Rising Imports, Weak Rupee Push India’s January Trade Deficit to $22.9 Billion

India’s trade deficit expanded to $22.9 billion in January, up from $21.94 billion in December, driven by high imports amid a weak rupee. Exports grew by 1.39% during April-January, while imports surged by 7.43%, according to provisional data released by Commerce Ministry on February 17.

Rising Imports and Revised December Figures

India’s trade deficit expanded to $22.9 billion in January, compared to $21.94 billion in December, as rising imports outweighed the growth in exports. Exports for January were recorded at $36.43 billion, while imports surged to $59.4 billion.

Economists had anticipated a trade deficit of $22.35 billion for the month. The deficit in December was initially reported as $37.84 billion, but was later revised to $32.84 billion after adjustments to gold import figures.

During the April-January period of the fiscal year, India’s exports increased by 1.39% to $358.91 billion, while imports grew by 7.43% to $601.9 billion.

Merchandise and Services Show Growth Despite Trade Deficit

As per news reports, Trade Secretary Sunil Barthwal emphasised that India’s merchandise and services exports are performing well. Merchandise exports in January stood at $36.43 billion, lower than $38.01 billion in December.

Imports in January totalled $59.42 billion, a slight decrease from December’s $59.95 billion.

Services exports saw a substantial increase, with January exports estimated at $38.55 billion, compared to $32.66 billion in December. Services imports also grew to $18.22 billion from $17.50 billion in the previous month.

Rupee Depreciation Drives Up Import Costs

Despite the positive performance in exports, the weakening of the Indian rupee has contributed to a larger trade deficit. The rupee has depreciated by 1.4% against the dollar since the beginning of the year, which has added to the import bill, particularly since India imports around 90% of its oil needs.

A weaker rupee results in higher costs for essential imports, such as edible oils, pulses, fertilisers, and especially oil and gas, with crude oil imports being a significant contributor to India’s trade imbalance.

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