Trade Deficit Widens in India

By Nikunj Ohri and Manoj Kumar

NEW DELHI (Reuters) – India’s trade deficit widened in July, hampered by weak exports, according to government data released on Wednesday amid renewed concerns about the global economy’s resilience.

The merchandise trade deficit reached $23.5 billion in July, exceeding economists’ expectations of $21.35 billion, as reported in a Reuters poll. In June, the trade deficit stood at $20.98 billion.

India’s merchandise exports totaled $33.98 billion in July, while imports were $57.48 billion. For context, June’s merchandise exports were $35.20 billion, with imports at $56.18 billion.

Devendra Pant, an economist at India Ratings and Research, commented, “The second consecutive month of decline in goods exports suggests global demand is still sluggish. A nine-month high goods trade deficit is not a good sign for the economy and currency.”

Concerns about a possible recession in the United States, triggered by weak job data, have shaken investor confidence, resulting in a global sell-off and emphasizing the fragile nature of the worldwide economic recovery.

In light of these uncertainties, India is seeking new markets, particularly in Africa, and aims to diversify its export goods basket to mitigate weaknesses in Western economies, as stated by Trade Secretary Sunil Barthwal.

Nevertheless, India’s services exports remained stable in July, amounting to $28.43 billion against services imports of $14.55 billion. Comparatively, in June, services exports were $28.82 billion, and imports were $15.02 billion.

Barthwal noted, “Our exports are holding on despite what is happening globally, reflected in substantial increases in engineering and electronics good exports.”

He also mentioned that monthly fluctuations in exports are largely influenced by crude oil prices.

Gold imports rose to $3.13 billion in July, slightly above June’s $3.06 billion. As a major oil consumer, India imported $13.8 billion worth of oil in July, down from $15.05 billion the previous month.