India’s merchandise trade deficit narrowed to $20.13 billion in June, compared to $22.1 billion in May.
The trade deficit has slightly shrunk as fall in imports was larger than the fall in exports.
Merchandise exports stood at $32.97 billion, while imports were $53.10 billion in June. In the previous month, merchandise exports were $34.98 billion, while imports stood at $57.10 billion.
The merchandise trade deficit in June 2023 exceeded forecasts by economists.
“Most of the sub groups of exports reported a YoY contraction in June 2023, reflecting an unpalatable combination of lower demand and commodity prices,” said Aditi Nayar, Chief Economist & Head – Research & Outreach, ICRA Ltd.
India’s exports remained weak due to several reasons including a slowdown in the world’s major economies, Commerce Secretary Sunil Barthwal said during the release of trade data on July 14.
“WTO projection of slowdown has come true. Slowdown in major economies of world where our exports are concentrated including US and EU is the prime reason for this,” he said.
The tightening of monetary policy, as per the secretary, was perhaps also affecting business policy. “Globe is in twin dilemma of slowdown and inflationary pressure which is all creating impact on manufacturing activities which in turn is impacting trade activities,” he said.
Services exports in June were $27.12 billion, while imports were $15.88 billion. In May, services exports were $25.30 billion and imports were $13.53 billion.
The degrowth of exports, was rising on the back of fall in oil as well as gems & jewellery exports, commerce officials during the press briefing said.
In absolute terms, petroleum products accounted for half the fall in exports in June 2023 relative to June 2022. The key outlier was electronic goods, with a robust 45 percent expansion in exports in June 2023.
Under combined lens for April-June
However, for the April-June period, India’s overall trade deficit improved by 28.26 percent during the first quarter of 2023 to $22.59 billion from $31.49 billion in the same period of 2022.
The merchandise trade deficit also improved by 7.9 percent at $57.6 billion April-June 2023 as compared to $62.6 billion in April-June 2022, government data revealed.
India’s overall exports (merchandise and services combined) in June 2023 is estimated to be at $60.09 billion, declining 13.16 percent over June 2022. Overall imports in June 2023 is estimated to be at $68.98 Billion, also exhibiting a negative growth of 13.91 percent, year on year.
Meanwhile, electronic goods export saw significant growth of 45.4 percent and 47.1 percent in June and April-June 2023, respectively, compared to the corresponding period last year. Iron ore exports improved too, by a whopping 1664.3 percent YoY in June 2023 and 35 percent during April-June 2023 over April-June 2022. Agricultural exports registered a robust growth too, along with spice exports, which increased 18.2 percent, fruits and vegetables export, which increased 14.1 percent, and oil seeds and oil meals export by 25.1 percent and 33.2 percent, respectively, in April-June 2023 over April-June 2022.
