India trade gap narrows in June as import bill declines

India’s trade deficit narrowed in June as the nation reined in its import bill and some recovery in global demand kept exports steady.

The gap between exports and imports stood at $20.98 billion last month, Trade Ministry data showed Monday, in line with the $21.1 billion deficit forecast by economists in a Bloomberg survey. Exports grew 2.6% from a year earlier to $35.20 billion, while imports expanded 5% to $56.18 billion. 

The inbound shipments were $61.91 billion in May, while outbound shipments stood at $38.13 billion.

While domestic demand remained strong, imports of some commodities, including gold and coal have eased. Gold imports fell 38.7% in June from a year ago period to $3.06 billion, while coal imports dropped almost 17% to $2.94 billion.

Outbound shipments of engineering goods, electronics and pharmaceuticals picked up pace in June, the data showed. 

The merchandise exports have shown good growth, Trade Secretary Sunil Barthwal told reporters in New Delhi, adding that services exports are growing in a “sustained manner.” Services exports stood at $30.27 billion in June, compared to $27.79 billion from a year ago.  

Despite geopolitical uncertainty, a recent report said global trade trends have turned positive amid a strong recovery in the US, one of India’s major export markets. Global central banks pivoting toward interest rate cuts is also buoying sentiment.

The Indian government expects goods and services exports to cross $800 billion in the current fiscal year, from $776.7 billion in the year that ended in March. 

The narrowing trade deficit will help India keep its current account deficit at manageable levels. The gap recorded a surplus in the January-March period.

Here’s more from the briefing:

• India is looking at increasing electronic, engineering exports to Russia
• The government has asked Russian officials to look at non-tariff barriers
• India and Russia led Eurasian economic union bloc are discussing scope of proposed trade agreement

--With assistance from Preeti Soni.

(Updates with more details and a chart.)

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