India’s merchandise exports saw broad-based deceleration in October as global demand continued to slow. At $29.8 billion, exports were down 16.7% (on-year), and touched a 20-month low.

Both oil and non-oil exports fell, with the latter seeing a bigger decline. High inflation and rising interest rates are landing a double whammy on consumption and investment demand, especially in the advanced economies.

To be sure, a part of the sequential decline in the dollar value of exports can also be attributed to softer international commodity (both energy and non-energy) prices in October.

Merchandise imports, however, continued to grow on-year, albeit at a slower pace. At $56.7 billion, imports were up 5.7% on-year in October (vs. 8.7% in September), primarily because of higher oil imports (reflecting an uptick in crude oil prices in October after OPEC+ announcement on reducing oil supplies).

While core imports saw on-year growth, they declined sharply sequentially, in part due to fall in global commodity prices. It may still be early to say if pressure is building on domestic demand.

Declining exports and rising imports led to a wider trade deficit of $26.9 billion in October 2022, compared with $17.9 billion in October 2021. Sequentially, too, trade deficit widened from $25.7 billion in September 2022.

On a cumulative basis from April to October 2022, merchandise exports were up 11.8% on-year to $261.6 billion, while imports rose 33.2% to $437.0 billion. As a result, cumulative trade deficit was $175.4 billion, up from $94.1 billion in the year-ago period.