India’s trade deficit swells to $27.1 bn in October, exports rise 17.3%

India's trade deficit widened to $27.1 billion in October, as merchandise exports rose by 17.3% to $39.2 billion, up from $33.43 billion in October 2023, as per data released by the Ministry of Commerce and Industry. At the same time, merchandise imports increased by 3.9% to $66.34 billion, compared to $63.86 billion in the same month last year.

Merchandise trade deficit during April-October 2024 was $164.65 billion as compared to $149.67 billion during April-October 2023. Total exports, combining both merchandise and services, are estimated at $73.21 billion in October 2024, marking a 19.08% increase compared to October 2023. Total imports, combining both merchandise and services for the same month are estimated at $83.33 billion, showing a growth of 7.77% year-over-year (YoY).

The key drivers of merchandise export growth in October 2024 include engineering goods, electronic goods, organic and inorganic chemicals, rice, and ready-made garments (RMG) of all textiles.

From April to October 2024, India’s total exports reached an estimated $468.27 billion, reflecting a 7.28% increase, while total imports for this period amounted to $531.51 billion, growing by 7.05%.

Services exports are estimated to grow by 12.51% at $34.02 billion, up from $28.05 billion in October 2023, while services imports are estimated at $17 billion, rising from $13.46 billion in October 2023.

Exports of non-petroleum and non-gems & jewellery goods saw an increase of 27.68%, rising from $24.56 billion in October 2023 to $31.36 billion in October 2024.

Exports of engineering goods surged by 39.37%, rising from $8.08 billion in October 2023 to $11.26 billion in October 2024. Exports of electronic goods jumped by 45.69%, rising from $2.36 billion in October 2023 to $3.43 billion in October 2024.

"The merchandise trade data for October 2024 displayed divergent trends, with a sharp rise in the trade deficit in sequential terms, amidst a sizeable moderation relative to October 2023. One of the chief reasons underpinning the sequential rise in the trade deficit appears to be a jump in the volume of crude oil imports, as well as a festive season-led uptick in gold imports,” says Aditi Nayar, chief economist and head - Research & Outreach, ICRA.

“Non oil merchandise exports registered a jump in both sequential and year-on-year growth, which is an encouraging sign, led by sectors such as electronic goods, engineering goods, chemicals and garments. Looking ahead, we expect the current account deficit to ease to 1.2% of GDP in the ongoing quarter from an estimated 1.8% of GDP in Q2 FY2025, and settle around 1.0% of GDP for the year as a whole," Nayar adds.