India's Oil Exports Suffer Amid Falling Crude Prices: CRISIL Report

A CRISIL report reveals a contraction in India's oil exports due to plummeting crude prices, paired with a widening trade deficit fueled by quicker import growth. Amid container shortages and looming US tariffs on Chinese goods, India's current account gets some relief from services trade and remittances.

India's oil exports have taken a hit due to declining crude oil prices, leading to an overall contraction in the country's exports for August, as per a report from CRISIL. Oil remains a pivotal export for India, which sends petroleum products to nations such as the Netherlands, Singapore, Australia, and South Africa, according to Commerce Ministry trade data.

'A fall in the price of crude—one of India's top export items—is impacting oil exports,' CRISIL stated. The report further notes that imports have surged faster than exports, contributing to a broader trade deficit. While the fiscal year commenced positively with merchandise exports growing steadily in the first quarter, growth slowed by July and August, resulting in a contraction. Factors like container shortages have disrupted major trade routes, exacerbating the decline.

The situation is compounded by the US's plan to increase tariffs on Chinese goods, further affecting global trade dynamics. 'The fiscal year started strong, but issues like container shortages and impending US tariffs on Chinese exports are affecting growth,' the report highlights. Additionally, the slowdown in China's economy has led to a surge in Chinese exports to the Asian market, including India, with notable increases in steel imports from China and Vietnam, thereby widening India's trade deficit.

Despite these hurdles, the report acknowledges some mitigating factors. India's services trade remains in surplus, and the country enjoys robust remittance inflows from overseas workers. These elements provide a buffer and are expected to help maintain a stable current account, despite the rising merchandise trade deficit. (ANI)

(With inputs from agencies.)