India in trade deficit with nine of top 10 trading partners in 2023-24

India Records Trade Deficit with Nine of Top Ten Trading Partners (FY 2023–24)

• India ran a trade deficit with nine of its top ten trading partners in 2023–24, according to official data. Only the U.S. and few European nations (UK, Belgium, Italy, France, Bangladesh) showed a trade surplus with India.
• Key Deficits (2023–24):
  • China: $85 billion (up from $83.2 bn in 2022–23)
  • Russia: $57.2 billion (up from $43 bn)
  • Korea: $14.71 billion (up from $14.57 bn)
  • Hong Kong: $12.2 billion (up from $8.38 bn)
• Total trade deficit narrowed to $238.3 billion from $264.9 billion in 2022–23.

Major Trade Partners

• China: Largest trading partner – two-way trade $118.4 billion
• U.S.: Bilateral trade $118.28 billion, trade surplus $36.74 billion
• India maintains free trade agreements with Singapore, UAE, Korea, and Indonesia.

Implications of Trade Deficit

• A trade deficit is not inherently negative if imports are raw materials or intermediate goods supporting exports.
• Persistent deficits can:
  • Pressure the domestic currency → depreciation → costlier imports
  • Increase need for foreign borrowing → higher external debt
  • Impact foreign exchange reserves → reduce investor confidence
• Experts’ suggestion: Boost exports, reduce non-essential imports, develop domestic manufacturing, manage currency and debt effectively.

Significance

• Rising trade deficits highlight India’s dependence on critical imports from countries like China, Russia, and Korea.
• Maintaining strategic trade partnerships and negotiating FTAs/PTAs is essential for economic stability and global competitiveness.
  
  Updated -  May 26, 2024 02:44 pm | The Hindu