India’s merchandise trade deficit widens to US$ 23.5 billion in July

India’s merchandise exports declined by about 1.5%, and imports rose by 7.4% during July. The country exported US$ 33.98 billion worth of goods, while it imported US$ 57.48 billion.

Image Credit: Freepik 

India’s merchandise trade deficit hit a nine-month high in July, largely due to increased crude oil imports and a drop in overall goods exports after three months of growth. 

Exports in July fell 1.47% year-on-year to US$ 33.98 billion, while imports rose 7.4% to US$ 57.48 billion, resulting in a trade deficit widening by 23.7% at US$ 23.5 billion- the highest since October, when it was US$ 30 billion.

The higher deficit in July was primarily caused by a 17% increase in crude oil imports, which totaled US$ 13.8 billion, while petroleum product imports decreased by 22% year-on-year to US$ 5.2 billion. 

July’s exports were supported by strong performance in sectors like engineering products, electronics, pharmaceuticals, and ready-made garments. Engineering exports rose 3.6% to US$ 9 billion, electronics exports jumped 37.3% to US$ 2.8 billion, pharmaceutical exports increased 8.3% to US$ 2.3 billion, and ready-made garment exports grew 11.8% year-on-year to US$ 1.2 billion. There was also notable growth in tea, tobacco, spices, and meat and dairy product exports.

Gold imports declined by 10.7% to US$ 3.13 billion, while silver imports drew attention with a staggering increase of over 439%, reaching nearly US$ 650 million. The trade deficit was further widened by higher imports of ‘non-oil, non-gold’ items, including consumer goods. Electronics imports grew by 11.5%, pulses by 43%, and vegetable oils by 14.5%.

From April to July, exports grew 4.15% to US$144.2 billion, while imports increased 7.57% to US$ 229.7 billion.

Commerce Secretary Sunil Barthwal expressed confidence that, despite the July decline, total exports for the year will exceed last year’s figure of US$ 437.1 billion. In July, services exports grew 8.4% to US$ 28.43 billion, while imports rose 5.8% to US$14.5 billion. For the April-July period, services exports increased 9.8% to US$ 117.3 billion, with imports up 6.3% to US$ 62.95 billion during the same period.

He noted, “India’s GDP is growing at more than 7% and the world is growing at 3%, therefore our domestic consumption is going to grow more. Perhaps that is also reflecting on crude imports. Domestic consumption (of auto fuels) is leaving less for the exportable surplus.” 

“Export growth has to be seen over a period of time which is significant when looking at what is happening around the world whether protectionism or other gro-political issues,” the Commerce Secretary added.