India's trade deficit widens to $28.68 bn in Aug, import rises 37%

[beijingwalker]

India's trade deficit widens to $28.68 bn in Aug, import rises 37%


India's trade deficit continues to widen.
Updated: 03 Sep 2022, 08:40 PM IST

• The imports climbed by 37%, while exports remained flat during the month.

India's trade deficit widened to $28.68 billion in August, as per the government data. The imports climbed by 37%, while exports remained flat during the month. With that, the country's trade deficit has more than doubled compared to 11.71 billion in August last year. Overall, the exports is expected to cross $450 billion by end of the current financial year.

In August 2022, the country's imports climbed sharply by 37% to $61.68 billion. While exports stood flat at $33 billion.

In sector-wise performance, in August 2022, oil imports jumped by 86.44% to $17.6 billion. On the contrary, gold imports declined by 47.54% to $3.51 billion.

On month-on-month, India's trade deficit was down by 4.4% from $28.7 billion in July 2022.

Also, a decline was seen in both exports and imports compared to July month.

During the month under review, imports dipped by 7% compared to $66.27 billion in July. While exports slipped by 9% against $36.3 billion in July this year.

Between April - August this year, the country's export stood at $192.59 billion registering a growth of 17.12%. Imports came in at $317.81 billion skyrocketing by 45.64%.

Thereby, in the first five months of FY23, India's trade deficit widened by $125.22 billion compared to $53.78 billion in the same period a year ago.

Commerce secretary B V R Subrahmanyam, however, said that the country's overall exports are expected to cross $450 billion during the current fiscal, as reported by PTI.

Subrahmanyam further said, "In goods exports, we will be crossing $450 billion this fiscal."

During the first quarter of FY23 (April to June), India's trade deficit more than doubled to $70.25 billion from $31.42 billion in the corresponding period last year. In Q1FY23, the exports stood at $116.77 billion up by $95.54 billion in Q1FY22, while the imports jumped to $187.02 billion against $126.96 billion in Q1 last year, as per the Ministry of Commerce & Industry data released last month.

India's trade deficit widens to $28.68 bn in Aug, import rises 37%

The imports climbed by 37%, while exports remained flat during the month.

www.livemint.com

 

[beijingwalker]

Challenges persist as govt tries hard to bridge India's trade deficit​

• IANS
• Economy News
• 2022-09-11 05:45

Simply put, trade deficit is a situation in which the value of goods a country imports is greater than the value of goods it exports -- excluding software, remittances and others.

"Exports are slowing down while imports are increasing. This has led to widening trade deficit. The trade deficit was $190 billion last year and around $125 billion for the period from April-August 2022," Madan Sabnavis, Chief Economist, Bank of Baroda (NS:BOB), told IANS.

"Exports are slowing down due to the global economy moving to recession. Imports are rising as demand is going up as our economy grows - both oil and non-oil imports," he added.

According to the Ministry of Commerce and Industry, India's merchandise imports were $61.68 billion and exports were $33 billion in August 2022, leaving a deficit of $28.68 billion.

During April-August 2022-23, India's merchandise imports were $317.81 billion while exports were $192.59 billion, leaving a gap of $125.22 billion.

The top five export items are: engineering goods, petroleum products, gems and jewellery, organic/inorganic chemicals, drugs and pharmaceuticals.

Similarly, the top import items are: petroleum, crude and products; electronic goods; coal/coke; machinery - electrical/non-electrical; gold; organic/inorganic chemicals.

The fall in global oil prices will help reduce the trade deficit. Further, with India buying huge amounts of oil from Russia at a discount and the talks of rupee invoicing of oil imports would ease the trade deficit, Jamal Mecklai, CEO, Mecklai Financial Services Private Ltd, said.

"Buying from Russia in rupees helps to address the issue as there are fewer outflows of dollars. It is a good way of doing trade by having a rupee-rouble arrangement," said Sabnavis.

It should be noted that Russia is now a major source of crude as well as fertilisers for India.

However, Russia closing its oil tap to Europe is expected to have an adverse impact on India's import bill as the oil and gas prices will increase.

