Coronavirus Hit India’s Imports, Country Posts First Trade Surplus In 18 Years

India posted a USD 0.79 billion trade surplus in June 2020, the largest on record and first since 2002, compared with market expectations of a USD 4.50 billion deficit, as imports tumbled much more than exports amid subdued demand due to the coronavirus crisis. Imports was down 47.59 percent with the biggest decreases reported for: gold (-77.42 percent), coal, coke & briquettes (-55.72 percent), petroleum, crude & products (-55.29 percent), machinery, electrical & non-electrical (-42.02 percent) and electronic goods (-34.05 percent). Meanwhile, exports fell at a slower 12.41 percent led by lower sales of gems & jewelry (-50.06 percent), leather & leather products (-40.47 percent), RMG of all textiles (-34.84 percent), man-made yarn, fabrics (-31.98 percent) and petroleum products (-31.65 percent). Considering the April to June period, the trade deficit narrowed sharply to USD 9.12 billion from USD 45.96 billion in the same period of the previous fiscal year.

India Previous Trade Deficit Smallest in 11 Years (June)

India’s trade deficit narrowed sharply to USD 3.15 billion in May 2020 from USD 15.36 billion in the same month last year and below market expectations of USD 7.0 billion. It was the smallest trade gap since February 2009, as the coronavirus pandemic hit global demand. Exports plunged 36.47 percent, mainly due to lower sales of gems & jewelry (-68.83 percent), petroleum products (-68.46 percent), engineering goods (-24.25 percent), electronic goods (-45.35 percent), and organic & inorganic chemicals (-12.71 percent). Imports slumped 51.05 percent, due to lower purchases of gold (-98.40 percent); petroleum, crude & products (-71.98 percent); coal, coke & briquettes (-44.93 percent); electronic goods (-40.32 percent); and machinery, electrical & non-electrical (-34.37 percent). Considering the first two months of the 2020-21 fiscal year, the trade gap shrank to USD 9.91 billion from USD 30.69 billion in the same period of the previous year.

India Posts Largest Trade Surplus on Record

India posted a trade surplus of $790 million in June, its first in over 18 years, with imports plunging as the coronavirus pandemic depressed domestic demand for crude oil, gold, and other industrial products, reflecting a slowing economy. Indian exports and imports have been falling since March and worsening India-China relations, shrinking global demand, and disruptions in supply chains are likely to pressure the trade outlook over the next few quarters, analysts said.

Asia’s third largest economy is projected to contract by up to 5 per cent this financial year, beginning April, from an earlier government estimate of nearly 6 per cent growth as an over two-month-long COVID-19 lockdown has hit economic activities and consumer demand.

Merchandise imports contracted 47.59 per cent in June to $21.11 billion from a year ago, while exports fell 12.41 per cent to $21.91 billion, leading to a marginal trade surplus, data released by the Ministry of Commerce and Industry on Wednesday showed.

India last posted a trade surplus – a slim $10 million – in January 2002, according to Refinitiv data.

Ajay Sahai, director general of the Federation of Indian Export Organisations (FIEO), said a marginal trade surplus was “good news.”

“However, we will have to analyse to what extent lockdown, import restrictions and slowdown in the domestic economy have contributed to the fall in imports,” he said, referring to a fall in raw material imports by exporters.

Prime Minister Narendra Modi has been pushing for import substitutions and has so far resisted industry pressure to sign a free trade agreement with the European Union.

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