India Balance of Trade

India's trade deficit shrinks to a five-month low in Feb '18.

Published by Ministry of Commerce and Industry, RBI. Updated until the month of February 2018. (Published on March 15th, 2018)  

Recent Data Trend

India’s trade deficit narrowed to a five-month low of USD 12 billion in Feb ’18, supported by slowing growth in imports. Merchandise imports in Feb’18 fell to a four-month low of USD 37.8 billion, growing at 10.4% year on year (YoY), as compared to more than 20% growth in the past three months. The oil imports continued to remain strong, growing at 32.3% YoY, on account of a rise in crude oil prices in the last one year.

Exports grew by 4.5% YoY in Feb ’18 reaching USD 25.8 USD billion, amidst concerns that a global trade war initiated by the US President’s move to hike import taxes on steel and aluminum, could affect its exports to the US. During Apr-Dec ’17, steel and aluminum exports to the US added around USD 2 billion. The export growth has continued to slow down since Nov ’17 and this will be concerning for the government. To add to this, the US has already challenged India’s export subsidies at WTO, citing that various export-oriented schemes and subsidies of India help it to sell the goods cheaply in the US to the detriment of American workers and manufacturers.

However, exports are likely to be supported by a rise in commodity prices and strong demand in the Europe and US, in the near future.

What’s interesting is that for both exports and import the level of growth has moved down in the past few months. This might be indicative of the transition of the global economy towards a more protectionist stance.

We believe that such protectionist measures might quell global trade and will have implications for India's trade performance as well. Given the heat building up between US and India the trade may get affected in the short-term, but, the long-term bilateral trade partnership is expected to stay positive.

Brief Overview

The balance of trade data records the value of merchandise trade of India with its trading partners. The data on import and export of the Indian economy is published by the Ministry of Commerce on a monthly basis. Merchandise trade is a key indicator of the development of the economy. India’s largest trade partners include US, EU, and China. India has maintained an overall trade deficit since 1990 and in the past decade, the deficit has increased manifold. According to World Trade Organization, India’s share export of merchandise goods in 2015 was 1.5%.

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Next Release Date: Second week of April 2018

Trade Balance-Quarterly