New Delhi: In the first seven months of the fiscal year 2023-24, India experienced a trade deficit with nine of its top ten trade partners, with only the US showing a surplus, the Economic Times reported.
The trade surplus with the US, India’s largest trading partner, amounted to $19.59 billion, while deficits with China, Russia, and the UAE reached $51.11 billion, $33.56 billion, and $6.83 billion, respectively, the report said.
‘With Russia, the imports are of petrol, high calorific value coal, coke and briquettes, and fertiliser, especially potash. Our exports of gems and jewellery to Hong Kong and the US have declined,’ an official told the business daily. With Hong Kong, the trade gap was $7.59 billion.
For April-November period of FY24, India’s total merchandise exports decreased by 6.51% to $278.8 billion, and imports fell by 8.67% to $445.15 billion, the newspaper reported.
Trade deficits were also recorded with Saudi Arabia, Indonesia, Iraq, Singapore, and South Korea.
‘With Indonesia, the trade deficit is because of edible oil. It was getting normalised because of rice and sugar exports to them but now those are restricted and the deficit has increased,’ the official said, adding that India has traditionally had a deficit with Korea despite the two inking a Comprehensive Economic Partnership Agreement in 2009.
Another official told ET that Iran has reduced its tea and rice imports from India because of foreign exchange issues and finalisation of the rupee-payment mechanism.
India’s exports to Iran dipped 47% year-on-year to $567 million in April-October 2023, the Hindu BusinessLine reported. The newspaper reported that the Israel-Hamas war has severely damaged revival prospects of these exports.
According to the business daily, the decrease is attributed to a minimal rupee balance in the rupee-rial account. India still imports certain agricultural products from Iran, such as saffron, which generates rupee balance, however it’s very little, a source told the newspaper.
‘As oil imports, which accounted for most of India’s imports earlier, are still suspended, the rupee-rial mechanism is almost non-functional,’ the source pointed out.
‘While we have seen similar situations earlier also, the global trade environment is uncertain because of geopolitical issues and a general slowdown across developed economies. Our exports and trade balance are getting impacted by that,’ Ajay Sahai, director general of the Federation of Indian Export Organisations (FIEO), told ET.
Additionally, as per experts, reviews of existing free trade agreements are unlikely to address the trade deficit.
