Merchandise imports surged by 10.25% to $54.09 billion in April 2024 from $49.06 billion in April 2023, propelling a $19.1 billion increase in the trade deficit, marking a five-month high. This surge was fuelled primarily by petroleum products. Non-petroleum, non-gems, and jewellery imports also experienced a nearly 2% year-on-year increase, reaching $32.72 billion in April 2024 compared to $32.13 billion in April 2023.

On the export front, non-petroleum and non-gems and jewellery items, considered indicators of export health, experienced a modest growth of 1.32% at $26.11 billion in April 2024 from $25.77 billion in April 2023. Key drivers of this growth were electronic goods (25.8%) tea (25.74%), organic and inorganic chemicals (16.75%), Coffee (15.87%), Tobacco (13.22%), Spices (12.27%), petroleum products (3.1%) and drugs & pharmaceuticals (7.36%). However, exports declined in 17 out of 30 key sectors in April, including gems and jewellery, engineering products, readymade garments, man-made yarns, and marine products.

Aditi Nayar, chief economist, ICRA says, "India’s merchandise trade deficit widened sharply to $19.1 billion in April 2024 from $14.4 billion in the year-ago-month, amid an increase in the oil as well as the non-oil deficit. This was the highest merchandise trade deficit print in four months and was also much higher than ICRA’s expectations. Notably, the widening in the non-oil deficit in April 2024 vis-à-vis April 2023 was entirely driven by a tripling in gold imports, partly aided by the surge in gold prices.”

“Overall, nearly half of the widening in the aggregate merchandise trade deficit between April 2023 and April 2024 was on account of the surge in the value of gold imports amid the rise in global prices. Merchandise exports eked out a very mild growth and trailed our forecast for April 2024. As of now, the current account deficit for FY2025 appears likely to print at a modest 1.2% of GDP,” Nayar adds.

Services exports recorded a 14.7% growth to $29.57 billion in April 2024 as compared to $25.78 billion in April 2023, with imports growing by 21.5% to $16.97 billion in April 2024 as compared to $13.96 billion in April 2023, resulting in a surplus of $12.6 billion.

Additionally, the Department of Commerce revised India’s overall exports (goods and services) for FY24 to $778 billion, up from the previously announced $776 billion, mainly due to positive growth in services exports.

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