India's Trade Deficit Expands to $23 Billion in January

India’s trade deficit widened to $22.9 billion in January, increasing from $21.94 billion in December, primarily due to a surge in imports and a depreciating rupee. According to provisional data released by the Commerce Ministry on February 17, exports registered a modest growth of 1.39% during April-January, whereas imports rose significantly by 7.43%.

Increased Imports and Revised December Data

The widening trade deficit in January, reaching $22.9 billion from December’s $21.94 billion, was attributed to higher imports surpassing export growth. January’s export figures stood at $36.43 billion, while imports climbed to $59.4 billion.

Economists had earlier projected a trade deficit of $22.35 billion for the month. December’s deficit, initially reported as $37.84 billion, was later revised to $32.84 billion following adjustments in gold import data.

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For the April-January period of the current fiscal year, India’s exports saw a slight increase of 1.39%, reaching $358.91 billion, while imports surged by 7.43% to $601.9 billion.

Growth in Merchandise and Services Despite Trade Deficit

Trade Secretary Sunil Barthwal highlighted the strong performance of India’s merchandise and services exports, despite the trade gap. Merchandise exports for January were valued at $36.43 billion, slightly lower than December’s $38.01 billion. Imports in January amounted to $59.42 billion, a marginal dip from December’s $59.95 billion.

The services sector, however, exhibited robust growth, with January’s exports estimated at $38.55 billion—up from $32.66 billion in December. Services imports also increased, reaching $18.22 billion compared to $17.50 billion in the previous month.

Rupee Depreciation Escalates Import Costs

While exports showed resilience, the Indian rupee’s depreciation has exacerbated the trade deficit. The currency has weakened by 1.4% against the U.S. dollar since the start of the year, inflating the cost of imports, particularly as India relies on imports for nearly 90% of its oil consumption.

A weaker rupee raises the cost of essential imports such as edible oils, pulses, and fertilizers, with crude oil remaining a major factor in India’s widening trade imbalance.