Geo-political conflicts, slowdown in global demand and fall in commodity prices took its toll on India’s foreign trade with goods exports falling 3.11 per cent (year-on-year) in April-March 2023-24 to $437.06 billion as items including petroleum products, gems & jewellery, readymade garments, chemicals, leather and marine products faced the heat, per government figures.

Trade deficit during the fiscal, however, narrowed 9.33 per cent to $240.17 billion as contraction in imports in FY 2023-24 was a higher 5.41 per cent at $677.23 billion. There was a significant fall in imports of products such as petroleum, coal & coke, pearls, precious and semi-precious stones, transport equipment and chemicals, according to quick estimates released by the Commerce & Industry Ministry on Monday.

“This year was difficult from trade point of view. Not only did the Ukraine-Russia conflict continue, other conflicts also came up. We faced huge issues related to Red Sea and Panama Canal…We have beaten all odds,” Commerce Secretary Sunil Barthwal said pointing out that overall exports of goods and services (estimated figures) in FY 2024 were marginally higher than the previous year’s.

India’s overall exports (merchandise and services combined) in FY 2023-24, was projected by the Commerce & Industry Ministry almost flat at $776.68 billion with services exports projected to grow at 4.39 per cent to $339.62 billion during the fiscal. (RBI will share its estimates on services exports for the fiscal later).

Things may have now started looking up for the coming months with goods exports in March 2024, valued at $41.68 billion, registering the best monthly performance in fiscal 2023-24. It was lower by a marginal 0.67 per cent than exports in March 2023. Imports of goods in March 2024 fell 5.98 per cent to $ 57.27 billion with trade deficit during the month at $15.6 billion.

Export sectors

Barthwal said that as global trade was looking up this year, going by projections made by both UNCTAD and the WTO, Indian exports were also looking up.

Export sectors that continued to do well in 2023-24 despite the geo-political tensions include electronic goods, engineering goods, drugs & pharmaceuticals and cotton yarn.

In fact, non-petroleum and non-gems & jewellery exports during FY 2023-24 at $320.21 billion was higher than the previous fiscal’s exports of the same at $315.64 billion.

“FY24 closed on a strong note with engineering exports rising 10.66 per cent to $11.28 billion... With more Free Trade Agreements (FTAs) in the pipeline, engineering exports wuld certainly increase its share in the global market in coming years,” according to a statement from EEPC India.

According to exporters’ body FIEO, the need of the hour was to address the Middle East geopolitical situation and Red Sea crisis challenges by ensuring availability of marine insurance and rational increase in freight charges. “The sector also needs easy and low cost credit and marketing support, besides timely conclusion of some of the key FTAs with the UK, Peru and Oman,” per a statement issued by FIEO.

Acknowledging that exports of certain items, like gems & jewellery, had got hit due to regional conflicts, including the Russia-Ukraine war, the Commerce Secretary said that the government was focussing on diversification of both markets and products.