Shreya_Anaokar Shreya Anaokar 15th December 2022

Indian Markets makes Advances

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According to  India's Ministry of Commerce and Industry's latest data, the US has become India's largest trading partner, exceeding China with bilateral trade reaching $ 119.42 billion. 

From the breakdown data, India's trade exports to the US increased from about $ 51.62 billion in the previous fiscal year to $ 76.11 billion, while imports increased from about $ 29 billion to about $ 43.31 billion. India's major exports to the US include polished diamonds, pharmaceutical products, jewelry, light oil and petroleum, frozen shrimp, cosmetics, and more. India's imports from the United States are mainly oil, liquefied natural gas, gold, coal, recycled products and scrap iron, large almonds, etc. The data also shows that the bilateral trade volume between India and China in the 2021-2022 fiscal year is about $ 115.42 billion, an increase of about 1/3 from the $ 86.4 billion in the previous fiscal year. 

Among them, India's exports to China are about $ 21.25 billion, and its imports to China are about $ 94.16 billion. It is reported that the trade volume of imported goods from China is increasing, and the top 100 imported items each have an import value of more than $ 100 million. Indian experts believe that India's dependence on China for imports of manufactured goods shows no sign of easing.

Inflation will return to the Reserve Bank of India’s mid-point target in the next two years with policy actions aimed at cooling price pressures set to take a toll on the economy. The inflation based on the consumer price index (CPI), would stay above the RBI’s target range of 2%-6% for the next three quarters. Failure to keep inflation within the mandated range for three straight quarters will force the RBI to write a letter to the federal government, explaining why it missed the target and lay out remedial measures. 

The RBI has already raised the benchmark repo rate by 90 basis points in the recent past and is poised to hike it further as the six-member rate-setting panel steps up its fight to cool prices. 

India witnessed a current account deficit of 1.2 percent of GDP in 2021-22 against a surplus of 0.9 percent in FY2020-21 due to a wider trade deficit. For the January-March 2022 quarter, the CAD narrowed on a sequential basis to $13.4 billion or 1.5 percent of GDP against $22.2 billion or 2.6 percent of GDP in the December 2021 quarter. A current account deficit occurs when the value of goods and services and other receipts by a country in a particular period. The trade deficit widened to $189.5 billion in FY22 from $1002.2 billion a year ago, which resulted in a slippage in the number which is considered a key representation of a country's external strength. The Balance of Payments data suggested that goods imports stood at $ 618.6 billion in FY22 as against $ 398.5 billion in the year-ago period, leading to the widening of the trade deficit.

 

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Disclaimer: Investment/Trading is subject to market risk, past performance doesn’t guarantee future performance. The risk of trading/investment loss in securities markets can be substantial. Also, the above report is compiled from data available on public platforms.

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