India saw strong trade momentum in December quarter: Unctad

India’s goods and services trade showed strong momentum in the December quarter of 2024, the United Nations Conference on Trade and Development’s (Unctad’s) monthly publication Global Trade Update said.

The report, released on Sunday, however, cautioned that global trade could be affected by shifts in US policy and geopolitical tensions.

India’s exports of goods and services reached $817.4 billion last year, which is a 6.3% increase from 2023, the report stated. This outpaced the global annual trade growth rate of 3.7%.

In the December quarter alone, India’s goods exports grew by 7%, and services exports increased by 3%. Meanwhile, China also had a 5% increase in goods exports during the same period.

Unctad noted that developing countries, especially India and China, had better-than-average trade expansion, while many developed countries reported trade contractions.

Despite this, India continues to face challenges surrounding high tariffs and a growing trade deficit.

The Unctad report noted that South Asia, including India, is subjected to some of the highest tariff rates globally, and has an average of 4% on exports and 8% on imports.

While developed countries often impose lower tariffs, they have “tariff peaks” exceeding 100% on several agricultural products.

India, along with other developing countries, impose higher import duties to protect emerging industries and generate revenue. The taxes on global trade contribute between 10-30% of government income in some cases.

India’s trade deficit continues to remain a concern, primarily in its trade relationships with China and Russia.

Last year, India’s trade deficit with China was recorded at $103 billion, making it the seventh-highest among bilateral trading partners. The deficit with Russia reached $65 billion, ranking twelfth.

The growing gap with China is said to be because of a decline in Indian exports, while the increasing deficit with Russia is linked to large imports of crude petroleum.

Indian oil companies have sought cost-effective crude supplies as international sanctions on Moscow continue, refining the imports and exporting finished petroleum products to other markets.