India Logs Trade Deficit With 9 Out Of 10 Trading Partners, China Leads At $83.2 Billion

In FY24, China also emerged as the largest trading partner for India with two-way commerce worth $118.4 billion, surpassing the US at $118.28 billion

India clocked a trade deficit with nine out of its top 10 trading partners, official data revealed. The data showed that the country witnessed a negative difference between imports and exports with majority of its trading partners including China, Singapore, Korea, and Russia in the 2023-24 fiscal year (FY24).

The data revealed that the country’s trade deficit with Korea, Russia, China, and Hong Kong rose in the last fiscal as compared to the 2022-23 fiscal year (FY23). Relatively, India’s trade gap with the UAE, Saudi Arabia, Russia, Indonesia, and Iraq narrowed in the period under review, reported PTI.

India’s trade deficit with China increased to $85 billion, while the deficit with Russia rose to $57.2 billion. The trade difference with Korea jumped to $14.71 billion and $12.2 billion in Hong Kong in the fiscal under review. 

In FY23, the trade deficit with China stood at $83.2 billion, with Russia at $43 billion, with Korea at $14.57 billion, and with Hong Kong at $8.38 billion.

In FY24, China also emerged as the largest trading partner for India with two-way commerce worth $118.4 billion, surpassing the US. The bilateral trade between US and India stood at $118.28 billion in the fiscal year under review. In FY24, India clocked a trade surplus of $36.74 billion with the US.

Elaborating on the trade trends, the economic think tank Global Trade Research Initiative (GTRI) noted that a bilateral trade with a nation isn’t a major problem unless it renders India too reliant on its trading partner’s critical supplies. “However, a rising overall trade deficit is harmful to the economy.A rising trade deficit, even from importing raw materials and intermediates, can cause the country's currency to depreciate because more foreign currency is needed for imports. This depreciation makes imports more expensive, worsening the deficit,” GTRI Founder Ajay Srivastava stated.

The think tank head shared that to manage the increasing deficit, the country might have to take more borrowings from foreign lenders and this can lead to rising external debt and exhaust forex reserves.