India’s Exports Grow Despite Global Tensions, But Trade Deficit Widens
India’s merchandise exports grew by 5.8% to USD 109.96 billion compared to USD 103.9 billion last year, according to a CRISIL report. Despite geopolitical tensions in Europe and the Middle East, the growth momentum slowed in June, with exports increasing by only 2.6% year-on-year, down from 9.1% in May.
Non-Oil and Services Exports
Non-oil exports continued to grow steadily, rising by 7.7% in June. Services exports also performed well, contributing positively to the overall trade scenario.
Imports and Trade Deficit
Merchandise imports grew at a slower pace of 5.0% year-on-year in June, down from 7.7% in May. However, core imports, excluding oil and gold, surged by 7.1%. Despite positive export growth, the trade deficit widened to USD 21 billion in June from USD 19.2 billion last year.
Sector Performance
Sectors like drugs, pharmaceuticals, engineering goods, and ready-made garments showed positive growth. However, gems and jewellery exports continued to decline. Cashew exports have been declining since 2018, with a 7.3% fall in June.
Future Outlook
The Indian government’s focus on foreign trade agreements is expected to boost trade. However, the persistent growth in imports surpassing exports is a concern. The service trade surplus and robust remittance flows are positive indicators for the current account.
Doubts Revealed
Exports -: Exports are goods or services that a country sells to other countries. For example, India might sell spices, textiles, or software services to other countries.
Global Tensions -: Global tensions refer to conflicts or disagreements between countries. These can affect trade because countries might impose restrictions or tariffs on each other.
Trade Deficit -: A trade deficit happens when a country buys more from other countries than it sells to them. For example, if India imports more goods than it exports, it has a trade deficit.
CRISIL -: CRISIL is a company in India that provides ratings, research, and risk analysis. They help people understand how well companies and economies are doing.
Merchandise Exports -: Merchandise exports are physical goods that a country sells to other countries. This can include things like cars, clothes, and electronics.
Non-oil Exports -: Non-oil exports are goods that are sold to other countries that do not include oil. For example, India might export tea, rice, or jewelry.
Services Exports -: Services exports are services that a country provides to other countries. This can include things like IT services, education, and tourism.
Imports -: Imports are goods or services that a country buys from other countries. For example, India might import oil, machinery, or electronics.
Foreign Trade Agreements -: Foreign trade agreements are deals between countries to make trading easier. They can reduce taxes on goods and services traded between the countries.