Commerce secretary Sunil Barthwal attributed the contraction to low export of petroleum products. Trade deficit widened to $23.5 billion in July, from $20 billion a year ago.
Merchandise imports rose 7.45% to $57.48 billion in July due to a jump in the inbound shipments of crude oil, silver and electronic goods, data released by the commerce and industry ministry showed Wednesday.
Fall in prices, low demand and increasing domestic consumption led to a dip in the exports of petroleum products in July.
“Various factors have contributed to the decline in petroleum exports-the fall in prices, the demand for some of the products is low and finally, domestic consumption of petroleum products has increased, which is playing a major role in leaving less for exportable surplus,” Barthwal said.
Petroleum products, which have more than 15% share in India’s exports, contracted 22% in July at $5.23 billion. Import of petroleum and crude products grew 17.4% at $13.87 billion.Aditi Nayar, chief economist at ICRA, said a widening oil as well as non-oil deficit expanded the merchandise trade deficit in July 2024 relative to July 2023. “The higher oil import bill reflects higher volumes and global prices, as well as a possible decline in discounts,” she said.Gold imports dipped 10.65% to $3.13 billion in July.
“Our exports are holding on despite what is happening globally, reflected in substantial increase in engineering and electronics good exports,” Barthwal said. Engineering goods, electronics, drugs & pharmaceuticals and textiles were the export growth drivers.
Federation of Indian Export Organisations (FIEO) president Ashwani Kumar said the dip in exports was because of international trade disruptions and sharp drop in crude, commodities and metal prices.
When asked whether the government is looking at reviewing the new authorisation regime for monitoring imports of certain IT hardware products, he said: “When the appropriate time comes, we will take the call”. On October 19 last year, the government tweaked curbs on imports of laptops and computers as it allowed importers to bring in shipments of IT hardware from overseas on a mere “authorisation” upon detailing quantity and value.
Russia trade
Barthwal said that over 53 vostro accounts have been opened with Indian lenders to trade in local currency and Moscow has started working to cut the non-tariff barriers, adding that New Delhi has also discussed diversification of trade beyond petroleum products.
“We are expecting that even in non-petroleum trade, there will be a good improvement in volumes,” he said.
Trade pacts
India is seeking review of certain provisions of its FTA with the UAE, which came into force on May 1, 2022. Barthwal said India is in discussions with the UAE and there are various issues which can be discussed in the review.