India’s merchandise export sector recorded a significant milestone reaching a 12-month pinnacle with exports amounting to $41.68 billion in March. Although this achievement marks a marginal decline of 0.67% compared to the figures registered last year, it remains an important indicator of the country’s resilient trading capabilities. Concurrently, the import sector witnessed a 6% drop to $57.3 billion in the same month. The synchronization of these two economic flows resulted in a contraction of the goods trade deficit, reducing it to $15.6 billion in March, denoting the lowest margin in a span of 11 months.
The contraction in the trade deficit can be largely attributed to the significant fall in gold imports, which plummeted by 53.6% to $1.53 billion in March. The drop in non-oil, non-gold imports also contributed to the reduction in the overall import bill. In contrast to the decline in gold imports, silver importation showcased a remarkable increase, surging nearly 1059% to $816.6 million.
Despite the subdued performance earlier in the fiscal year, March’s robust export figure, accompanied by the preceding month’s $41.4 billion tally, provided a boost to the overall merchandise shipments for the fiscal year 2023-24. The average goods export value for the initial ten months stood at $35.4 billion, but the surge in the last two months escalated the full-year export total to $437.1 billion, which, despite being 3.1% below the illustrious $451.1 billion mark of the previous year, reflects a substantial recovery.
On the importation front, the fiscal year witnessed a steeper decrease of 5.41% in goods imports, accumulating to $677.24 billion. This decline played a pivotal role in curtailing India’s trade deficit for the year to $240.2 billion, marking a notable 9.33% reduction in comparison to the preceding fiscal annum.
While the concrete data on services exports is available only up to February, estimates by the Commerce Ministry indicate a contraction of 6.2% in March to $28.5 billion. Imports in the services sector followed a similar trajectory, falling 6.6% to $15.8 billion. Nevertheless, an overall assessment points to an estimated rise in services exports by 4.4% during the fiscal year 2023-24 to nearly $340 billion, and a dip in imports by 2.5% to $177.6 billion.
When consolidating the outcomes of merchandise and services sectors, India’s total exports are believed to have experienced a marginal increase of 0.04%, reaching $776.68 billion in the fiscal year 2023-24. Meanwhile, total imports are projected to have descended by 4.81% in the same period, rounding up to $854.8 billion.
This favorable movement in the goods trade deficit is poised to have positive implications for the country’s current account balance in the final quarter of the fiscal year. Aditi Nayar, the Chief Economist at ICRA, optimistically anticipates the possibility of a transient surplus in the quarter, estimating it could be around the mark of $1-2 billion.
These developments reflect the intricate balance and fluctuations within India’s trade dynamics, portraying a fiscal year of challenges, recovery, and cautious optimism within the nation’s economy. The fine-tuning of exports and imports, as well as the proactive management of the trade deficit, continue to carry pivotal importance for the economic health and international trade relations of the country.
