India’s merchandise trade deficit moderated to USD 19.4 bn in Sep-23 from USD 21.7 bn in Aug-23.

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Oct 14, 2023

QuantEco Research || Sep-23 Merchandise Trade - Deficit moderates, revisions escalate

Bulk of the moderation in Sep-23 trade deficit was on account of Chemicals, Gems & Jewellery, Machinery Items, and Ores & Minerals. We note that sizeable upward revision in the case of petroleum trade data has once again started to reduce the magnitude of trade gap. This calls for closer scrutiny by data collection agencies as it complicates the signal for policymakers. Notwithstanding the sizeable data revisions, the monthly merchandise trade deficit could carry an upward bias in the coming months on account of festive season demand, hardening of international commodity prices, lower reliance on Russia for crude imports, and administrative exim interventions by the government to curb inflationary pressures.  Overall, we maintain our forecast for FY24 current account deficit at USD 67 bn, unchanged from FY23 levels, and look for sequential widening of merchandise trade deficit in H2 vis-à-vis H1 of FY24.