Further, with the energy costs increasing in Europe, the cost of imported items is expected to go up.

The way to improve the trade balance is to boost exports, which the government is doing through its policies. But exports are driven more by demand in the overseas market, Sabnavis pointed out.

The increasing interest rates overseas to curb inflation may dampen exports, while the pent up demand in the domestic market boosts imports, thereby widening the trade gap.

A trade deficit is bad for an economy as it puts pressure on the current account deficit, which is the trade account plus invisibles account (includes software, remittance, travel tourism and others), said Sabnavis.

He also said the current account deficit puts pressure on capital account, which if not setting it off will lead to fall in forex reserves which in turn leads to rupee depreciation.

According to Moody's Investors Service's Credit Opinion on India, the country's foreign exchange reserves have fallen to $511.3 billion in July 2022 from $569.9 billion at the end of 2021, reflecting a widening in the current account deficit resulting primarily from higher global prices for India's imported energy inputs.

In particular, India's imports of crude oil and petroleum products rose 83.7 per cent year-on-year over the first seven months of the year; consequently, over the same period, the balance of trade in crude oil and petroleum products gapped to Rs.6.1 trillion (2.7 per cent of 2021 GDP) from Rs 3.5 trillion (1.5 per cent of 2021 GDP).

"We now expect the current account deficit to widen to 3.9 per cent of GDP in fiscal 2022 from 1.2 per cent in fiscal 2021," Moody's said.

Be that it may, the Indian government has to balance the domestic interests vis-a-vis the exports revenue. It has already banned wheat and broken rice exports.

In order to make India a global production base, the government has come out with schemes like production linked incentive (PLI) for various sectors and it is also mulling such a scheme for other sectors.

Challenges persist as govt tries hard to bridge India's trade deficit

Challenges persist as govt tries hard to bridge India's trade deficit

in.investing.com

 

[beijingwalker]

Indian exports to China dip by a third in April-August, imports from China up 28 per cent​

China became India's fourth largest export destination during the period, slipping from the second position during the same period a year ago​

Asit Ranjan Mishra & Shreya Nandi | New Delhi Last Updated at September 5, 2022 00:23 IST

Amid a slowdown in economic activity in China, India’s exports to its northern neighbour dropped 35 per cent to $6.8 billion during April-August period at a time the country's overall exports rose 17.1 per cent. China became India’s fourth largest export destination during the period, slipping from the second position during the same period a year ago.

Multiple shocks have hit China’s economy, including the drag on consumption from the zero-Covid policy, the prolonged impact of the property sector downturn and declining export demand, all of which have slowed down economic activity.

While exports of petroleum products such as naptha to China rose 81 per cent to $1.2 billion during April-July due to elevated crude oil prices, shipments of organic chemicals (-38.3 per cent), iron ore (-78.5 per cent) and aluminium products (-84.2) saw sharp decline, disaggregated data available on Commerce Ministry website showed. However, China increased its imports of non-Basmati rice (141.1 per cent) and marine products (18.7 per cent) during the period. A cut in steel output in China has also led to sharp dip in iron ore exports from India.

On the other hand, imports from China were up 28 per cent during April-August at a time when India’s overall imports grew 45.6 per cent, leading to a trade deficit of $37.1 billion in the first five months of FY23.

India’s rising trade deficit with China—the highest with any country — has been a cause for concern. “The growth of trade deficit with China could be attributed to two factors: narrow basket of commodities, mostly primary, that we export to China and market access impediments for most of our agricultural products and the sectors where we are competitive in, such as pharmaceuticals, IT/ITeS, etc. Our predominant exports have consisted of iron ore, cotton, copper, Aluminium and diamonds/ natural gems. Over time, these raw material-based commodities have been over-shadowed by Chinese exports of machinery, power-related equipment, telecom equipment, organic chemicals, and fertilizers. We continue to engage the Chinese side for addressing market access issues,” the Indian Embassy in China explains on its website.

