economies,” Barthwal said.
However, exports of petroleum products that comprise 15 per cent of India’s export basket contracted 18 per cent year-on-year to $5.52 billion despite a rise in international petroleum prices. International petroleum prices rose from $74.93 per barrel in June 2023 to $82.55 per barrel in June 2024.
Aditi Nayar, chief economist at ICRA, said that India’s merchandise trade deficit widened in June compared to last year, amid a surge in the oil deficit.
“Owing to the slightly faster growth in imports vis-à-vis exports, the merchandise trade deficit expanded to $62.3 billion in Q1 FY25 from $56.2 billion in the year-ago quarter. This is expected to push up India’s current account deficit (CAD) to ~1.4 per cent of GDP from 1 per cent in Q1 FY2024 and a turnaround of the transient surplus of 0.6 per cent of GDP that was seen in Q4 FY2024,” Nayar said.
Services exports saw 8.9 per cent growth to $30.27 billion in June, while imports saw 10.7 per cent growth to $17.29 billion, resulting in a surplus of $12.98 billion. The services trade data for April, however, is an “estimate”, which will be revised based on the Reserve Bank of India’s subsequent release.
