The merchandise trade deficit narrowed to $17.49 billion in January from $19.80 billion in December, largely because imports declined to $54.41 billion against the $58.25 billion recorded in December, commerce ministry data showed.

Goods exports fell marginally to $36.92 billion in January, from $38.45 billion in December. The decline in exports is mainly due to armed conflict in the Red Sea.

Meanwhile, services exports rose in January to $32.80 billion compared with $27.88 billion in December, and imports rose to $16.05 billion from $13.25 billion in the previous month.

On an annual basis, merchandise exports grew by 3.13% during January, while imports also rose about 3% during this period.

Services exports and imports rose annually by 17.14% and 8.23%, respectively, during January.

Commerce Secretary Sunil Barthwal said the January trade data reflected an overall positive sentiment amid geopolitical turmoil.

“We have told the banks to extend credit to exporters. Exim bank and ECGC (Export Credit Guarantee Corporation of India) have been told to not increase insurance rates,” Barthwal said at a press briefing.

“We have created a positive atmosphere for them (exporters). The difficult circumstances under which we have grown speak volumes about our exporters and exporting community. I hope we will see positive growth in the coming years too,” he added.

Overall trade deficit, including merchandise and services, stood at $70.43 billion during the April 2023-January 2024 period, down from $111.99 billion in the year-ago period.

Ajay Sahai, director general of the Federation of Indian Export Organisations, said, “While the initial shocks of the Red Sea crisis have been absorbed, what remains to be seen is whether Indian exporters, while renegotiating contracts in April, are able to share the rising freight charges with their customers as it is difficult to absorb such hikes for a longer period on their own.”

About 30% of Indian exports are routed through the Red Sea.

In y-o-y (year-on-year) terms, the trade deficit this January ($17.49 billion) is higher than in January 2023, when it was at $17.03 billion.

So far this fiscal (April 2023-January 2024), India’s merchandise exports are at $353.92 billion, down 4.89% annually, while merchandise imports stood at $561.12 billion, down 6.71% annually.

The government has created a task force to investigate the issues of non-tariff barriers, sanitary and phytosanitary issues with various countries, and measures that would aid trade growth, Barthwal said.

“We also took up the matter of the non-listing of exporters with some countries and asked them to remove those exporters which are not exporting and add potential exporters to the list,” he said.

“Listing of other exporters helped us to push up our exports. The task force on non-tariff barriers will continue to work and give a push to our exports,” he added.

As things stand, Indian exports have been impacted by a slowdown in global growth.

The tightening of interest rates due to nagging inflation, especially in advanced Western economies, has led to a slowdown in business, investment and trade.

Meanwhile, conflicts in Ukraine and West Asia have threatened to push up commodity oil prices, leading to greater inflationary pressures.

Rating agency Icra Ltd expects India’s monthly trade deficit to stand at about $20 billion–$25 billion in the remaining months of FY24, resulting in a current account deficit of around 2.5% of GDP in Q3 and 1.7% of GDP in Q4FY24.

“The exports dipping by 5% and imports dropping by 7% in first 10 months of the fiscal is largely an outcome of global slowdown and drop in commodity prices as well. Much of the export decline is attributed to petroleum goods, chemicals, gems and jewellery and flat growth in engineering goods: all reflecting drop in the commodity prices as well,” Sahai added.

During the April-January 2023-24 period, India’s top export destinations were Australia, Singapore, United Kingdom, China, UAE, Netherlands, and Saudi Arab.

Among the import destinations, Russia stood at the top with a 44.76% share in India’s import basket, followed by Switzerland, China, Korea, Singapore, UAE, etc.

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Published: 15 Feb 2024, 10:47 PM IST