China’s economy is bracing for more pain as Chengdu’s lockdown, the sixth largest city in the country’s west, damaged business and consumer activity in the area and hurt sentiment more broadly. The hit to global production and shipping from China’s strict Covid lockdown policies have also set back recovery in global supply-chain activity.

Moody’s last week lowered its growth forecasts for China for both 2022 and 2023 to 3.5 per cent and 4.8 per cent, respectively, down sharply from 8.1 per cent in 2021.

July trade data showed a surge in China's trade surplus to a record $101.26 billion, up from $97.4 billion in June. “China's recovery beyond 2023 will depend on knock-on effects on other sectors resulting from troubles in the property sector and measures by authorities to stabilize it, and the impact on households’ balance sheets and their consumption-saving decisions. A strong revival of domestic consumption demand, alongside the increased infrastructure spending that the government is already undertaking, will be key to sustaining a solid recovery,” Moody’s said.

Indian exports to China dip by a third in April-August to $6.8 billion

China became India's fourth largest export destination during the period, slipping from the second position during the same period a year ago

www.business-standard.com

 

[hualushui]

This is a good thing for India.
India's trade deficit increased, representing high economic growth;
trade deficit decreased , representing India's economic growth is low.

 

[beijingwalker]

This is a good thing for India.
India's trade deficit increased, representing high economic growth;
trade deficit decreased , representing India's economic growth is low.

Really puzzles me, how an economy can register a double digit growth when the exports drop like a rock and imports skyrocket?

 

[MH.Yang]

Really puzzles me, how an economy can register a double digit growth when the exports drop like a rock and imports skyrocket?

First, India exports labor, that is, it relies on remittances from Indians working abroad.

Secondly, India's current economic growth is actually a rebound from last year's negative economic growth.

Third, a large proportion of India's economic growth comes from inflation, with little real growth.

 

[Lava820]

Really puzzles me, how an economy can register a double digit growth when the exports drop like a rock and imports skyrocket?

Elevated prices of crude oil in the wake of the Russia-Ukraine war has inflated India’s import bill.
Weak demand from China, EU, US and export duty on steel items , refined petroleum products among the factors decelerating India's goods exports in July. Although these are preliminary data's, I'm waiting for the actual foreign trade data where the actual scenario will be revealed.

India's service exports rise 20.2% to $23.26 billion in July

As per the monthly data on India's international trade in services for July 2022, the imports rose 22.3 per cent to USD 13.92 billion in July.

www.moneycontrol.com

Secondly, India's current economic growth is actually a rebound from last year's negative economic growth.

India's GDP for the first quarter ended June 30, 2021 soared to record high of 20.1 per cent

Stellantis Ending China Jeep Production in Radical Shift

Stellantis NV is halting production of Jeeps in China and ending a 12-year joint venture with GAC Group after failing to gain traction in the world’s biggest car market.

www.bloomberg.com

Beijing Hyundai’s Chongqing Plant Shut Down since December 2021, Chinese News Outlet Says

Citing remarks made by an insider of Beijing Hyundai, China Business News reported on Feb. 21 that the Chongqing plant of Hyundai Motor’s Chinese joint venture

www.businesskorea.co.kr

Third, a large proportion of India's economic growth comes from inflation, with little real growth.

@Black Tornado @VkdIndian @Raj-Hindustani

Suzuki to invest Rs 30,000 cr on 2 new plants, PM Modi lays foundation stone

The factory at Hansalpur in Gujarat will be completed by 2026 and make cells for electric vehicles (EV) that the company will make in India. The upcoming Maruti Suzuki plant at Kharkhoda in Haryana, meanwhile, will make EVs and petrol-driven cars and will have an annual capacity to make one...

economictimes.indiatimes.com

Indian component industry clocks highest-ever turnover in FY2022, grows 23%

Sales to OEMs rise 22% on back of market recovery; trade surplus of $700 million for the first time as exports jump 43% vs 33% rise in imports; aftermarket grows 15% to Rs 74,203 crore

www.autocarpro.in

Indian IT revenues grow fastest in a decade to $227 bn in pandemic-hit FY22

Nasscom, which has ceased to give a growth projection for the future, said that a chief executives' survey pointed to another growth year.

