Recent Decline in Exports
India’s merchandise exports fell by 1.5% to just under $34 billion in July, marking the weakest performance since November 2023.
Sectoral Weaknesses
Key export sectors significant drops, with petroleum down 22.2%, gems and jewelry down 20.4%, and chemicals down 12%.
Restrictions on some food exports also negatively impacted overall export performance
Increasing Imports
The import bill grew by 7.5%, driven by a 17.4% increase in petroleum imports and higher demand for non-oil and non-gold imports like electronics and pulses.
Gold imports fell by 10.7%, but silver imports surged almost 440% due to favorable trade agreements.
Widening Trade Deficit
The trade deficit rose by 24% to $23.5 billion, the highest in nine months, due to shrinking exports and rising imports.
Geopolitical and Economic Risks
Ongoing geopolitical tensions and disruptions, such as issues with Bangladesh, pose risks.
Rising freight costs and falling commodity prices, especially due to a slowing Chinese economy, are impacting export viability.
Uncertain Outlook
India faces challenges in keeping up with global trade growth and gaining market share.
Uncertainty around government schemes like the RoDTEP (Remission of Duties and Taxes on Export Products) and interest subsidies creates difficulties for exporters, who need more stability and support.
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