India's exports decline over 12% YoY in December, trade deficit at $23.76 billion

India's goods exports dropped 12.2% year on year in December to $34.5 billion as the deepening global slowdown dented consumer demand across most of the developed world and many emerging economies.

The drop in imports was less as the growing Indian economy continued to ship in inputs and goods. Imports declined to $58.2 billion in December against $60.3 billion in the same month last year, as per data released by the commerce and industry ministry on Monday.

India's merchandise trade deficit in December widened to $23.8 billion against $21.1 billion a year ago.

"The US and Europe are facing recessionary trends. In China, there is huge demand reduction. So, we are facing a lot of headwinds," commerce secretary Sunil Barthwal said. "Our export competitiveness has held its head high despite the strong headwinds we're facing," he added.

During April-December, overall goods exports rose 9% to $332.8 billion while imports were up by a quarter at $551.7 billion.

"Encouragingly, non-oil, non-gold exports rose, albeit only slightly, despite global growth headwinds and the decline in exports across Asia," Rahul Bajoria of Barclays said in a note.

Eleven out of 30 export sectors reported growth.

Among the key export items, engineering goods shipments declined about 12% on year in December to $9.1 billion while those of gems and jewellery fell 15.2% to $2.54 billion. Petroleum products exports contracted almost 27% to $4.9 billion in December.

In April-December, the US was the largest export destination for India with a growth of 6.8% at $59.57 billion, followed by the UAE, Netherlands, Bangladesh, and Singapore.

While trade deficit rose in December, reversing several months of declining trend, experts expect imports to decline in the coming months with commodity prices easing, helping bring down the merchandise trade gap.

"We believe the current account deficit has likely peaked in Q2 FY2023, and foresee a moderation to $25-29 billion each in the subsequent two quarters," said Aditi Nayar, chief economist at ratings agency ICRA.