India’s merchandise exports hit a 12-month peak of $41.7 billion last month, marginally lower than March 2023 and a tad higher than February’s $41.4 billion figure. Imports fell 6% to $57.3 billion, taking the trade deficit to an 11-month low. The last two months’ robust export numbers bolstered the tally for outbound shipments from $354 billion at the end of January to $437.1 billion for the full year, just 3% short of the record $451 billion performance in 2022-23. Amid a decline in commodity prices, which averaged about 14% lower last year, this is a commendable outcome, aided by demand proving more resilient than earlier anticipated in major markets. That imports dipped at a higher 4.8% pace has also cushioned the trade deficit, and economists now expect the January-March quarter to end up with a small but rare current account surplus. Services trade data for the full year will be available later, but the Commerce Ministry estimates that total exports in 2023-24 were fractionally higher than the previous year at $776.7 billion.
Trade mandarins believe goods exports have entered a positive growth cycle, having coped with persistent strife — from Ukraine to Palestine and the Red Sea. Last week, the World Trade Organization (WTO) downgraded its global trade volume growth projection to 2.6% from 3.3% reckoned earlier, with risks tilted towards the downside. This is despite favourable base effects from its revision for 2023 trade volumes, which the WTO says tanked 1.2% compared with a 0.8% dip expected earlier. Export volumes from Asia are expected to rise 3.4% in 2024, with imports climbing 5.6%. In India, a healthy monsoon is expected to spur domestic demand, including for discretionary imports. But sustained disruptions on two of the world’s key shipping routes — the Suez and Panama Canals — along with geopolitical fault lines and an increasing scepticism about the benefits of global trade in several countries, pose creeping risks that have not fully manifested yet. Exporters do not seem so sure about the upbeat official outlook — they need to start raising prices soon to catch up with shipping cost surges, exposing them to competitive pressures. For Asia and India, any prolonged friction in the Strait of Hormuz, a key supply route for the region’s oil and gas imports, is the biggest threat to trade and macroeconomic balances. The spike in crude prices already showed up in March as the petroleum trade deficit hit a record monthly high of $11.8 billion while oil exports slid to an eight-month low. India’s high energy import dependence is known, and any spurt in global energy and food prices would also derail hopes of global interest rate cuts and improved demand.
