The forecast for merchandise trade is uncertain due to issues including container shortages and geopolitical worries, even if September’s export growth showed indications of improvement, according to a Crisil analysis.
A rise in Chinese exports to Asian markets, particularly India, could result from the US’s increased tariffs on Chinese imports, which raises concerns about the growing trade deficit.
However, it is anticipated that a strong services trade and substantial remittance inflows will offer some stability and keep the current account within a safe range.
After two consecutive months of fall, including a 9.3 per cent contraction in August, India’s merchandise exports saw a minor bounce in September, rising 0.5 per cent year-over-year to US $ 34.6 billion.
A 9.2 per cent gain in core exports, as opposed to a 2.4 per cent increase the month before, was the main driver of this improvement. Key industries, such as ready-made clothing, saw notable development. Ready-made garment (RMG) exports increased 17.30 per cent last month, according to data released by the Apparel Export Promotion Council (AEPC). Exports of garments increased 8.61 per cent from April to September compared to April-September 2023, in terms of dollars.
Even though core imports continued to expand steadily, overall import growth slowed, which helped India’s trade deficit shrink from US $ 29.7 billion in August to US $ 20.8 billion in September—near the US $ 20.1 billion reported in September 2023.