In a significant shift, India’s imports from Russia experienced a remarkable 64% surge, reaching USD 36.27 billion during the April-October period of the current fiscal year. This surge can be attributed to increased shipments of crude oil and fertilizers, as per data released by the commerce ministry.
Russia has now secured its position as India’s second-largest import source, surpassing the imports from countries like China and the United States during the first seven months of the fiscal year. In the corresponding period of the previous year, the imports from Russia stood at USD 22.13 billion, showcasing a substantial increase.
Before the Russia-Ukraine conflict, Russia held a market share of less than 1% in India’s import basket. However, in the aftermath of the conflict, Russia’s share of India’s oil imports has surged to over 40%. This shift is notably significant as India, being the world’s third-largest crude importer after China and the United States, has turned to Russian oil after some Western countries-imposed sanctions, avoiding it as a form of punishment for Russia’s invasion of Ukraine.
Meanwhile, imports from China experienced a marginal dip to USD 60.02 billion during the period, compared to USD 60.26 billion in the corresponding period last year. Similarly, imports from the United States saw a 16% decline to USD 24.89 billion from USD 29.56 billion last year. Imports from the UAE also contracted by 21%, amounting to USD 24.91 billion during the same period.
The data further reveals a contraction in imports from other major countries, including Saudi Arabia, Iraq, Indonesia, Singapore, and Korea, during the first seven months of the fiscal year.
Among the top 10 import source nations for India, Switzerland witnessed an increase in imports to USD 13.97 billion, up from USD 10.48 billion in April-October 2022. This surge can be attributed to gold imports.
Shifting focus to the export front, India’s merchandise exports to six of its top-10 destinations recorded negative growth rates during the period. Exports to the US, the UAE, Singapore, Germany, Bangladesh, and Saudi Arabia declined. However, exports to the UK, Australia, and the Netherlands showed positive growth.
Notably, outbound shipments to China rose to USD 8.92 billion during the period under review from USD 8.85 billion in April-October 2022.
In October this year, India’s overall merchandise exports increased by 6.21%, reaching USD 33.57 billion. However, the trade deficit ballooned to USD 31.46 billion during the same month, according to government data released on Wednesday.
The surge in imports from Russia underscores the evolving dynamics in India’s trade relationships, especially in the wake of geopolitical developments. With Russia emerging as a crucial source for essential commodities like crude oil and fertilizers, India’s economic ties with the nation have deepened, offering a degree of resilience in the face of shifting global trade patterns.
Despite the positive trajectory in India’s overall merchandise exports, the widening trade deficit in October raises concerns. The ballooning deficit, reaching USD 31.46 billion, reflects the challenges posed by the increased import bill. The government may need to strategize and balance trade relationships to ensure sustainability and mitigate the impact of deficits on the country’s economic landscape.
Looking ahead, the fluctuations in trade relationships and the resilience displayed by India’s import-export sector in navigating global uncertainties remain critical. The diversification of import sources and the sustained growth of exports to certain destinations underscore the need for a nuanced approach in India’s trade policies. The government and stakeholders will likely closely monitor these trends to formulate adaptive strategies for the country’s economic resilience and competitiveness on the global stage.