India's merchandise exports declined 15.9% to $32.25 billion in July 2023 as compared to $38.34 billion registered during the same month the previous year. Merchandise imports also showed the same trend, declining 17% to $52.92 billion in July 2023 as against $63.77 billion in July 2022.

The decline in India's foreign trade is in line with the global trend. "Sluggish global demand especially in economies like China and EU coupled with the contraction in growth has led to the continuous decline in exports during the recent months. Manufacturing across the Euro Zone and the US has contracted due to persistent policy tightening measures by both the US Fed and the European Central Bank squeezing finances with also Britain's pace of decline steepening as optimism faded," A Sakthivel, president, Federation of Indian Export Organisations (FIEO), said.

The decline in exports was partially softened by the resilience shown in services exports which rose 10.7% to $27.17 billion in July 2023 as compared to $24.26 billion the same month last year.

Overall, India's combined export of merchandise and services in July 2023 is $59.43 billion, 5.06% lower than what was registered in July 2022. The decline in overall imports in July 2023 was 12.92% during the same time.

Sluggish global demand with growth contraction and softening of commodity prices led to continuous decline in exports, Sakthivel said.

One of the key reasons for the decline in the value of foreign trade during July 2023 was the softening of prices of petroleum and petroleum products as compared to the previous year. Non-petroleum and non-gems & jewellery exports in July 2023 were $25.35 billion, compared to $26.89 billion in July 2022. Non-petroleum, non-gems & jewellery (gold, silver & precious metals) imports in July 2023 were $35.65 billion, compared to $38.55 billion in July 2022.

"The merchandise trade deficit printed in line with expectations in July 2023, with the YoY decline in commodity prices compressing exports, imports as well as the trade deficit. On a positive note, non-oil exports remained steady, even as lower oil exports dampened the overall shipments in July 2023 relative to the previous month," says Aditi Nayar, chief economist, head - Research & Outreach, ICRA. "Based on the available trends, we expect the current account deficit to widen to $11-13 billion in Q1 FY2024 and further to $15-17 billion in Q2 FY2024, with the monthly trade deficit likely to remain above the $20 billion mark in the next couple of months," she adds.

India's imports

India's goods exports fall 15.9% in July, services exports up 10.7%