India’s merchandise exports fell for the sixth consecutive month in January 2020. Trade deficit has risen to a seven-month high. The increase in the January merchandise trade deficit has primarily been led by a sharp rise in crude oil imports, which will subside in February because of the correction in crude oil prices.

During the first 10 months of the current fiscal year, exports have contracted 1.9 per cent while imports have shrunk 8.1 per cent. Weakening external sector will put additional pressure on India’s fledgling economic growth, which is estimated to decelerate to an 11-year low of five per cent this year. Out of the 30 major items each in India’s export and import baskets, 21 export items and 17 imported goods witnessed contraction. While exports of readymade garments fell by five per cent, gems and jewelry dropped by 11.6 per cent and engineering goods lost four per cent during the month. However exports of pharmaceuticals, electronics goods, petroleum products and chemicals made a recovery. Among major imports, coal fell by 24.4 per cent, chemicals by 12 per cent, gold by 31.5 per cent and electronics goods shrank by 4.7 per cent. However, signaling a recovery in domestic industrial activity, imports of machinery and transport equipment rose.