India's Merchandise Trade Shortfall Widens to $23.5 Billion in July

By IndraStra Global News Team

India's trade deficit in goods expanded in July, driven by a rise in imports and subdued global demand amid ongoing geopolitical challenges. The trade gap reached $23.5 billion, up from $20.98 billion in June, surpassing economists' expectations of around $21.35 billion. Exports of goods declined to $33.98 billion in July, a drop from $35.20 billion in June and $38.13 billion in May, while imports increased slightly to $57.48 billion, compared to $56.18 billion in June, though still below May's $61.91 billion.
In April, the World Trade Organization (WTO) projected a recovery in global trade for 2024 following a downturn in 2023, which was caused by inflation and elevated energy costs. The WTO forecasted that global trade volumes would grow by 2.6% annually in 2024 and by 3.3% in 2025, as noted in its Global Trade Outlook and Statistics report.
Commerce secretary Sunil Barthwal highlighted that despite a challenging global trade environment, India's exports are resilient, with growth in electronic goods, engineering products, and pharmaceuticals. He emphasized that India is on track to exceed past export figures, and service exports are also performing well. While there have been fluctuations in merchandise trade, overall growth remains positive through July. Barthwal noted a decline in petroleum exports from $6.7 billion in July 2023 to $5.2 billion in July 2024, due to higher domestic consumption, while crude petroleum imports rose from $11.8 billion to $13.8 billion over the same period.
Indian exports have been affected by slowing global growth and rising interest rates driven by persistent inflation, particularly in Western economies, which have dampened business, investment, and trade. Geopolitical conflicts, including those in West Asia, Ukraine, and the Red Sea, have further disrupted global trade. However, India's services exports reached $28.43 billion in July, up from $26.22 billion a year earlier, though slightly below the $30.27 billion recorded in June.
In July, India's total services imports reached $14.55 billion, a rise from $13.74 billion in July 2023, though lower than the $17.29 billion reported in June 2024. Combined exports of both merchandise and services stood at $62.42 billion in July, slightly above the $60.71 billion in the same month last year but below the $65.47 billion in June 2024. Total imports, including merchandise and services, amounted to $72.03 billion, up from $67.23 billion in July 2023, though lower than the $73.47 billion recorded in June.
The key drivers of merchandise exports in July included engineering goods, electronics, drugs & pharmaceuticals, and textiles, with notable growth in sectors such as electronic goods, which saw a 37.31% year-on-year rise to $2.81 billion, and meat, dairy & poultry products, which increased by 56.18% to $0.46 billion. Gold imports remained steady at $3.13 billion, while oil imports were slightly lower at $13.8 billion, down from $15.05 billion in June. Aditi Nayar, Chief Economist at ICRA Ltd., pointed to the widening oil and non-oil deficits as contributing factors to the expanding merchandise trade deficit, alongside fluctuating global prices and reduced oil discounts.
India's top export destinations in July included the US, UAE, and the Netherlands, while its key import sources were China, Russia, and the UAE. With recent political events in Bangladesh, Commerce Secretary Sunil Barthwal emphasized the importance of closely monitoring developments and enhancing trade relations between India and its neighbor. Economists, like Dr. Manoranjan Sharma from Infomerics Ratings, expressed concerns about the continued decline in goods exports and the persistence of a high trade deficit, which could negatively affect India's economy and currency, underscoring the need for focused efforts to boost exports.
IndraStra Global Staff has not edited this story, which is auto-generated from a syndicated feed.

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