India's trade deficit sinks to 5-month-low of $20.8B in September
India's trade deficit has sharply declined to a five-month low of $20.8 billion in September, from $29.7 billion in August, data released today showed. The improvement comes on the back of a positive turnaround in merchandise export growth, its first increase after three months of decline. The export sector shrank marginally by 0.5% as against a massive 9.4% contraction last month.
Imports rise amid shrinking trade deficit
Unlike the export sector, imports grew by 1.6% in September, slightly down from 2.8% growth in August. This data shows continued demand for foreign goods despite the narrowing trade deficit. The import sector's performance has painted the overall economic picture, with a 6.1% increase recorded for the first half of fiscal year 2024-25.
Trade data contradicts manufacturing PMI trends
Interestingly, the trade data stands in stark contrast to recent trends in the manufacturing Purchasing Managers's Index (PMI), which indicated a weakening of external conditions. This resulted in a dip in manufacturing activity to its lowest point in eight months. Despite these tough conditions, exports managed to register a slight increase of 1% during the first half of fiscal year 2024-25.
A closer look at India's merchandise trade
In September, India's merchandise exports were worth $34.58 billion, while imports were worth $55.36 billion. This is a marginal decline from August when merchandise exports were worth $34.71 billion and imports were much higher at $64.36 billion. The services sector also saw a change with exports worth $30.61 billion and imports worth $16.32 billion in September, as opposed to August's $30.69 billion and slightly lower imports worth $15.7 billion respectively.
