Lok Sabha Question No. 3467 (UNSTARRED), answered on 2024-12-17
Subject: Widening Trade Deficit
Ministry: COMMERCE AND INDUSTRY
Asked by: Shri V K Sreekandan

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY (DEPARTMENT OF COMMERCE)

## LOK SABHA UNSTARRED QUESTION NO. 3467 ANSWERED ON 17/12/2024

## WIDENING TRADE DEFICIT

## 3467.  SHRI V K SREEKANDAN:

Will the Minister of COMMERCE AND INDUSTRY ( वाणिज्य एवं उद्योग मंत्री ) be pleased to state:

- (a)         whether it  is  a  fact  that  India's  trade  deficit  has  widened rapidly in the last several years;
- (b)        if so, the trade deficit witnessed during the last two years and the current year, monthwise;
- (c)        whether it is also true that the huge imports from China are the main component of the bigger trade deficit;
- (d)       whether it is also true that the slowdown in our exports also contributes to the huge trade deficit; and
- (e)        if so the steps proposed to be taken up by the Government in this regard?

## ANSWER

## वाणिज्य और उद्योग मंत्रालय में राज्य मंत्री (श्री णिणिन प्रसाद ) THE MINISTER OF STATE FOR COMMERCE AND INDUSTRY (SHRI JITIN PRASADA)

- (a) & (b) The  month-wise  details  of  overall  trade  deficit/balance  (merchandise  plus services) for the last two years and the current year is as follows:

(value in US $ Billion)

| Month     |   2022-23 |   2023-24 | 2024-25   |
|-----------|-----------|-----------|-----------|
| April     |     -8.36 |     -2.62 | -5.94     |
| May       |    -12.19 |    -11.41 | -9.77     |
| June      |    -10.92 |     -7    | -7.98     |
| July      |    -15.24 |     -6.52 | -8.95     |
| August    |    -13.58 |    -10.37 | -15.81    |
| September |    -15.03 |     -6.22 | -4.67     |
| October   |    -14.48 |    -15.42 | -9.90     |
| November  |    -10.47 |     -6.31 |           |
| December  |     -7.84 |     -2.05 |           |
| January   |     -3.86 |      0.14 |           |
| February  |     -4.15 |     -5.61 |           |
| March     |     -5.48 |     -2.15 |           |
| Total     |   -121.59 |    -75.56 | -63.02    |

Source: DGCI&S & RBI

(c) & (d) Trade deficit depends upon relative fluctuations in the import and export of different commodities and services due to global and domestic factors such as demand and supply in domestic and  international  markets,  GDP  growth  of  domestic  and  foreign  countries,  currency  fluctuations, international prices, etc. Moreover, India's merchandise trade deficit has been high on account of a variety of reasons including the fact that most of the goods imported are capital goods, intermediate goods and raw materials and are used for meeting the demand of fast expanding sectors  like  electronics,  telecom,  gold,  petroleum  and  power  in  India  as  well  as  their utilization for domestic manufacturing and exports.

Also,  India's  overall  (merchandise  plus  services)  export  has  increased  from  US  $  436.51 billion during April-October, 2023-24 to US $ 468.46 billion during the same period of the year 2024-25, reflecting a positive growth of 7.32%.

(e) To  reduce  its  trade  deficit,  the  Government  of  India  has  taken  various  proactive measures  aimed  at  enhancing  domestic  capacities,  boosting  exports,  diversifying  supply chains, exploring alternate sources of imports and fostering economic resilience. This is part of  India's  broader  'Atmanirbhar  Bharat'  vision,  which  aims  to  make  India  a  strong manufacturing hub and reduce dependence on any single country. Moreover, in this era of globalization, as India is increasingly integrating with Global Value Chains, imports matter as much as exports for such integration. Further, the Government has taken following steps to boost exports from the country: -

(i) The Directorate General of Trade Remedies (DGTR) actively monitors unfair trade practices by foreign companies and recommend corrective remedial actions.

(ii) The  Government  is  also  encouraging  Vocal  for  Local  Campaign  by  promoting awareness among consumers and businesses to buy   Indian-made products, thereby aiming to reduce demand for imported goods.

(iii) Production  Linked  Incentive  (PLI)  Schemes  for  14  key  sectors  (with  an  incentive outlay  of  Rs.  1.97  lakh  crore)  are  under  implementation  to  enhance  India's  manufacturing capabilities and exports. The Production Linked Incentive (PLI) Scheme is positioning India as  a  key  player  in  the  global  value  chain  by  incentivizing  manufacturing  in  high-growth sectors  such  as  electronics,  pharmaceuticals,  and  renewable  energy.  The  PLI  scheme strengthens India's role in global supply chains, attracting significant FDI and integrating the country into critical production networks.

(iv) New  foreign  Trade  Policy  has  been  launched  on  31 st March,  2023  and  came  into effect from 1 st April, 2023.

(v) Interest Equalization Scheme on pre and post shipment rupee export credit has been extended upto 31.12.2024.

(vi) Assistance  provided  through  several  schemes  to  promote  exports,  namely,  Trade Infrastructure for Export Scheme (TIES) and Market Access Initiatives (MAI) Scheme.

(vii) Agricultural  &  Processed  Food  Products  Export  Development  Authority  (APEDA) has Central Sector specific scheme for Financial Assistance to facilitate the export of agri-

products  by  providing  assistance  to  exporters  for  augmenting  export  related  infrastructure, participating in Buyer Seller Meets, etc.

(viii) The  APEDA  is  implementing  the  National  Programme  for  Organic  Production (NPOP).  The  programme  involves  the  accreditation  of  Certification  Bodies,  standards  for organic production, promotion of organic farming and marketing etc.

(ix) The Marine Products Export Development Authority (MPEDA) provides assistance for upgrading the infrastructure facilities for value addition, establishing testing laboratories, participating  in  international  trade  fairs,  and  providing  technical  assistance  for  aquaculture production meant for exports etc.

(x) Quality  Control  Orders  (QCOs)  have  been  notified  by  Bureau  of  Indian  Standards (BIS)  for  improving  the  quality  of  Indian  products  and  to  prevent  import  of  substandard goods into Indian market.

(xi) Rebate of State and Central Levies and Taxes (RoSCTL) Scheme to promote labour oriented sector export has been implemented since 07.03.2019.

(xii) Remission  of  Duties  and  Taxes  on  Exported  Products  (RoDTEP)  scheme  has  been implemented  since 01.01.2021. With  effect from  15.12.2022, uncovered  sectors like pharmaceuticals, organic and inorganic chemicals and article of iron and steel has also been covered under RoDTEP.

(xiii) Districts  as  Export  Hubs  initiative  has  been  launched  by  identifying  products  with export  potential  in  each  district,  addressing  bottlenecks  for  exporting  these  products  and supporting local exporters/manufacturers to generate employment in the district.

(xiv) Common Digital  Platform  for  Certificate  of  Origin  has  been  launched  to  facilitate trade and increase Free Trade Agreement (FTA) utilization by exporters.

(xv) Active  role  of  Indian  missions  abroad  towards  promoting  India's  trade,  tourism, technology and investment goals has been enhanced.

(xvi) Regular monitoring of export performance with Commercial Missions abroad, Export Promotion Councils, Commodity Boards/ Authorities and Industry Associations and taking corrective measures from time to time.

(xvii) The  government  has  launched  Trade  Connect  ePlatform  on  11 th September  2024. Trade connect ePlatform is an information and intermediation platform on international trade bringing together Indian Missions Abroad and officials from Department of Commerce and other organisations to provide comprehensive services for both new and existing exporters.

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