Adverse global headwinds impacted India’s goods and services exports which rose marginally by 0.8% year-on-year in the first eleven months of the current fiscal. Merchandise exports, which declined year-on-year by 3.4%, faced the brunt of the weakening international trading environment and creeping protectionism. Services exports remained relatively unscathed as they rose by 6.7%. The good news is that the overall deficit was lower by 35% as imports of goods and services shrank. Exemplifying the adverse global factors affecting our trade flows is the attacks on shipping vessels during the last five months by Yemeni Houthi forces in the Red Sea, which is the route to and from the Suez Canal and the quickest way for goods to transit between Asia and Europe.The Red Sea accounts for 15% global sea trade, including 8% of grain, 12% and 8% of seaborne oil and LNG respectively. India’s exports of goods and services amounted to $ 709.8 billion in April-February 2024, which is not very far from the $770 billion achieved in FY23 as a whole. India’s commerce and industry minister, Piyush Goyal, in recent interviews to the media, has stated the goods and services numbers in FY24 to be the same as in FY23.

India’s exports of goods and services holding their ground is an achievement considering that most developing countries witnessed a fall in their international trade. But the outlook this year is unlikely to improve. Besides the persisting global uncertainties, the ongoing tensions in the Red Sea are likely to hit India’s trade even harder. The Houthi attacks have prompted global shipping companies to reroute their vessels around Africa via the Cape of Good Hope which inflate costs as vessel journeys take one to two weeks longer. Transit times have risen by 30% and container shipping capacity has fallen by........

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