India's Trade Deficit Decline Opens Doors for Domestic Industry Growth: FIEO

Synopsis

The recent drop in India's trade deficit signals a potential for domestic industries to thrive, according to FIEO. While exports are challenged, the decline in imports suggests a shift in consumer demand. FIEO emphasizes the need for targeted efforts to enhance export growth as a means for economic advancement.

Key Takeaways

Decline in trade deficit indicates potential growth.
Imports fell significantly, reflecting cautious consumer behavior.
Merchandise exports rose slightly, bolstering economic optimism.
FIEO calls for targeted initiatives to boost exports.
Focus on export diversification and new market exploration.

New Delhi, March 17 (NationPress) The decrease in India’s trade deficit is an encouraging indication that the sector is starting to rebalance, creating opportunities for local industries to flourish, stated the Federation of Indian Export Organisations (FIEO) on Monday.

Despite facing some obstacles, particularly from the global tariff conflict, the significant drop in imports reflects a decreased demand for foreign products.

According to the latest statistics from the Ministry of Commerce and Industry, India's merchandise trade deficit shrank to an over 3-year low of $14.05 billion in February, down from $22.99 billion in January, as exports remained stable while imports fell.

Merchandise exports rose by 1.3% to $36.91 billion in February, compared to $36.43 billion in January, whereas imports plunged by 16.3% to $50.96 billion from $59.42 billion the previous month.

Ashwani Kumar, President of FIEO, noted that this drop in imports is a positive sign for manufacturing and a shift in domestic demand, indicating that Indian consumers and businesses are becoming more selective regarding imported goods.

Kumar expressed hope that the narrowing trade deficit — fueled by the reduction in imports — could represent a key opportunity for India’s economic growth.

However, he emphasized the necessity for a unified effort to rejuvenate export growth, especially through targeted strategies that enhance India’s competitiveness globally.

Importantly, cumulative merchandise and services exports from April to February of this fiscal year saw a notable increase of 6.24%, reaching $750.53 billion, up from $706.43 billion last year.

To leverage this growth, FIEO urged the government to implement focused support aimed at boosting exports.

This includes broadening the scope of the Production-Linked Incentive (PLI) scheme and enhancing access to competitive financing for exporters.

Kumar also stressed the need to address non-tariff barriers, improve market access, and strengthen India’s integration into global value chains to secure ongoing export growth.

Additionally, the FIEO President advocated for a concentrated approach to export diversification, encouraging the exploration of new markets and products along with continued trade facilitation measures.

With the appropriate strategic initiatives, India’s export sector can regain its momentum and significantly contribute to the nation’s economic growth in the forthcoming months, he concluded.