India has recorded a trade deficit with nine out of its top ten trade partners in the first seven months of the financial year 2023-24, according to data from the Commerce & Industry Ministry. The only exception was the United States, with which India experienced a trade surplus of $19.59 billion from April to October. However, the deficit with China, India’s second-largest trading partner, was a staggering $51.11 billion, followed by a gap of $33.56 billion with Russia, its fourth-largest partner.
The trade deficit with the UAE, India’s third largest trade partner, reached $6.83 billion. An official stated that imports from Russia primarily included petrol, high calorific value coal, coke and briquettes, and fertilizers. At the same time, exports of gems and jewelry to Hong Kong and the US had declined. India sustained a trade gap of $7.59 billion with Hong Kong.
Data released in December revealed that India’s overall merchandise exports during the April to November period of FY24 contracted by 6.51% to $278.8 billion, while imports fell by 8.67% to $445.15 billion. In addition to China and Russia, India’s trade deficit extended to Saudi Arabia, Indonesia, Iraq, Singapore, and South Korea during the April to October period.
The Federation of Indian Export Organisations (FIEO) suggested that an aggressive marketing strategy focusing on various sectors, such as vehicles, jewelry, electronics, auto components, marine products, apparel, insecticides, iron, and steel, could potentially unlock an additional $112 billion in export potential over the next three years.
However, trade experts argued that reviewing existing free trade agreements would unlikely resolve the trade deficit issue, as partner countries benefiting from these pacts would be unwilling to make changes. The global trade environment’s uncertainty, geopolitical issues, and a general slowdown in developed economies were seen as contributing factors to India’s exports being impacted.
In efforts to address the situation, the FIEO has proposed that the government take measures to tackle global economic challenges, including a rising interest rate, high inflation, and stagnant demand.
