Export and import growth decelerate in June

Merchandise exports growth eased to 2.6% on-year in June from 9.1% in May as oil exports contracted 18.2%. Non-oil exports, however, maintained momentum at 7.7% from 7.8% last month. Services export growth is expected to have been strong in June.

Merchandise imports also recorded slower growth at 5.0% on-year from a growth of 7.7% on-year in the previous month. This time, core imports, i.e., non-oil and non-gold¹ imports logged stronger growth at 7.1%, as compared to 0.8% growth in the previous month. That said, higher growth in core imports was partly led by the low base effect.

A higher growth in imports compared to exports saw merchandise trade deficit widen to $21 billion from $19.2 billion in June last year.

On a cumulative basis, merchandise exports rose 5.8% to $109.96 billion for the first quarter of fiscal 2025, from $103.9 billion in the year-ago period. This growth in exports in the first quarter of fiscal 2025 suggests that India has managed to keep its exports resilient in the wake of the ongoing conflict in Europe and the Middle East. Cumulative imports rose at a faster pace of 7.7% to $172.4 billion from $160 billion. As a result, trade deficit widened to $62.44 billion from $56.1 billion. It is also noteworthy that the trade deficit widened due to a higher oil trade deficit, while the non-oil trade deficit narrowed compared with last year.

Services exports were up 10.2% on-year, growing to $29.76 billion in May². At the same time, growth in services imports moderated to 5.4% on-year after hitting a high of 19.1% on-year in the previous month. Hence, the services trade surplus was recorded at $13.02 billion, up from $11.1 billion in May last year.

¹ Refers to gems and jewellery
² The latest data released by the RBI for the services sector is for May 2024