A positive surprise

India's trade performance, as reflected in October export data has come as a positive surprise, though it also projects certain longstanding challenges.

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With total exports for April-October period reaching USD 468.27 billion-a 7.28 per cent increase over the same period last year-the numbers seem impressive. However, a closer look would reveal a widening merchandise trade deficit that has now hit USD 164.65 billion, up from USD 149.67 billion in 2023. Merchandise exports fared strongly in October, growing 17.25 per cent year-on-year. The uptick was registered through a surge in non-petroleum and non-gems & jewellery categories. Sectors like electronics, engineering goods, and textiles saw remarkable growth, driven ostensibly by festive demand in key global markets. This rise comes as a relief after a sluggish second quarter that saw goods exports stumble. Yet, the optimism is tempered by an equally significant rise in imports, particularly oil. October witnessed a record oil trade deficit of USD 13.7 billion, with petroleum imports soaring by 13.2 per cent, even as global crude prices remained subdued. The rea-sons for this paradox-where oil imports increased despite falling export volumes-are worth examining, especially as domestic demand alone cannot fully explain the trend.