That’s because the multi-billion dollar trade deficit represents product demand opportunities for exports to India since the country is a net spender on a specific set of goods highlighted below.
Drilling down from its overall negative balance, India performed worst in its international trade with fellow Asian countries incurring a -$89.3 billion shortfall. Exporters from the Middle East also profited, accounting for a -$25.2 billion trade deficit at India’s expense. African exporters also satisfied India’s product demand as born witness by a -$8.1 billion negative trade balance for India during 2015.
Country-specific trade deficits indicate India’s competitive disadvantages and areas which foreign businesses can and do exploit. India accumulated the world’s third-biggest trade deficit during 2015, outdone only by the United States and the United Kingdom.
Nevertheless, there is a glimmer of good news: India’s trade deficit in 2015 shrank by 21.5% since 2011 when its negative balance totaled -$160.9 billion.
Product Demand Opportunities for Exports to India
- Top 10
- Growth
- Detail
Top 10
The following list shows the top 10 general product categories under which India racked up the severest trade deficits during 2015.
- Mineral fuels including oil: -US$73.3 billion (35.4% of all product-level deficits)
- Electrical machinery, equipment: -$28 billion (13.5%)
- Gems, precious metals: -$21.1 billion (10.2%)
- Machinery including computers: -$18.8 billion (9.1%)
- Animal/vegetable fats, oils: -$9.6 billion (4.6%)
- Fertilizers: -$7.4 billion (3.6%)
- Plastics, plastic articles: -$6.3 billion (3.1%)
- Iron, steel: -$5.4 billion (2.6%)
- Ores, slag, ash: -$5.2 billion (2.5%)
- Optical, technical, medical apparatus: -$4.9 billion (2.4%)
The above top 10 product categories generate a subtotal deficit of -$180 billion, an amount 1.4 times higher than India’s overall deficit of -$126.4 billion. For that subtotal, 49 of India’s 97 general product categories incurred deficits in 2015 while the remaining 49 categories delivered surplus amounts.
Growth
Detail
Major Product Demand by India’s Supplying Countries
- Top 10
- Growth
- China
- Switzerland
- Saudi
Top 10
The following list presents trade partners with which India racked up the highest trade deficits in 2015.
- China: -US$44.8 billion (18.1% of Indian country-specific deficits)
- Switzerland: -$20 billion (8.1%)
- Saudi Arabia: -$19.6 billion (7.9%)
- Qatar: -$15.3 billion (6.2%)
- Iraq: -$15.3 billion (6.2%)
- Kuwait: -$13.8 billion (5.6%)
- Venezuela: -$13 billion (5.2%)
- Nigeria: -$12.8 billion (5.2%)
- Indonesia: -$10.7 billion (4.3%)
- South Korea: -$8.6 billion (3.5%)
The above 10 trade partners represent an Indian trade deficit subtotal of -$272.9 billion. That amount that is offset by deficits with 72 other geographic entities with which India posted negative trade balances plus surpluses that India achieved with with 136 more partners, arriving at the overall -$126.4 billion trade deficit for India during 2015.
Growth
China
Switzerland
Saudi
See also India’s Top 10 Imports, India’s Top Import Partners, India’s Top 10 Exports and Highest Value Indian Export Products
Research Sources:
The World Factbook, Country Profiles, Central Intelligence Agency. Accessed on August 31, 2016
Trade Map, International Trade Centre. Accessed on August 31, 2016
Investopedia, Net Exports Definition. Accessed on August 31, 2016