India Records Trade Deficit With Nine Top Trading Partners in April-October FY24: Report

Subject :Economy

Section: External Sector

Context:

India’s total merchandise exports decreased by 6.51% to $278.8 billion in April-November period of FY24.India’s imports fell by 8.67% to $445.15 billion during the same period.

More on news:

During the first seven months of the fiscal year 2023-24, India experienced a trade deficit with nine of its top ten trade partners except the US.

Findings in the Report:

The trade surplus with the US (India’s largest trading partner) amounted to $19.59 billion.
Deficits with China, Russia, and the UAE reached $51.11 billion, $33.56 billion, and $6.83 billion, respectively

Imports from Russia: India imports petrol, high calorific value coal, coke and briquettes, and fertilizer, especially potash from Russia
Exports: Declination in exports of gems and jewelry to Hong Kong and the US.
Trade deficits were also recorded with Saudi Arabia, Indonesia, Iraq, Singapore, and South Korea.
India – Indonesia: The trade deficit among the two countries is because of edible oil. It was getting normalized because of rice and sugar exports to them but now those are restricted and the deficit has increased
India has traditionally had a deficit with Korea despite the two inking a Comprehensive Economic Partnership Agreement in 2009.
India -Iran Trade prospects:
India’s exports to Iran dipped 47% year-on-year to $567 million in April-October 2023.
The Israel-Hamas war has severely damaged revival prospects of these exports.
The decrease is attributed to a minimal rupee balance in the rupee-rial account.
India still imports certain agricultural products from Iran, such as saffron, which generates rupee balance.
Non-functional rupee-rial mechanism: Suspended oil imports accounted for non functional rupee rial mechanism.
Iran has reduced its tea and rice imports from India because of foreign exchange issues and finalization of the rupee-payment mechanism.

About Federation of Indian Export Organisations:

Establishment: Federation of Indian Export Organisations, popularly known as FIEO, was set up in 1965 as an Apex Body of Export Promotion Organisations in the country.
Registration: FIEO is registered under the Societies Registration Act, 1860 with its Headquarters in Delhi, Regional Offices in Delhi, Mumbai, Chennai and Kolkata
Purpose: FIEO provides the crucial interface between the international trading community of India and the Central and State Governments, financial institutions, ports, railways, surface transport and all engaged in export trade facilitation.

About Free Trade Agreements:

A Free trade Agreement (FTA) is an agreement between two or more countries or trading blocs that primarily agree to reduce or eliminate custom tariffs and non tariff barriers on substantial trade between them.
India has signed bilateral trade deals in the form of Comprehensive Economic Partnership Agreement (CEPA)/ Comprehensive Economic Cooperation Agreement (CECA)/FTA/Preferential Trade Agreements (PTAs) with some 18 groups/countries.

Balance of trade:

Balance of trade (BOT) refers to the difference between the value of a country’s exports and the value of a country’s imports for a given period.
BOT is the largest component of a country’s balance of payments (BOP).