India's Trade Deficit Eases In September As Imports Decline Faster Than Exports

India's merchandise deficit eased amid a sharper decline in imports.

The merchandise trade deficit fell to $19.4 billion September, as compared with $24.2 billion in August, according to a press briefing held by the Ministry of Commerce and Industry.

Key Highlights

• Exports fell by 2.6% annually to $34.5 billion.

• Imports fell by 15% annually to $53.8 billion.

• Exports were flat on a sequential basis, while imports fell by 8.2%.

The decline in import value reflected the sharp fall in prices of petroleum and edible oils, said Director General of Foreign Trade Santosh Sarangi.

• Non-petroleum and non-gems and jewellery exports in September 2023 were $24.8 billion, registering a rise of 1.8% from a year ago.

• Non-petroleum, non-gems and jewellery (gold, silver and precious metals) imports in September were $33.58 billion, 12.2% lower than the previous year.

While the decline in India's overall merchandise exports continued, non-petroleum and non-gems and jewellery exports recorded a year-on-year increase for the second consecutive month. This underscores the importance of focusing on manufacturing exports to impart resilience to India's exports basket, said David Sinate, chief general manager for research and analysis at India Exim Bank.

The exuberance in electronics goods exports seems to be waning as the sector recorded a year-on-year decline in exports during September, he said.

The narrower-than-expected merchandise trade deficit print augurs well for the current account deficit for Q2 FY24, although it is expected to enlarge vis-à-vis Q1 levels, said Aditi Nayar, chief economist at ICRA. "Crude oil price volatility amidst geopolitical tensions remains a risk to the CAD outlook for H2 FY24," said Nayar.

Key Export Items

• Exports of engineering goods stood at $8.9 billion, 6.8% higher year-on-year.

• Petroleum product exports were at $6.5 billion, 10.6% lower than a year earlier.

• Gems and jewellery exports were at $3.2 billion, 16% lower on an annual basis.

• Organic and inorganic chemical exports were at $2.1 billion, 15.3% lower on an annual basis.

• Drugs and pharmaceutical exports were at $2.4 billion, 9% higher from over a year earlier.

Key Import Items

• Petroleum, crude, and product imports were down 20.3% from a year ago at $14 billion.

• Organic and inorganic chemical imports were at $2.1 billion, 12.9% lower on an annual basis.

• Imports of coal, coke, and briquettes were 33.4% lower than a year ago at $2.3 billion.

• Imports of electronic goods were at $8.1 billion, 13.3% higher over a year earlier. 

• Machinery, electrical and non-electrical goods were at $3.9 billion, up 3.9% over the previous year.  

• Gold imports stood at $4.1 billion, 6.9% higher than a year ago.

From April to September, overall exports—merchandise and services—fell by 3% as compared with the same period last year, while imports fell by 10.1%.

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