March trade deficit shrinks to 11-month low as gold import more than halves

The Commerce Ministry released trade data for March 2024 on April 15.

India's trade deficit narrowed to $15.6 billion in March, a 11-month low, owing to a sharp fall in merchandise imports. The deficit figure stood at $18.96 billion in March 2023 and $18.71 billion in February 2024.

Even as the trade deficit narrowed in March, exports too dropped by 0.3 percent from the year-ago period to $41.68 billion while imports fell by a much larger 5.98 percent at $57.28 billion, the commerce ministry said on April 15.

The steep drop in imports in March 2024 were led by lower gold imports which more than halved on a year-on-year basis. Imports of fertilisers and leather products also witnessed significant contraction at 36.23 percent, and 25.7 percent respectively.

In terms of merchandise exports, 17 of the 30 key sectors showed growth in March 2024 as compared to same period last year, including categories like electronics, drugs and pharmaceuticals, engineering goods among others.

"The previous fiscal year was difficult from a trade point of view since not only did the Ukraine-Russia conflict continue, but other conflicts came up. There were huge issues with Red Sea as well as recessionary trends globally. But India has beaten all the odds," Commerce Secretary Sunil Barthwal said while speaking to the media.

At $15.6 billion, India's trade gap in March 2024 is the lowest in 11 months. The last time the deficit was narrower was in April 2023, when it came in at $15.24 billion.

For the previous financial year in its entirety, India's merchandise trade deficit was down 9.33 percent on-year at $240.17 billion, with exports for the period at $437.06 billion, exhibiting a fall of 3.11 percent. Imports fell by a sharper 5.41 percent to $677.24 billion.

India’s overall exports (merchandise and services combined) in March 2024 is estimated to be $70.21 billion, falling 3.01 percent on a year-on-year basis, while imports is seen at $73.12 billion, contracting 6.11 percent during the same period.

Despite persistent global challenges, overall exports in FY24 (merchandise and services) are expected to reach $776.68 billion as compared to $776.40 billion in FY23, the commerce ministry release said. This would surpass the previous financial year’s record high.

One of the brightest spots in India's exports growth story was engineering goods, with outbound shipments in FY24 surpassing the previous year's numbers despite slowdown in some of the global markets, geo-political tensions and high freight rates.

Export Promotion Council of India (EPC India) Chairman Arun Kumar Garodia expects the value of engineering goods to rise to $300 billion by 2030 and in the process generate a significant number of jobs and earn forex.

Engineering exports in FY24 rose to $109.31 billion from $107.04 billion in the previous financial year, registering a growth of 2.13 percent.