India’s exports weaken; trade deficit shrunk on larger import fall in June

In contrast to the strong growth observed in the previous year, India’s trade performance is now showing a downward trend.

  • In June, merchandise exports amounted to US$ 32.97 billion, while imports totalled US$ 53.10 billion.
  • The trade deficit came down to US$ 20.13 billion from US$ 22.12 billion in May.
  • India’s overall exports in June 2023 are estimated to be US$ 60.09 billion, reflecting a negative growth rate of (-) 13.16% compared to June 2022.


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June continued the trend of weakness in India’s external trade, with both goods and services sectors experiencing pressure. While the goods trade deficit dropped sequentially, it remained above $20 billion in June. On the services side, the trade surplus narrowed to $11.2 billion, marking the lowest level in 2023 according to government estimates.

In June 2023, India’s overall exports are estimated to be US$ 60.09 billion, indicating a negative growth rate of (-) 13.16% compared to June 2022. Similarly, the overall imports for the same period are expected to reach US$ 68.98 billion, reflecting a negative growth rate of (-) 13.91% over June 2022.

The contraction of India’s merchandise trade deficit in June is a positive development. The trade deficit decreased to US$ 20.13 billion from US$ 22.12 billion in May. This reduction in the trade deficit was primarily driven by a larger decline in imports compared to exports.

Merchandise exports in June amounted to US$ 32.97 billion, while imports stood at US$ 53.10 billion. In the previous month of May, merchandise exports were valued at US$ 34.98 billion, while imports were recorded at US$ 57.10 billion.

During June, India’s merchandise exports experienced a decline of 22% to US$ 32.97 billion compared to US$ 42.28 billion in the same period last year. Similarly, imports also fell by 17.48% to US$ 53.10 billion in June from US$  64.35 billion in June of the previous year.

Services exports amounted to US$ 27.12 billion, with imports at US$ 15.88 billion. Comparatively, in May, services exports were recorded at US$ 25.30 billion, with imports at US$ 13.53 billion.

Sector Overview

Under merchandise exports, 9 of the 30 key sectors exhibited positive growth in June 2023 as compared to the same period last year (June 2022).

Major Sectors Witnessing Positive Growth
Iron Ore (1664.3%) Electronic Goods (45.36%) Oil Seeds (33.33%)
Cashew (19.6%) Tobacco (17.8%) Fruits & Vegetables (14.1%),
 Coffee (7.1%), Handicrafts Excl. Hand Made Carpet (5.14%) Drugs & Pharmaceuticals (5.13%)

Last month, the list had 13 sectors with positive growth.

  • Exports of electronic goods witnessed a substantial increase of 45.36%, reaching USD 2.43 billion compared to USD 1.67 billion in June 2022. This growth trend continued in the April-June 2023 period, with electronic goods exports recorded at USD 6.96 billion as compared to USD 4.73 billion in April-June 2022, indicating a remarkable growth rate of 47.05%.
  • Enabling policies facilitating greater investment in electronics, mobile manufacturing, pharmaceuticals, etc. has resulted in visible growth in these sectors.
  • Textile exports continued to decline in June 2023 because of subdued demand due to recessionary effects in major economies.

Amid the ongoing muted export performance, the sharp deceleration in imports also raises concerns. What is particularly noteworthy is that the decline in imports is widespread, with 21 out of 30 key sectors experiencing a contraction. This broad-based drop in imports indicates a broader economic slowdown and highlights the need for cautious monitoring of the overall trade situation. Silver imports slumped by 94.36 per cent from USD 0.79 billion in June 2022 to USD 0.04 billion in June 2023. 82% y-o-y growth in gold shipments saved the drowning boat for imports.

Summing Up

The decline in India’s exports in June 2023, compared to June 2022, was primarily driven by a significant decrease in the export of petroleum products. Petroleum products accounted for half of the overall fall in exports during this period. The degrowth of exports was also rising on the back of a fall in oil as well as gems & jewellery exports.

However, it’s worth noting that electronic goods emerged as a key outlier, with a robust expansion of 45 per cent in exports in June 2023.

India’s exports remained weak due to various factors, including a slowdown in major economies worldwide, such as the US and EU, where a significant portion of India’s exports are concentrated. The World Trade Organization’s projection of a slowdown had materialized, and the global economic conditions, including the tightening of monetary policy and the twin challenges of slowdown and inflationary pressure, were impacting trade activities and manufacturing.

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