India’s merchandise exports witnessed a remarkable 17.3% growth in October, the fastest in 28 months, reaching $39.2 billion. This surge was driven by pre-Christmas inventory buildup in Western countries, boosting demand for goods like engineering products, electronic goods, chemicals, and garments. However, this export growth came alongside an all-time high in imports, which surged 3.9% to $66.34 billion, resulting in a trade deficit of $27.1 billion, up from $20.8 billion in September.
Key Drivers of Export Growth
Non-Oil Exports: Exports of non-petroleum and non-gems and jewellery items grew 27.7%, totaling $31.36 billion. This signals strong demand in sectors like engineering goods, chemicals, and electronics.
Sectors Leading the Growth: Engineering goods led the charge with a 39.4% rise, followed by chemicals (27.35%), electronic goods (45.7%), readymade garments (35.1%), and rice (85.8%).
Petroleum Exports Decline: Petroleum product exports contracted by 22.1% due to falling global crude oil prices.
Imports Hit Record High
Rising Imports: Imports surged to $66.34 billion, driven by higher shipments of crude oil, electronic goods, vegetable oil, and non-ferrous metals.
Gold Imports: Despite a 1% fall in year-on-year growth, gold imports remained high at $7.14 billion.
Trade Deficit and Economic Outlook
Trade Deficit: The widening trade deficit, which reached $27.1 billion in October, is primarily attributed to a significant rise in crude oil imports and festival season demand for gold.
Cumulative Data: From April to October, merchandise exports grew 3.2% to $244.5 billion, while imports grew 5.7%, totaling $416.9 billion, resulting in a cumulative trade deficit of $164.65 billion.
Future Projections: Commerce Secretary Sunil Barthwal projected that India could achieve exports worth $800 billion in the current fiscal year, driven by sectors such as electronics, engineering, chemicals, and agriculture.
Services Export Growth
Services Sector: Services exports also saw significant growth, rising 21.3% to $34 billion in October. Meanwhile, services imports grew 26.3%, resulting in a surplus of $17 billion for the month.
Expert Insights and Challenges
Global Tensions: The ongoing geopolitical tensions, especially between Israel and Iran, have disrupted traditional trade routes, contributing to logistical challenges. Export organizations like FIEO have expressed concerns over these disruptions but remain optimistic about India’s export growth prospects.
Strategic Focus: The government’s focus on sectors like electronics, engineering, and pharmaceuticals, along with the PLI scheme, is expected to continue yielding positive results.
Summery of the News
| Why in News | Key Points |
|---|---|
| India’s Merchandise Exports Surge | – India’s merchandise exports grew 17.3% in October 2024, the fastest pace in 28 months. – Exports reached $39.2 billion, driven by inventory buildup ahead of Christmas season. |
| Trade Deficit | – The trade deficit widened to $27.1 billion in October due to record imports of $66.34 billion. – Imports grew by 3.9% in October, led by crude oil, electronic goods, and vegetable oil. |
| Sectoral Export Growth | – Engineering goods: +39.4%, Electronic goods: +45.7%, Chemicals: +27.35%, Readymade garments: +35.1%, Rice: +85.8%. – Petroleum exports contracted by 22.1%. |
| Non-Oil & Non-Gems Exports | – Non-petroleum and non-gems exports grew by 27.7% to $31.36 billion, indicating strong manufacturing health. |
| Services Exports | – Services exports grew by 21.3% to $34 billion in October 2024. – Services trade surplus was $17 billion. |
| Government’s Export Target | – India aims for $800 billion in total exports in FY2024-25. – Focus on six sectors (engineering, electronics, pharma, chemicals, plastics, agriculture) and 20 countries. |
| Import Growth Drivers | – Crude oil imports: +13.3%, Electronic goods: +6.8%, Vegetable oil: +50.9%, Machinery: +8.7%, Non-ferrous metals: +26.1%. |
| Commerce Secretary | – Sunil Barthwal: Projected better export performance than last year. Focus on PLI scheme for manufacturing competitiveness. |
| Export Performance During April-Oct | – Exports grew 3.2% to $244.5 billion during April-October 2024. – Imports increased by 5.7% to $416.9 billion, leading to a cumulative trade deficit of $164.65 billion. |
| Economic Forecast | – Aditi Nayar (Icra): Expected current account deficit to ease to 1.2% of GDP in Q3FY25, down from 1.8% in Q2FY25. |
India’s Outward FDI Hits $3.7 Billion ...
WPI Inflation Soars to 4-Month High of 2...
Deposit Growth Matches Credit Amid Lendi...
