India’s trade deficit narrowed in April to a 21-month low as softening domestic demand and easing commodity prices led to a lower import bill.
The combined merchandise and services deficit fell to $1.38 billion compared with $8.37 billion in the same period last year. In March, the overall trade deficit had stood at $6.04 billion.
The merchandise trade deficit in April stood at $15.24 billion, down from $19.73 billion in March, data released by the government on May 15 showed.
A fall in both exports and imports was seen with April merchandise exports standing at $34.66 billion, down from $38.38 billion in March, while imports stood at $49.90 billion from $58.11 billion.
The merchandise imports dropped 14.1 percent from a year earlier to $49.9 billion in April, while exports fell 12.7 percent to $34.66 billion.
Also read: Trade deficit narrows to $17.43 billion in February 2023; exports, imports contract
DGFT Santosh Sarangi, addressing media during the release of trade data, attributed this decline partly to the cooling down of commodity prices and to reduced demand for products considered discretionary spending, like gems and jewellery.
Oil imports see a drop
The drop in imports was led by petroleum, crude and products, followed closely by coal & coke.
April oil imports fell 2.46 percent year-on-year to $15.17 billion.
"After the Russia-Ukraine conflict, commodity prices had gone up, which is cooling off now, and you can see that in our reduced import figures," Sarangi said.
Indian imports grew witnessed marginal growth year on year in sectors including machinery, iron and steel as well as pulses.
Services exports continue to rise
However, services exports rose for the second month, due to a sharp jump in information technology and business consulting work. India’s estimated services exports rose $30.36 billion in April, compared to $27.75 billion in March. It hit a record high in December 2022 at $31.09 billion rupees.
Also read: Merchandise trade deficit rises 39.6% on year in FY23
Exports of electronic goods rise
Despite global headwinds, the Indian engineering sector displayed resilience and engineering goods became the top merchandise export for India in April, rising marginally.
The exports rose from $ 1.67 billion last year in April to $ 2.11 billion this year.
The exports which reported a falling trend included petroleum products, gems and jewellery as well as engineering goods.
Upward revision of trade in 2022-23
Meanwhile, an upward revision of trade data has taken the total exports from the country in the fiscal year 2022-23 to $775.87 billion, said Directorate General of Foreign Trade Santosh Sarangi.
Also read: April CPI inflation crashes to 18-month low of 4.7% due to favourable base
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