INDIA’S TRADE TRENDS

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Context

• India recorded a trade deficit, indicating a difference between imports and exports, with nine out of its top 10 trading partners in the fiscal year 2023-24, based on official data.
• Notable trading partners include China, Russia, Singapore, Korea, among others.

READ ALL ABOUT TRADE DEFICIT: https://www.iasgyan.in/daily-current-affairs/trade-deficit-33#:~:text=A%20trade%20deficit%20is%20an,a%20negative%20balance%20of%20trade.

TRADE TRENDS IN THE FISCAL YEAR 2023-24

Trends in Trade Deficit

• Increased Deficit: The deficit with China, Russia, Korea, and Hong Kong widened compared to the previous fiscal year.
• Narrowed Deficit: However, the trade gap with the UAE, Saudi Arabia, Russia, Indonesia, and Iraq narrowed during the same period.

Bilateral Trade Highlights

• China: Emerged as India's largest trading partner, surpassing the U.S., with $118.4 billion in two-way commerce in 2023-24.
• U.S.: Bilateral trade with the U.S. stood at $118.28 billion during the same period.
• Free Trade Agreements: India has free trade agreements with several top trading partners, including Singapore, the UAE, Korea, and Indonesia.

Trade Surplus

• India maintained a trade surplus of $36.74 billion with the U.S. in 2023-24, along with other countries like the U.K., Belgium, Italy, France, and Bangladesh.

Total Trade Deficit

• India's total trade deficit narrowed to $238.3 billion in the fiscal year 2023-24, compared to $264.9 billion in the previous fiscal year.

Analysis by Trade Experts

• Trade Deficit Not Always Negative: Trade experts suggest that a deficit isn't inherently bad if it involves importing raw materials to boost manufacturing and exports.
• Impact on Currency: However, a trade deficit can put pressure on the domestic currency, leading to depreciation.
• Economic Stability Concerns: Rising deficits can signal economic instability, affecting foreign investment and necessitating increased borrowing, which may deplete foreign exchange reserves. 

Measures for Deficit Reduction

• Export Boost: Experts emphasize the need to boost exports, reduce unnecessary imports, develop domestic industries, and manage currency and debt levels effectively to address trade deficits effectively.

READ ALL ABOUT TRADE DEFICIT: https://www.iasgyan.in/daily-current-affairs/trade-deficit-33#:~:text=A%20trade%20deficit%20is%20an,a%20negative%20balance%20of%20trade.

SOURCE: ECONOMIC TIMES