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India's merchandise trade deficit narrowed to $17.49 billion in January, lowest in nine months, as exports edged up by 3.1 percent year-on-year despite the ongoing crisis in the Red Sea disrupting trade as commercial vessels traversing through the Suez Canal face attacks from Yemen-backed Houthi rebels.

The merchandise trade deficit stood at $19.80 billion in December 2023.

The January goods trade deficit print is the lowest since April 2023 when the gap came in at $15.24 billion.

According to data released by the commerce ministry on February 15, India's exports in the first month of 2024 amounted to $36.92 billion, up from $35.80 billion in January 2023 but down from $38.45 billion in December 2023.

"Despite the Red sea crisis, continued recession in advanced nations, and falling commodity prices we have been able to achieve positive merchandise export growth rate," Commerce Secretary Sunil Kumar Barthwal said in a briefing.

The key drivers of merchandise exports growth in January 2024 were petroleum products, engineering goods, iron ore, electronic goods, among others. Outbound shipments of petroleum products grew 6.57 percent to $8.21 billion in January 2024 on a year-on-year basis.

Meanwhile, India's merchandise imports were also up 3.0 percent year-on-year last month at $54.41 billion, although they were down from $58.25 billion in December 2023.

For April 2023-January 2024 as a whole, India's goods exports stood at $353.92 billion, down 4.9 percent from the first 10 months of 2022-23. Imports were down an even greater 6.7 percent year-on-year at $561.12 billion. As a result, the merchandise trade deficit was nearly 10 percent lower at $207.2 billion in April 2023-January 2024.

Barthwal told reporters on February 15 that while the global situation, given the conflicts, is not looking very optimistic, the government will continue to work with exporters to ensure outbound shipments keep growing.

Overall trade deficit (goods and services combined) is expected to improve by 37.11 percent in April-January 2023-24 on a year-on-year basis, while merchandise trade deficit has narrowed by 9.66 percent during the same period.

India’s overall exports (merchandise and services combined) in January 2024 is estimated to be $69.72 billion, exhibiting a positive growth of 9.28 percent on-year, whereas overall imports are projected at $70.46 billion, up 4.15 percent over January 2023.

India's commerce ministry expects services exports, a consistent bright spot for the country's overall trade dynamics, to see a jump of 17.14 percent in January 2024 year-on-year, while services imports are estimated to witness a relatively smaller growth rate of 8.22 percent during the same period.