India has reported a record-high export of goods worth $447 billion in FY23, an increase of about 6% from the previous year, according to data from the commerce ministry. However, the country’s goods exports in March 2023 slipped to $38.38 billion, registering a 13% fall compared to the previous year. Meanwhile, goods imports rose by over 16% to $714 billion, widening the goods trade deficit to a record-high of $267 billion against the previous year’s $191 billion. The overall trade deficit, including goods and services, touched a record-high of $122 billion during the year, as imports outmatched exports.
Energy-related imports, which stood at $259.3 billion for FY23, were highlighted as a cause of concern by Ajay Srivastava, co-founder of Global Trade Research Initiative. These imports constituted 36.3% of India’s merchandise import bill, and grew by 34% in FY23 compared to the previous year. However, imports of other merchandise goods grew at a slower pace of just 8.4%. Experts warned that goods exports may come under pressure in the current financial year, as economic activity slows down and demand cools across the globe.
Imports from China rose by 4% to $98 billion during FY23 from $94.57 billion a year earlier. Despite this, its share in overall imports fell to 13.8% from 15.4%. China remained the largest exporter to India, followed by the UAE, US, Russia, and Saudi Arabia. Commerce Secretary Sunil Barthwal said India has managed to cross last year’s export numbers despite global headwinds, and that the country is working to reduce dependence on China and diversify its value chain.
The US continued to be India’s largest merchandise export destination, with exports worth $78.31 billion, up over 2% from the previous last financial year. The US was followed by the UAE, the Netherlands, China, Singapore, and Bangladesh. The Netherlands saw the sharpest jump of 66% last financial year, driven by exports of petroleum products. Aditi Nayar, Chief Economist and Head of Research and Outreach at ICRA Ltd, warned that non-oil exports are expected to decline further in FY2024, exacerbating concerns about the performance of the manufacturing sector and its impact on GDP growth.
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