Exports in India witnessed a significant increase of 6.21% in October compared to the same period last year, finally reverting to positive growth after being in the negative zone for most of the year. This rise can largely be attributed to a low base effect. Similarly, imports exhibited an unexpected upswing, recording a year-on-year increase of 12.3% in October. However, this surge was primarily influenced by a substantial influx of gold and silver shipments, rather than inputs for domestic value addition or exports.
Government officials are hopeful that this improvement in trade figures, despite global challenges, signifies positive economic “green shoots.” They expressed confidence in surpassing the previous fiscal year’s exports of $451.1 billion. Nonetheless, the surge in imports, largely due to festive demand and the precious metals trade, resulted in a trade deficit of $31.46 billion, marking an all-time-high monthly deficit.
Commerce Secretary Sunil Barthwal highlighted the presence of these “green shoots” and anticipated surpassing the previous year’s export figures. In October, exports amounted to $33.57 billion, while imports reached $65.03 billion. From April to October of the current fiscal year, cumulative exports declined by 7% to $244.89 billion, and imports fell 8.95% to $391.96 billion.
Notably, gold imports surged by 95% to $7.2 billion, and silver imports rose by 124% to $1.7 billion in October due to increased domestic demand. However, the same level of growth was not observed in the exports of gems and jewellery. Their exports witnessed a decline of 9.8% to $2.9 billion in October.
The festive calendar shift was primarily responsible for the higher trade deficit in October, but economists expect it to moderate in November. Chief Economist at ICRA, Aditi Nayar, estimated the current account deficit for the full year to be in the range of 1.8-2%.
Positive growth was observed in 22 out of 30 key sectors in October, including iron ore, meat, dairy and poultry products, pharmaceuticals, electronics, carpets, plastics, marine goods, and engineering goods. Engineering goods experienced a third consecutive month of growth with a 7.2% increase to $8 billion, while pharmaceutical exports surged 29% to $2.4 billion.
On the import side, sectors such as pulses, fruits and vegetables, non-ferrous metals, and electronics goods witnessed notable growth in October, indicating increased domestic demand. The World Trade Organization (WTO) predicted global trade to grow by only 0.8% in 2023, reflecting challenges faced by many markets.
In terms of services, exports in October were estimated at $28.7 billion compared to $25.3 billion in the previous year. Imports stood at $14.32 billion, slightly higher than the $13.51 billion recorded last year. The estimated value of services exported from April to October 2023 was $192.65 billion, an increase from $181.37 billion in the same period of the previous year.
