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India witnessed a significant reduction in its trade deficit during April, reaching a 21-month low, attributed to a decrease in domestic demand and lower commodity prices, resulting in a reduced import expenditure.
In comparison to the corresponding period last year when it stood at $8.37 billion, the combined deficit for merchandise and services plummeted to $1.38 billion. This decline follows March’s trade deficit of $6.04 billion.
According to government data released on May 15, the merchandise trade deficit in April amounted to $15.24 billion, showcasing a decline from the previous month’s figure of $19.73 billion.
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The month of April witnessed a decrease in both exports and imports. Merchandise exports for April were recorded at $34.66 billion, down from $38.38 billion in March. Similarly, imports amounted to $49.90 billion in April, showing a decline from $58.11 billion in the previous month.
In April, merchandise imports experienced a 14.1 percent year-on-year decline, reaching $49.9 billion, while exports also fell by 12.7 percent to $34.66 billion.
During the announcement of the trade data, DGFT Santosh Sarangi stated that this decline could be partly attributed to the decrease in commodity prices and a decrease in demand for discretionary products such as gems and jewelry.
Petroleum, crude oil, and related products were the primary contributors to the decline in imports, closely followed by coal and coke.
In April, oil imports in India experienced a year-on-year decrease of 2.46 percent, amounting to $15.17 billion.
Sarangi explained, “Following the Russia-Ukraine conflict, there was a surge in commodity prices, but now we are witnessing a cooling off, which is reflected in our reduced import numbers.”
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While certain sectors such as machinery, iron and steel, and pulses observed marginal year-on-year growth, overall Indian imports remained subdued.
In contrast, services exports in India demonstrated growth for the second consecutive month, driven by a significant increase in information technology and business consulting activities. The estimated services exports for April amounted to $30.36 billion, surpassing the figure of $27.75 billion recorded in March. It is worth noting that India’s services exports achieved a record high of $31.09 billion in December 2022.
Amidst challenging global conditions, the Indian engineering sector exhibited its resilience, with engineering goods emerging as the leading merchandise export category for India in April, experiencing a slight increase.
The exports in this sector rose from $1.67 billion in April of the previous year to $2.11 billion this year.
However, certain export categories, including petroleum products, gems and jewelry, and engineering goods, witnessed a decline in their export figures.
Directorate General of Foreign Trade Santosh Sarangi announced that a positive revision of trade data has resulted in the total exports from India for the fiscal year 2022-23 being adjusted to $775.87 billion.
