India’s goods exports grew only for the second time in 2023-24 in October, albeit on a low base, rising 6.2% to $33.6 billion, but imports jumped to a record high of $65.03 billion, 12.3% over last year, fuelled by higher gold inflows.
Consequently, India’s monthly goods trade deficit widened to an all-time high of $31.46 billion, eclipsing the previous record of $29.23 billion in September 2022. October’s outbound shipments’ value was also the lowest since last November, and 2.5% below September’s tally.
“October’s trade figures, with goods exports rising 6.2%, along with indications from the first week of November, confirm that green shoots that we spotted in August are now stabilising,” Commerce Secretary Sunil Barthwal said, “I am very hopeful that we will cross last year’s high export numbers in 2023-24, despite a dip in commodity prices,” he added.
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In 2022-23, India’s goods exports had crossed $450 billion. Between April and October this year, merchandise exports stand at nearly $245 billion, 7% below last year’s figure in the same period as per provisional Commerce Ministry data released on Wednesday.
Officials stressed that though volumes of exports have been rising or stable for some commodities, lower prices vis-à-vis last year were responsible for dragging overall shipment values.
October’s 6.2% uptick in goods exports is only the second time in nine months that overseas shipments have risen. In August, exports had hit a five-month high of $38.4 billion, reflecting a 3.8% growth over last year.
Record imports
While ministry mandarins attributed a large part of the spike in October’s imports to a surge in gold imports, which were up 95.4% to $7.2 billion, trade analysts noted that other items, including oil, electronic and gems and jewellery, also contributed to the record import bill.
The over $65 billion imports last month were as much as 20.8% higher than September. The previous high import bill, of $64.3 billion, was recorded in June 2022, when commodity prices were spiralling after the Russia-Ukraine conflict.
“A broad-based increase in imports appears to have taken shape in last month, driving them to a record high,” Yuvika Singhal, an economist at QuantEco Research told The Hindu. “A rise in crude price-driven increase in oil imports, wedding and festive season-led demand in gold and other items such as electronics, gems and jewellery have led the upside,” she added.
Ms. Singhal said some manufacturing imports like chemicals, machinery and base metals are also witnessing buoyancy. “The widening of trade deficit has been single-handedly driven by imports, which may normalise next month,” she reckoned.
ICRA chief economist Aditi Nayar, who had anticipated a festive spike to some imports to take the goods trade deficit of about $23 billion in October, said higher gold, oil and other imports threw a spanner in the math.
“Non-oil imports should moderate in November, as would exports, given a higher number of holidays. We foresee the trade deficit for the current month at $22-25 billion,” Ms. Nayar said.
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