India’s trade deficit could soon double to $200 billion, as demand drives up imports

The unfavorable gap between India’s imports and exports is expected to widen further in the current and the next financial year, with the trade deficit soon doubling to hit the $200 billion level. India reported record exports and imports trade deficit numbers for the month of December. The record trade numbers in December were likely on the back of positive price effect, seasonal uptick, and buoyancy in global and domestic demand, according to a note from Kotak Securities.
The country’s trade deficit is expected to widen to $190 billion in the current fiscal year 2021-22, and further to $200 billion in the next fiscal year 2022-23, according to Kotak Securities. This compares with the $102 billion deficit reported in the last financial year 2020-21. Analysts at brokerage firm Emkay Global Financial Services said that going ahead, factors such as the new global and domestic headwinds amid the new omicron variant and persistent supply constraints need to be watched out for as they could slow the cyclical global recovery.