India's foreign trade in 2023: Its top trading partners and most traded commodities

Foreign trade registers a deficit of $203 billion; crude oil is India's most imported commodity, while refined petroleum oil and other petroleum products are its most exported commodities

By Fazal Rahim Forbes India Staff

Published: Dec 29, 2023 04:55:57 PM IST

Updated: Dec 29, 2023 05:04:49 PM IST

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Although India’s trade surplus with the United States has increased by almost $1 billion, the total trade between the two countries has decreased by over $9 billion, which was over $109 billion in October 2022. Image: Shutterstock

India’s total foreign trade in this calendar year crossed the $1 trillion mark in November. India exported $422.23 billion worth of commodities and services, while imports stood at $625.87 billion till November. According to Ministry of Commerce and Industry data, India’s foreign trade registered a deficit of $203 billion for the 11 months of this calendar year; however, compared to the same period last year, it has decreased by $40 billion.

The United States is India’s biggest trading partner, with total trade between the two countries amounting to almost $100 billion till October of this calendar year. With exports worth $63.36 billion and total imports amounting to $36.50 billion, India has achieved the highest trade surplus of over $26 billion from its foreign trade with the United States.

The United States is also the most prominent destination of India’s services exports. India had exported $163 billion worth of services by September this year; a large chunk of it went to the United States. “The figures demonstrate India’s persistence and relevance in the global service trade arena. The United States, as the largest market for our services, continues to be a fundamental driver of our performance. Despite the pandemic’s hurdles, India’s dedication to building a rich talent pool and sustaining Atmanirbhar Bharat initiatives has made us a strong partner to the US, driving our services exports,” says Balaji Viswanathan, MD & CEO, Expleo India, a global engineering, technology and consulting service provider.

China is India’s second biggest trading partner, with over $95 billion worth of commodities and service transactions between the two biggest economies of Asia. However, India has had the highest trade deficit from its trading relations with China, which amounted to almost $70 billion till October this year.

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“India’s substantial reliance on Chinese imports, encompassing raw materials and finished goods, further exacerbates the issue. While Chinese companies find it relatively easy to access the Indian market, the reverse is hindered by non-tariff barriers. A wholehearted commitment to the Make in India initiative is essential for mitigating the trade deficit with China in the ensuing decades,” says Vishal Sharin, Professor of Economics at Mittal School of Business.

India’s total imports from China stood at $82.65 billion till October in the current calendar year, a decrease of $5 billion from last year. Electronics alone comprise over 26 percent of India’s total imports from China. India’s exports to China only grew by $220 million, amounting to $13.19 billion by October this year.

Crude oil is India’s highest imported commodity in 2023. The total value of imported crude oil reached $182 billion in October. Russia, Iraq, Saudi Arabia, and the United Arab Emirates are India’s biggest oil-exporting partners. This year, India has made significant changes in its oil importing policies, leading to a high rise in crude oil imports from Russia.

Commenting on the recent changes in India’s oil import policies, Sharin says, “The precarious geopolitical situation in the Middle East has emerged as a pivotal factor, compelling India to proactively diversify its energy sources. The precarious geopolitical situation in the Middle East has emerged as a pivotal factor, compelling India to proactively diversify its energy sources.”

Last year, India’s total imports from Russia were $25.4 billion, which has increased to $51 billion by October this year. Crude oil is about 88 percent of India’s total imports from Russia. India’s exports to Russia by October were only $3.3 billion.

Although India has increased crude oil imports from Russia, there has been no significant reduction in oil imports from the Middle East. Saudi Arabia and the United Arab Emirates remain significant oil exporters for India as the imports from these countries amounted to $28.26 billion and $37.60 billion, respectively, by October.

“Through collaborative endeavours with other oil-importing nations, India aims to exert influence on OPEC’s decision-making processes, contributing to the establishment of a more balanced and transparent global energy market,” adds Sharin.

Despite promising export growth to Saudi Arabia and the United Arab Emirates, India still has a trade deficit with the two countries. With exports worth $8.9 and $26.35 billion to Saudi Arabia and UAE, respectively, the total trade deficit for the two countries was $19.36 and $11.25 billion till October of this calendar year.

Besides crude oil, electrical machinery and equipment are India’s second most imported commodity. India imported $62.9 billion worth of electrical machinery till October. Precious stones and metals, including gold, are the third-highest imported commodities by India. The total value of imported precious stones and metals reached $61.5 billion in October. Nuclear reactor machinery and organic chemicals are next on the list, imported for $47.67 billion and $23.15 billion, respectively.

While crude oil is India’s most imported commodity, refined petroleum oil and other petroleum products are its most exported commodities. India exported $74.63 billion worth of petroleum products by October this year. Precious stones, metals, pearls, and jewellery are the second most exported commodities of India, valued at $27.69 till October. Electric and nuclear machinery are next in India’s most exported items, which amounted to $26.6 billion and $24.4 billion, respectively. Pharmaceutical products are the fifth most exported product of India. The total value of exported pharmaceutical products in this calendar year amounted to $17.63 billion till October.