India’s trade deficit narrows to $240 billion in the last fiscal year

New Delhi: India’s merchandise trade deficit narrowed to $ 240.17 billion in the financial year ended March 2024 from $264.90 billion recorded in the previous year as the country’s import bills declined due to lower oil and commodities prices, official data released on Monday showed.

Merchandise exports as well as imports during the financial year 2023-24 were lower when compared with the previous year. However, decline in imports was sharper leading to narrower deficit.

During the financial year 2023-24 merchandise exports declined to $437.06 billion as against $451.07 billion recorded in 2022-23, a decline of 3.10 per cent 7.24 billion in 2023-24, a year-on-year fall of 5.40 per cent.

A key reason for decline in exports as well imports during the year was softening in prices of commodities and petroleum products. The value of merchandise exports, excluding non-gem and jewellery and petroleum products, rose from $315.64 billion in 2022-23 to $320.21 billion in 2023-24.

“This year (FY24) was a very very difficult year, extremely difficult year, from foreign trade point of view,” Commerce Secretary Sunil Barthwal told reporters.

“Not only did the Ukraine-Russia conflict continue, but other conflicts came up. There were huge issues with the Red Sea as well as recessionary trends globally. But India has beaten all the odds,” he added.

Key drivers of India’s outbound shipments during the year 2023-24 included engineering, electronic goods, drugs and pharmaceuticals, iron ore, cotton yarn, handloom, ceramic and glassware products.

Engineering goods exports in FY24 rose to $109.31 billion from $107.04 billion in the previous year, posting a growth of 2.13 per cent. During the month of March engineering goods exports jumped by 10.66 per cent year-on-year to $11.28 billion.

“Monthly as well as cumulative numbers clearly show that the Indian engineering sector is quite competitive globally and consistently achieving success in penetrating new markets,” said EEPC India Chairman Arun Kumar Garodia.

He said free trade agreements (FTAs) with the UAE and Australia helped the exporting community in deepening their foothold in these key markets.

"With more FTAs in the pipeline, engineering exports would certainly increase its share in the global market in coming years,” Garodia added.

During the month of March 2024 merchandise exports declined marginally to $41.68 billion from $41.96 billion recorded in the same month last year. While imports fell from $60.92 billion in March 2023 to $57.28 billion in March 2024. 

Trade deficit narrowed to $15.60 billion in March, the lowest in 11 months, data released by the Ministry of Commerce and Industry showed.

India’s overall exports (merchandise and services combined) declined by 3.01per cent year-on-year to $70.21 billion in March. For the full fiscal year, overall exports rose marginally to $776.68 billion in FY 2023-24 from $776.40 billion in the previous year.

Overall trade deficit narrowed to $78.12 billion in the financial year ended March 2024, around 35.77 per cent down when compared with the previous year’s figure of $121.62 billion. Merchandise trade deficit during the year declined by 9.33 per cent to $240.17 billion. The overall deficit was lower due to surplus in services trade. During the year ended March 2024, India exported services worth $339.62 billion, while services imports stood at $177.56 billion during the year.