India’s merchandise exports experienced a decline for the first time in four years during the 2023/24 fiscal year, as reported by official data. The drop, attributed to factors such as geopolitical tensions and export restrictions on foodstuffs like rice to manage domestic inflation, led to a decrease in goods exports to $437 billion, down from $451 billion in the previous year. This marks the first yearly decline since 2020/21, when trade was impacted by the COVID-19 pandemic.
Specifically, rice exports fell by 6.5% to $10 billion, while other cereals dropped by 57% to $518 million. Additionally, ready-made garment exports shrank by 10% to $14.5 billion, and petroleum product exports fell by 13.7% to $84.1 billion. The country’s imports also experienced a decline of approximately 5% year-on-year, totaling $677 billion, driven by reduced shipments of fertilizers, cotton, and vegetable oil.
Despite the decline in both exports and imports, India’s overall merchandise trade deficit stood at $240 billion, down from $265 billion in the previous year. In March, the country’s merchandise trade deficit notably decreased to $15.6 billion, primarily due to lower imports, particularly of gold, which more than halved compared to the same period last year.
The reduction in the trade deficit is expected to have a positive impact on the current account, with economists anticipating a small surplus of $1 billion to $2 billion in the January-March quarter. The data also revealed a decline in services exports and imports in March compared to the same period last year.