The Global Trade Research Initiative (GTRI) said that India does not need to worry about the trade deficit from importing crude oil and coal, however, it must focus on reducing the industrial goods imports, especially from countries like China, as these threaten India’s economic sovereignty.
“Between January and June 2024, India had a trade surplus with 151 countries, representing 55.8 per cent of its exports and 16.5 per cent of its imports, totalling USD 72.1 billion,” GTRI said in a report.
The biggest surpluses were with the USA (USD 21 billion) and the Netherlands (USD 11.6 billion) during January-June this year.
“India had a trade deficit with 75 countries, which accounted for 44.2 per cent of its exports and 83.5 per cent of its imports, resulting in a USD 185.4 billion deficit, much larger than India’s overall trade deficit,” it said, adding this situation highlights the need to reduce reliance on specific imports and strengthen domestic production.
The data analysis by the think tank also showed that with 23 of 75 countries, India’s trade deficit exceeded USD one billion and these countries accounted for 32.9 per cent of India’s exports and 73.5 per cent of its imports.
The top five countries with the highest trade deficits were China with USD 41.88 billion, Russia with USD 31.98 billion, Iraq with USD 15.07 billion, Indonesia with USD 9.89 billion, and the UAE with USD 9.47 billion.
Remaining 18 countries with trade deficit exceeding USD one billion include Saudi Arabia (USD 9.43 billion), Switzerland (USD 8.46 billion), South Korea (USD 6.93 billion), Japan (USD 6.13 billion), Qatar (USD 5.76 billion), Hong Kong (USD 5.21 billion), Taiwan (USD 4.28 billion), Australia (USD 3.34 billion), Thailand (USD 2.60 billion), Germany (USD 2.10 billion), Vietnam (USD 2.07 billion), Malaysia (USD 1.49 billion), Venezuela (USD 1.47 billion), Peru (USD 1.10 billion), and Ireland (USD 1.10 billion).
It added that India should not be concerned about the trade deficit with 11 countries that primarily export crude oil, petroleum products, and coal to India such as Angola, Iraq, Saudi Arabia, Australia and Nigeria.
But the country “may keep a watchful eye about the trade deficit with 4 out of the 23 countries that primarily export gold, silver, and diamonds to India as tariff cuts in gold and silver in this budget from 15 per cent to 6 per cent may lead to rise in imports,” GTRI Founder Ajay Srivastava said.
And these nations include Peru, Switzerland, UAE, Hong Kong.
On China, the report said that during January to June 2024, India exported USD 8.5 billion to China while importing USD 50.4 billion, resulting in a trade deficit of USD 41.9 billion.
This low export and high import makes China India’s largest trade deficit partner.
“Worse, 98.5 per cent of imports from China, or USD 49.6 billion, are industrial goods. China accounts for 29.8 per cent of India’s industrial goods imports. India must invest in deep manufacturing to cut dependence on import of critical industrial products from China,” Srivastava said.
Goods whose share of China in India’s global imports are more than 50 per cent include umbrellas, artificial flowers, man-made filaments, rolling stock, glassware, leather goods, ceramic products, toys, and musical instruments.
It added that the updated trade data for FY24 now shows the USA as India’s top merchandise trade partner, overtaking China.
“The revision added an extra USD 2.8 billion in global imports, bringing India’s total imports to USD 678.2 billion. Of this increase, USD 1.4 billion came from the USA. As a result, India’s imports from the USA rose from USD 40.8 billion in May to USD 42.2 billion in August, making the USA India’s top trading partner with a total trade of USD 119.7 billion, surpassing China,” it said.
