India's exports are down but so is the trade deficit

India's exports in the month of July declined 16 percent to $32.25 billion while imports fell 17 percent to $52.92 billion, government data showed on Monday.

Exports have now contracted for the sixth month in a row due to the global headwinds, after contracting 22 percent In June, according to the government data. The trade deficit dipped 18.5 percent from $25.4 billion in July 2022 to $20.7 billion in July 2023.

In June, the exports had fallen by 22 percent compared to the previous year, imports data showed a fall of 17.5 percent, year-over-year. For July, India’s Merchandise exports fell to $32.25 billion from $38.34 billion in July 2022 & imports fell from $63.77 billion in July 2022 to $52.92 billion in July 2023. The Commerce Ministry was quoted saying "despite headwinds, India's services exports have done well."

The Government further described services as a "success story" and mentioned that it can't be ignored, with exports rising to $27.17 billion in July 2023 from $24.26 in July 2022. Meanwhile, the Commerce Ministry has also added that it is important to see India’s trade data not in isolation, with quantification of global headwinds. Trade deficit has fallen as the government prioritised food security and took a conscious decision to stop export of certain edible products.

There's a huge decline in both exports and imports of many countries while India's fall in exports is not as much as elsewhere. According to the Government data, decline was noted in merchandise imports from China in April to July 2023 while imports from Russia nearly doubled. Most of the decline in exports came due to the decline in value of petroleum exports. Import data of India's export destinations show consistent decline in imports in the past four months.

CNBC-TV18 reported in early July that many global chemical companies like FMC, Evonik, Clariant, Lanxess AG and Olin corp have issued profit warnings and blamed channel partners drawing down inventory and not replenishing them.

In 2022, the country had witnessed the largest growth year in exports, this year's figure would look smaller in view of global headwinds, mentioned the Commerce Ministry.