India's trade scenario witnessed a significant shift in November, reflecting a notable decline in the goods trade deficit by nearly 35% compared to the previous month, primarily attributed to a substantial decrease in imports. Commerce Ministry data revealed a merchandise trade deficit drop from October's $31.46 billion to $20.58 billion in November, largely due to a decline in imports to $54.48 billion, notably lower than October's $65.03 billion. Last year's Diwali celebrations in October led to a spike in imports, particularly of gold.
Conversely, exports saw a marginal uptick to $33.90 billion in November compared to $33.57 billion in October. The government expressed optimism, citing the stabilizing 'green shoots' in exports, anticipating a typical surge in exports during the final quarter of the year.
Year-on-year comparison also highlighted a decrease in the trade deficit in November 2023 ($20.58 billion) compared to the same period in 2022 ($26.31 billion). However, April-November 2023 reflected a decline in merchandise exports by 6.51% annually, totaling $278.80 billion, and merchandise imports by 8.67% annually, totaling $445.15 billion.
Pronab Sen, former country director for the India Programme of the International Growth Centre, observed that the November trade deficit remained higher than usual, reflecting the inherent challenges of forecasting amid global economic variables.
The slowdown in global growth significantly impacted Indian exports, coupled with inflationary pressures in advanced Western economies due to interest rate adjustments, affecting business, investment, and trade. Moreover, geopolitical conflicts in regions like Ukraine and West Asia posed threats of escalating oil prices and intensifying inflation.
Anticipating a monthly trade deficit between $20 billion and $25 billion in the upcoming months of FY24, rating agency Icra Ltd projected a current account deficit of approximately 2.5% of GDP in Q3 and 1.7% of GDP in Q4FY24.
The World Trade Organization's revised forecast, slashing global trade growth for 2023 by 50%, aligns with the evident slowdown in global trade, reducing the estimated world trade volume growth to 0.8% annually from its earlier projection of 1.7%.
India's top merchandise export destinations from April-November 2023 included the US, the UAE, the Netherlands, China, the UK, Singapore, Saudi Arabia, and Bangladesh. Import sources comprised China, Russia, the US, the UAE, Saudi Arabia, and Iraq, reflecting India's trade dynamics.
Additionally, services exports maintained stability at $28.69 billion in November, while imports declined to $13.40 billion, portraying a static services trade scenario amidst fluctuating goods trade trends.
