India's Merchandise Exports Contract in July Amid High Domestic Oil Demand

India's merchandise exports fell by 1.5% in July due to weak oil, gems, and jewellery exports as well as high domestic demand for oil products, increasing imports. Crisil Ratings reports early fiscal year growth and highlights increased foreign trade agreements as potential boosters.

India's merchandise exports experienced a 1.5% contraction in July, driven by weak performance in oil, gems, and jewellery exports, combined with high domestic demand for oil products, according to a report by Crisil Ratings. The rising domestic demand led to an increase in imports, further dampening export figures.

Crisil Ratings retains a positive outlook, noting that the current fiscal year commenced on a strong footing with steady growth in merchandise exports during the first quarter. They emphasized that the government's focus on foreign trade agreements could bolster export performance. The agency, however, remains cautious about the sustainability of July's export dip.

In July, India's merchandise exports totaled USD 33.9 billion, showing a core export growth of 5.7%. Categories like electronic goods, meat, dairy, and poultry products saw significant on-year increases, while gems and jewellery, ceramic products, and chemicals faced declines. The overall growth in merchandise imports was notably higher, resulting in the widest monthly trade deficit in nine months.