In the first month of the fiscal year 2024-25, India’s merchandise trade deficit has widened to $19.1 billion as against $15.6 billion in March 2024 due to fall in exports.
The reason cited by behind this wider year-on-year trade deficit is the three-fold increase in gold imports, which now touches $3.11 billion. As against $1.01 billion in the same month last year.
According to ICRA chief economist Aditi Nayar, this is the highest merchandise trade deficit in four months and goes above ICRA’s expectations.
Adding, taking the aggregate of the goods deficit between April 2023 and April 2024 into account, It widened due to the surge in the value of gold imports amidst rise in global prices.
However, in merchandise exports, out of 30, 13 key sectors showed a steady growth this April 2024 compared to last year. especially in electronic goods (25.8 percent) and tea (25.74 percent).
While in imports, 14 sectors noted decrease. Especially in pearls, precious and semi-precious stone (-21.12 percent), and fertilisers – crude and manufactured (-8.3 percent).
Engineering goods too, saw the dip of 3% year-on-year in April 2024 to $8.66 billion after recording a growth for four consecutive months.
Meanwhile explaining dip in engineering goods, EEPC India Chairman Arun Kumar Garodia said these declines are primarily due to low demand from some key markets and logistics issue plaguing the Red Sea.
But he also opined, that there are some signs of improvement in global economy and trade might face rebound. As a result, the engineering sector might perform better.
All-in-all, the overall trade deficit (goods plus services) in the first month, will most likely remain $ 6.51 billion which is higher than $2.62 billion in April 2023. Despite India’s trade dynamics being comparatively positive this month.