India’s trade deficit narrows as demand wanes in sluggish economy

The gap between exports & imports was $15.28 billion last month, compared with $15.36 billion in May, according to government data.

Pedestrians and shoppers walk past stores on a street in Varanasi (representational image) | Photo: Dhiraj Singh | Bloomberg

New Delhi: India’s trade deficit narrowed in June as a slowing economy and lower oil prices curbed imports.

The gap between exports and imports was $15.28 billion last month, compared with $15.36 billion in May, according to data on Monday from the Commerce Ministry. That was higher than the $15 billion median estimate in a Bloomberg survey of 23 economists.

Key Insights

• Exports fell 9.71% from a year ago to $25 billion, compared with a 3.9% gain in May. Imports declined 9.1% to $40.3 billion, against a 4.3% increase in the previous month.
• The decline in exports is consistent with global trends and the government is “pro-actively” pursuing an export promotion strategy, the ministry said in a statement. Petroleum products, rice cotton, gems and jewelry contributed to the drop, it said.
• Prime Minister Narendra Modi, who returned to office for a second term in May, wants to double exports from the $2.6 trillion economy by boosting manufacturing. But his government has made slow progress in raising local factory output, while weak global growth, and pressure from President Donald Trump to reduce India’s trade surplus with the U.S. are undermining those plans.
• Sluggish domestic consumption has pulled economic growth down to a five-year low, and curbed inbound shipments in recent months. Prices of crude oil — India’s biggest import — also had an impact. Oil imports dropped 13.3% in June from a year earlier to $11 billion