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India’s merchandise exports shrank 12.7% in April to a six-month low of $34.66 billion but imports fell by a sharper 14% to hit $49.90 billion, as per initial estimates from the Commerce Ministry released on Monday.
Consequently, the monthly goods trade deficit cooled 17% in April to touch a 20 month-low of $15.24 billion from $18.35 billion a year ago. Sequentially, outbound shipments fell 17.3% from March’s $41.9 billion exports, which were the highest since June 2022.
Officials attributed the decline in exports to faltering demand in key markets and a decline in commodity prices. Director General of Foreign Trade and Additional Secretary in the Commerce Ministry Santosh Kumar Sarangi said the broader picture is that imports have declined sharply.
“Part of it is on account of cooling down of commodity prices and part of it has to do with reduced demand for products which are considered as discretionary spending like gems and jewellery. So their imports are falling along with petroleum, and both are also export-oriented… a reduction in demand for such items is likely to result in decline in imports as well as exports,” he said in response to a query from The Hindu.
“Global demand is not looking good from markets like the EU and the US. For the next two-three months, the demand scenario doesn’t look very optimistic,” Mr. Sarangi said, adding that the government will initiate inter-ministerial talks to find ways to diversify and sustain the exports momentum.
“Hopefully, things will change from August-September onwards. The Chinese economy is opening up, and keeping that in mind, WTO has revised its global trade growth from 1% to 1.7%, and if demand improves from EU and US by August or so, it might give a boost to our exports,” he reckoned.
“Taking into account estimated services trade during April, the total trade deficit is just $1.38 billion, the lowest in 21 months,” Mr. Sarangi said. Actual services trade data is released later by the Reserve Bank of India.
The Ministry also released updated trade numbers for 2022-23, indicating goods exports grew 6.7% to cross $450 billion, higher than earlier estimates. Including services trade, the total exports for the year rose 14.7% to $775.87 billion.