India's exports rise 3% in Jan, trade deficit narrows to 9-month low

India's exports rose by 3.1 per cent in January to $36.92 billion compared to $35.8 billion in the same month of the previous year despite the geopolitical crisis in the Red Sea region that has disrupted the global ship movement, data released by the Commerce Ministry on Thursday showed.

The country’s merchandise imports also increased by 3.0 per cent in January 2024 to $54.41 billion but were lower than $58.25 billion in December 2023.

The merchandise trade deficit narrowed to a 9-month low of $17.49 billion which reflected a strengthening of the macroeconomic fundamentals of the country that will help to reduce pressure on the rupee.

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

The attacks on merchant ships by Houthi rebels around the Red Sea have disrupted trade as shipments now have to be sent through the longer route via the Cape of Good Hope on the southern tip of Africa which has led to increase in transport costs. This has also slowed the overall movement of goods.

Around 80 per cent of India's goods trade with Europe, estimated at nearly $14 billion a month, normally passes via the Red Sea, according to the government data. These goods now have to traverse around 5,000 additional nautical miles on the longer route via Africa which takes another 15 days or so.