Exports dip by 6.58% in Jan; trade deficit lowest in 12 months at $17.75 billion

Imports in January too contracted by 3.63 per cent, the second consecutive month, to $50.66 billion

Slowdown in global demands has hurt India’s foreign trade with exports slumping by 6.58 per cent to $32.91 billion in January. Imports have also declined leading to a drop in trade deficit that will help ease pressure on the country’s current account deficit.

India’s imports fell by 3.63 per cent to $50.66 billion in January 2023 as compared with $52.57 billion recorded in the same month last year. Trade deficit narrowed to $17.75 billion in January, the lowest in 12 months.

Gold imports, which have a bearing on the current account deficit, dipped by 70.76 per cent to $0.70 billion in January 2023 as compared to $2.38 billion recorded in the same month last year. Silver imports slumped by about 82 per cent from $0.64 billion in January 2022 to $0.11 billion in January 2023.

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Cumulative value of merchandise exports for April-January period of the current financial year stands at $369.25 billion, which is 8.51 per cent higher when compared with $340.28 billion recorded during the corresponding period of last fiscal.

Merchandise imports for the period April-January 2022-23 stood at $602.20 billion as against $494.06 billion during the corresponding period of 2021-22, according to data released by the Ministry of Commerce and Industry.

For the first 10 months of the current financial year, the trade deficit surged to $232.95 billion as against $153.79 billion recorded in April-January 2021-22.

While there was healthy growth in exports of some items like electronic goods, oil meals, oil seeds, iron ore, rice, fruits & vegetables, the exports of gems and jewellery, engineering goods, cotton and textiles items remained sluggish.

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“The global headwinds pose a serious challenge to the sector in achieving the annual export target,” said EEPC India Chairman Arun Kumar Garodia.

The engineering exports sector has been witnessing a downward trend for the last almost seven months in the current financial year primarily due to weak demand from key markets including China. Engineering goods exports declined by 9.8 per cent year-on-year to $8.40 billion in January.

Global economic growth is projected to fall from an estimated 3.4 per cent in 2022 to 2.9 per cent in 2023. India’s economic growth is also estimated to slow from 6.8 per cent in 2022 to 6.1 per cent in 2023, as per the IMF latest report.

“This seems to be having a two-way effect on India’s trade. On one hand, it is reducing exports as there is decline in global growth resulting in sluggish export demand while on the other hand increasing imports as domestic demand remains resilient due to relatively high growth,” ministry of commerce and industry noted in a statement.

India’s overall exports, merchandise and services combined, rose to $65.15 billion in January, recording year-on-year growth of 14.58 per cent.