Trade deficit eases as imports plunge

India's trade deficit narrowed in September as imports plunged and exports continued to slide amid slowing demand in the West and China.

- Ravi Dutta Mishra

Goods exports slipped marginally by 2.59% to $34.47 billion compared to $35.39 billion in September 2022, while imports fell a steeper 15% to $53.84 billion against $63.37 billion a year earlier. Consequently, the trade deficit fell to $19.37 billion, down over 30% from $27.98 billion a year ago, commerce ministry data showed.

"India's merchandise trade deficit compressed considerably to $19.4 billion in September 2023 from $28 billion in the year-ago month, with a sharp contraction in imports reflecting the impact of lower commodity prices," said Aditi Nayar, chief economist, ICRA Ltd.

"The narrower-than-expected merchandise trade deficit print augurs well for the current account deficit (CAD) for Q2 FY24, although it is expected to enlarge vis-à-vis the Q1 levels. Crude oil price volatility amid geo-political tensions remains a risk to the CAD outlook for H2 FY2024," Nayar added.