India's October merchandise trade deficit widened to $26.91 billion from $25.71 billion in September, a Reuters calculation based on export and import data released by the government on Tuesday showed.
Meanwhile, India's merchandise exports fell to $29.78 billion from $35.45 billion in September. Exports in October 2021 stood at $35.73 billion. Merchandise imports declined to $56.69 billion from $61.16 billion in the same period, the data showed. Imports in October 2021 stood at $53.64 billion.
"India’s exports in October have fallen below USD 30 billion for the first time in nearly 20 months. Even more concerning is the sharp contraction in core exports (non-oil and non-gems and jewellery exports) by around 17% (YoY) in October," said Rajani Sinha, chief economist at CARE Edge. "Some moderation in imports could be attributed to softening of global commodity prices and we will have to watch the trend over next few months to decipher any indication of domestic demand moderation."
The merchandise trade deficit for April-October 2022 was estimated at USD 173.46 billion as against USD 94.16 billion in April-October 2021, as per the data.
Trade deficit in October 2021 was USD 17.91 billion. Last time it was in November 2020, when exports contracted by 8.74 per cent.
Briefing media, Commerce Secretary Sunil Barthwal said that global headwinds are impacting consumption worldwide and that would have an impact on India's exports as well.
The World Trade Organisation (WTO) has projected that the global trade growth will rise by 3.5 per cent in 2022 but only one per cent in 2023.
India's share in global merchandise trade is 1.8 per cent and in global services, it is 4 per cent, and there is a lot of potential to increase this, he said.
"The pinch from slowing external demand is going to get more painful for Indian economy in the months to come. We could see a significant portion of India’s GDP shaved by widening of trade deficit in the subsequent quarters," CARE's Sinha said.
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