www.business-standard.com

India’s services exports rise to record high in FY22

India’s services exports touched $254.5 billion in 2021-22, up 23.4% from $206.09 billion in 2020-21, according to data by the RBI

www.livemint.com

 

[Lava820]

First, India exports labor, that is, it relies on remittances from Indians working abroad

FPI inflows hit 20-month high of Rs 51,200 cr in Aug as oil stabilises

Foreign investors have pumped in a little over Rs 51,200 crore into the Indian equity markets in August, making it the highest inflow in 20 months, amid improving risk sentiment and stabilisation in oil prices.

www.business-standard.com

FPIs infuse Rs 5,600 crore in Indian equities in September so far

There is a clear trend reversal in FPI flows from July onwards since when overseas investors turned buyers in India after nine straight months of massive net outflows, which started in Oct last year

www.business-standard.com

 

[beijingwalker]

Elevated prices of crude oil in the wake of the Russia-Ukraine war has inflated India’s import bill.

China buys way more oil than India from the global market, still enjoys record high trade surplus and very low inflation.

 

[Black Tornado]

First, India exports labor, that is, it relies on remittances from Indians working abroad.

Secondly, India's current economic growth is actually a rebound from last year's negative economic growth.

Third, a large proportion of India's economic growth comes from inflation, with little real growth.

Last year we didn’t have negative economic growth, we have 8.4% GDP growth in 2021, it was 2020 we had a recession. And remittances are roughly 2.67% of India’s GDP and declining, and the 8.4% is real growth, inflation is added on top when nominal GDP is calculated.

Really puzzles me, how an economy can register a double digit growth when the exports drop like a rock and imports skyrocket?

Really puzzles me, how can an economy grow just 0.4% with tall claims of unprecedented trade surplus?

 

[Bilal9]

Really puzzles me, how an economy can register a double digit growth when the exports drop like a rock and imports skyrocket?

When fudging numbers is your highest skills, this is eminently possible.

And then you have Modi-followers with their big mouths launching volleys of tirades....

But they just bounced back from 17% or so negative growth during covid. This is bounce-back effect and only temporary.

 

[beijingwalker]

Really puzzles me, how can an economy grow just 0.4% with tall claims of unprecedented trade surplus?

Trade volumes are being registered by both importers and exporters, they are cross countries and governments, and they need to match. China's huge trade surplus against India is actually reported by Indian side, not China's.

 

[Lava820]

China buys way more oil than India from the global market, still enjoys record high trade surplus and very low inflation.

China's Annual Oil Demand Could Drop For The First Time In 20 Years

China could see its first annual drop in oil demand in two decades this year, largely due to continued Covid lockdowns

finance.yahoo.com

When fudging numbers is your highest skills, this is eminently possible.

And then you have Modi-followers with their big mouths launching volleys of tirades....

But they just bounced back from 17% or so negative growth during covid. This is bounce-back effect and only temporary.

It is India's century, not India's decade: McKinsey CEO Bob Sternfels

It is reported that McKinsey is planning a "disproportionate dedication" to India and that is why its world board shall be coming to the nation in December. It is also said that the agency has 5,000 individuals in India, a quantity he desires to double to 10,000.

newsable.asianetnews.com

 

[beijingwalker]

China's Annual Oil Demand Could Drop For The First Time In 20 Years

China could see its first annual drop in oil demand in two decades this year, largely due to continued Covid lockdowns

finance.yahoo.com

Somewhere drops and somewhere increases, couldn't it be more normal? but overall trade China still enjoys massive surplus, are you going to deny this fact too?

 

[Lava820]

But they just bounced back from 17% or so negative growth during covid. This is bounce-back effect and only temporary.

Any source/link to validate your claim?

Somewhere drops and somewhere increases, couldn't it be more normal? but overall trade China still enjoys massive surplus, are you going to deny this fact too?

the housing market is collapsing which accounts 30% of your GDP

Last year we didn’t have negative economic growth, we have 8.4% GDP growth in 2021

8.7%