New Delhi. Due to global economic uncertainties, the country’s exports in August registered the biggest decline in 13 months. During this period, exports fell by 9.3 percent to $34.71 billion while the trade deficit increased to a 10-month high of $29.65 billion.
According to data released by the Commerce Ministry on Tuesday, the country’s imports rose 3.3 percent to a record high of $64.36 billion due to a significant jump in gold and silver imports. Gold imports more than doubled to $10.06 billion last month from $4.93 billion in the same month last year. Silver imports rose to $727 million in the month under review from $159 million in August 2023.
However, due to falling petroleum prices, crude oil imports fell by 32.38 percent to $ 11 billion in August. The fall in prices has also affected the country’s merchandise exports. The difference between imports and exports, that is, the country’s trade deficit was $ 30.43 billion in October 2023. At the same time, in July this year, the country’s merchandise exports declined by 1.5 percent. In the first five months (April-August) of the current financial year, the country’s exports increased by 1.14 percent to $ 178.68 billion, while imports during this period increased by seven percent to $ 295.32 billion.
Thus, the country’s trade deficit in the period April-August 2024 was $ 116.64 billion, while in the same period last year it was $ 99.16 billion. On these figures, Commerce Secretary Sunil Barthwal told reporters that exports are a big challenge in the current global situation.
He said that the slowdown in China and recession in the European Union and the US are affecting exports. Apart from this, the fall in oil prices and the increase in transportation costs due to the Red Sea crisis are also affecting exports. However, the Commerce Secretary said that despite these problems, India’s exports have registered positive growth in the first five months of the current financial year.
He said that the Commerce Ministry is focusing on exploring new markets in regions like Africa to increase exports. Apart from this, 12 champion service sectors like education, healthcare, shipping and transport have also been identified to increase exports.
When asked about the widening trade deficit, he said it is not a matter of concern for an emerging economy like India.
He said, “There is huge consumption demand in India. This is coming from an economy that is growing at twice the rate of the world economy.”
Red Sea crisis, logistics challenges hit India’s exports: Experts
The Red Sea crisis and logistics challenges have badly affected the country’s exports in August. Exporters and experts said this. According to the data of the Ministry of Commerce, exports have declined by 9.3 percent in the month of August. Research institute Global Trade Research Initiative (GTRI) said that the 37.56 percent decline in petroleum product exports to $ 5.95 billion in August is linked to the ongoing disruptions in the Red Sea. In August 2023, this export was worth $ 9.54 billion.
Ajay Srivastava, founder of GTRI, said, “This decline has significantly impacted India’s overall merchandise trade, leading to a 9.33 percent decline in exports in August 2024 compared to the previous year.” He added that crude oil prices remained relatively stable between these two periods. This suggests that the decline in petroleum product exports is linked to the Red Sea crisis.
The crisis has forced ships to take longer routes around the Horn of Africa and the Cape of Good Hope, making exports to Europe less profitable.
Ashwani Kumar, president of the apex body of exporters FIEO, said the sharp fall in exports came amid continued global economic uncertainties as well as falling commodity prices and logistical challenges. He said, “The fall in crude oil and metal prices as well as the ongoing international trade disruptions have also played a significant role in the decline in exports….” Kumar said there is an urgent need for interest support on the cash front and extension of the Interest Normalization Scheme (IES) for at least five years. This will create a better business environment for exporters. He said, “The government should extend the RODTEP (Rebate of Duty or Tax on Exported Products) scheme ending on September 30 so that exporters can easily plan ahead.”