India recorded a trade deficit with nine of its top ten trade partners in the first seven months of 2023-24, with the US being the only country with which exports exceeded imports.
India’s trade surplus with the US — its largest trading partner — was $19.59 billion in the April-October period,show data from the commerce and industry ministry. However, with China, the second largest partner, the deficit was a whopping $51.11 billion, followed by a $33.56 billion gap with Russia, the fourth largest trade partner of India. The deficit with the third largest trade partner, the UAE, was $6.83 billion.
“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,” said an official. With Hong Kong, the trade gap was $7.59 billion.
For the April-November period of FY24, India's total merchandise exports contracted 6.51% to $278.8 billion, while imports fell 8.67% to $445.15 billion, according to data released in December.
A trade deficit was recorded with Saudi Arabia, Indonesia, Iraq, Singapore and South Korea as well in the April-October period.
"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.
As per another official, Iran has reduced its tea and rice imports from India because of foreign exchange issues and finalisation of the rupee-payment mechanism.
“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,” said Ajay Sahai, director general of the Federation of Indian Export Organisations (FIEO).
The FIEO has suggested to the government that an aggressive marketing strategy with a focus on vehicles, jewellery, electronic items, auto components, marine products, apparel, insecticides, iron and steel can help Indian businesses tap $112 billion more in export potential in ten countries including the US and UK in three years.
It said owing to global slowdown, rising interest rate and high inflation, demand has taken a hit affecting India’s exports. As per trade experts, even reviews of the existing free trade agreements are unlikely to give a boost to India's exports.
“Why will the FTA partners agree for a review when they are benefiting from the pact? The reviews can’t help plug the deficit,” said a Delhi-based trade expert.
By Kirtika Suneja
https://economictimes.indiatimes.com/epaper/delhicapital/2024/jan/01/et-efm/india-runs-trade-deficit-with-9/10-top-partners/articleshow/106426671.cms
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