India's Merchandise Exports Grow Amid Geopolitical Tensions, Trade Deficit Widens

India's merchandise exports experienced a 5.8% growth, reaching USD 109.96 billion, amidst geopolitical instability in Europe and the Middle East. Despite robust services exports, a widening trade deficit, and surging core imports, concerns over the sustainability of export growth remain.

India's merchandise exports rose by 5.8% to USD 109.96 billion, compared to USD 103.9 billion in the same period last year, amidst geopolitical instability in Europe and the Middle East, according to a CRISIL report. However, the momentum slowed in June, largely attributed to an 18.2% contraction in oil exports, marking a 2.6% year-on-year increase, down from 9.1% in May.

Despite this, non-oil exports maintained steady growth at 7.7% in June, performing similarly to the previous month. Services exports also performed strongly, positively influencing the overall trade scenario. Notably, merchandise imports grew at a slower pace of 5.0% year-on-year in June, down from 7.7% in May.

While the trade deficit widened to USD 21 billion in June from USD 19.2 billion the previous year, sectors such as pharmaceuticals, engineering goods, and textiles showed growth. However, gems and jewellery exports marked their seventh month of decline. As the fiscal year begins positively with steady export growth, the Indian government's focus on foreign trade agreements could boost trade, despite concerns over the trade deficit and potential market disruptions due to US-China trade tensions.

(With inputs from agencies.)