India’s trade deficit narrowed to $12 billion in February, its lowest in five months, amid concerns that a global trade war could hit its exports because of U.S. President Donald Trump’s decision to hike import taxes on steel and aluminum.
India’s merchandise exports are expected to touch $300 billion in the current fiscal year ending this month compared with $275.8 billion, mainly driven by a rise in commodity prices and strong demand in the U.S. and Europe.
February merchandise exports were $25.8 billion while imports were $37.8 billion, Rita Teaotia, a top trade ministry official, told reporters on Thursday.
In the first 11 months of the fiscal, merchandise exports rose 11% to $273.7 billion from a year earlier while imports climbed 21% to $416.9 billion, she said.
New Delhi is worried that its exports could be hit in the coming months by Mr. Trump’s decision to impose tariffs of 25% on steel and 10% on aluminum.
Prime Minister Narendra Modi is hosting a mini-ministerial meeting of members of the World Trade Organization next week expected to discuss the impact of Mr. Trump’s decision.
India’s trade secretary said the country was disappointed by the U.S. decision ‘as it is against WTO rules’.
‘Slowing growth’
“Exports were recovering but imports were growing even faster,” D.K. Srivastava, chief policy adviser at EY India said.
“Now, the level of export and import growth has moved down, reflecting the change in the global economy towards more protectionist measures. The other factor could be that sometimes when global crude prices fall, then the demand for Indian exports also falls.”
Export growth slowed to 4.48% in February compared with 9.07% growth in January. A government release said that in February, major commodity groups of export showing positive growth over a year earlier were “petroleum products (27.44%), organic & inorganic chemicals (30.41%), drugs & pharmaceuticals (13.92%), rice (21.29%), and electronic goods (29.71%).”
On imports, it added that major commodity groups of import showing high growth “are petroleum, crude & products (32.05%), electronic goods (18.95%), machinery, electrical & non-electrical (23.04%), pearls, precious & semi-precious stones (15.86%), and coal, coke & briquettes, etc. (17.73%).”
(With inputs from TCA Sharad Raghavan)
