New Delhi, India experienced a trade deficit with nine of its top ten trade partners during the initial seven months of the fiscal year 2023-24, marking a challenging start to the economic period. Notably, the United States stands out as the sole country where India managed a trade surplus.
According to data from the Commerce and Industry Ministry, India’s trade surplus with the US, its largest trading partner, amounted to $19.59 billion from April to October. However, concerning China, the second-largest partner, a substantial deficit of $51.11 billion was recorded. Russia, as India’s fourth-largest trade partner, contributed to a deficit of $33.56 billion, while the UAE, the third-largest trade partner, resulted in a $6.83 billion trade gap.
An official explained, “With Russia, imports include petrol, high-calorific value coal, coke, briquettes, and fertilizers, especially potash. Our exports of gems and jewelry to Hong Kong and the US have declined.” The trade gap with Hong Kong stood at $7.59 billion.
For the April-November period of FY24, India’s total merchandise exports contracted by 6.51% to $278.8 billion, while imports fell by 8.67% to $445.15 billion, according to data released in December.
India faced trade deficits with other key partners, including Saudi Arabia, Indonesia, Iraq, Singapore, and South Korea, during the April-October period. An official stated, “With Indonesia, the trade deficit is due to edible oil. It was getting normalized because of rice and sugar exports to them, but now those are restricted, and the deficit has increased.”
Another official highlighted that despite the Comprehensive Economic Partnership Agreement signed in 2009, India traditionally maintains a trade deficit with Korea. Additionally, reduced tea and rice imports from India by Iran, attributed to foreign exchange issues and the finalization of the rupee-payment mechanism, were noted.
Ajay Sahai, Director General of the Federation of Indian Export Organisations (FIEO), emphasized the impact of the global trade environment’s uncertainty due to geopolitical issues and a general slowdown in developed economies on India’s exports. FIEO proposed an aggressive marketing strategy focusing on various sectors to tap into $112 billion more in export potential in countries like the US and the UK over the next three years.
Trade experts suggested that reviews of existing free trade agreements are unlikely to significantly boost India’s exports. A Delhi-based trade expert commented, “Why will the FTA partners agree to a review when they are benefiting from the pact? The reviews can’t help plug the deficit.”
