India’s exports slipped again
India’s merchandise trade deficit increased rapidly to $41.68 billion in the month of October, which is the highest level till date. Earlier in September this figure was 32.15 billion dollars. This means that in just one month the loss increased by more than 10 billion dollars. This surge was mainly seen due to the sudden increase in imports of gold and silver.
According to government data, this deficit in August 2024 was $35.62 billion, which was a matter of concern even at that time. But the situation in October was much more challenging. Surprisingly, in a survey conducted by Reuters, economists had estimated the October deficit to be only $28.8 billion, whereas the final figure turned out to be about $13 billion more.
Huge decline in exports, sharp increase in imports
India’s exports registered a decline of 11.8% in October. During this period, exports came down to 34.38 billion dollars. On the other hand, there was a big jump of 16.63% in imports and it reached 76.06 billion dollars. This imbalance, i.e. decrease in exports and increase in imports, together increased the trade deficit.
Import of gold made this situation more serious. According to the Commerce Secretary, gold imports increased to $14.72 billion in October compared to $4.92 billion last year. Festivals and increased investment demand increased gold imports manifold.
Exports to America also decreased – big impact of tariffs
India-US trade relations have also been affected this year. According to the Commerce Ministry, India’s exports to America declined to $6.3 billion in October from $6.9 billion last year.
Exporters have suffered huge losses due to increase in tariffs in sectors like textiles, shrimp, gems and jewellery. Recently, US President Donald Trump had imposed a heavy tariff of up to 50% on India for buying Russian oil. Due to this, Indian products became expensive and less competitive compared to countries like Vietnam and Bangladesh.
Government’s relief measures and the way forward
Under these circumstances, the complaints of exporters started increasing, after which the Government of India announced a relief package of more than 5 billion dollars. The government says that these steps will not only improve the cash position of businessmen, but will also strengthen the country’s progress towards the export target of $ 1 trillion.
Those sectors which employ a large number of people like textile, leather, footwear and gems and jewelery industries have suffered the most. Experts believe that if global demand does not improve soon, and tariff tensions continue, India’s trade balance may remain under pressure in the coming months.