Recent Trends in India’s Trade

Source: The post recent trends in India’s trade has been created, based on the article “Trade tact: More support and greater certainty in trade policy can bolster exports” published in “The Hindu” on 18th July 2024

UPSC Syllabus Topic: GS Paper3- Economy-mobilisation of resources

Context: The article discusses India’s trade figures for June. Exports increased slightly, while imports and the trade deficit also grew. It highlights concerns in the bullion market and the decline in gems and jewellery exports. The article calls for stable trade policies to support Indian exporters and boost job creation.

For detailed information on India’s New Foreign Trade Policy (FTP) read this article here

What Are the Recent Trends in India’s Trade?

1. Increase in Exports: India’s goods exports rose for the third consecutive month in June, increasing by 2.55% to reach $35.2 billion.
2. Growth in Imports: Imports grew by 5% to $56.2 billion, although this figure is lower than May’s peak of nearly $62 billion.
3. Trade Deficit Dynamics: The trade deficit expanded by 9.4% compared to last June, but cooled slightly from the previous month, totaling $21 billion.
4. Oil Trade Impact: Despite stable oil prices, petroleum exports decreased by 18.3% to $5.5 billion, indicating a drop in export volumes. Concurrently, oil imports rose by 19.6%, driven by increased domestic demand.
5. Bullion Trade: Gold imports decreased by 38.7% in June to $3.06 billion, the lowest in the fiscal year 2024-25. In contrast, silver imports soared by 377% in June, highlighting a sharp increase.

What Should be Done?

1. Stabilize Trade Policies: Ensure stable trade policies to support exporters, avoiding sudden changes like the recent scrapping of the interest equalisation scheme for all but smaller firms.
2. Boost Export Sectors: Focus on boosting exports across various sectors, where at least 19 of India’s top 30 export sectors showed growth over May and June.
3. Address Bullion Market Concerns: Investigate disruptions in the bullion market caused by concessional duty imports through GIFT City, especially related to the free trade pact with the UAE.
4. Support Gems and Jewellery Sector: Address the continuous decline in gems and jewellery exports, which have contracted for seven successive months.

Question for practice:

Discuss the recent trends in India’s trade and provide suggestions to increase exports.