"India’s Trade Deficit Shrinks 9.4% in Q1 as Services Exports Soar 11%"

 

India’s trade deficit shrank by 9.4% in the first quarter (April to June) of the current financial year, thanks largely to strong performance in the services sector. According to the Ministry of Commerce and Industry, services exports grew by nearly 11% in Q1, helping bring down the overall trade deficit to $20.3 billion, compared to the same period last year.

Total exports – which include both goods and services – rose to $210.3 billion during the first quarter, up from $198.5 billion last year. That’s a growth of around 6%. The government is optimistic about the trend continuing. Commerce Secretary Sunil Barthwal expressed confidence that India is on course to surpass last year’s record export numbers, which stood at an all-time high of $825 billion.

“If we maintain this pace, we will easily beat last year’s figures,” Barthwal said during a media briefing. “What’s encouraging is that both merchandise and services exports are performing better than expected, even when you compare it with the global outlook provided by the World Trade Organisation.”

What’s particularly significant is the role of services in this export boom. Services exports jumped to $98.1 billion this quarter, up from $88.5 billion during the same period last year – a solid 11% increase. On the other hand, merchandise (goods) exports only saw a modest rise of 2%, reaching $112.2 billion.

Barthwal pointed out that the sluggish growth in merchandise exports was largely due to declining petroleum prices. When petroleum is excluded, India’s exports of other goods actually went up by 6%, indicating that non-petroleum sectors are performing better than it might seem at first glance.

Meanwhile, imports have also increased, albeit at a slower pace than exports. Overall imports grew 4.4% to $230.6 billion. Merchandise imports rose 4.2%, and services imports increased by 4.9%. Despite this, the stronger export performance helped reduce the trade gap.

Among India’s export destinations, the United States continues to lead the pack. Exports to the U.S. climbed by 22.1% in Q1, reaching $25.5 billion. Other major export destinations included the United Arab Emirates ($9.04 billion), the Netherlands ($5.65 billion), and China ($4.4 billion).

The numbers paint an encouraging picture for the Indian economy, especially at a time when global trade has been under pressure. A growing services sector, stable demand from major export markets, and resilience in non-petroleum goods exports are giving the country a solid footing.

As things stand, India seems poised not only to weather the global trade uncertainties but also to set new records in exports, provided the current growth momentum continues.