On Wednesday, the parliament was informed that India's trade deficit widened in the last 3 years with 25 major countries including Japan, South Korea, Saudi Arabia, Iraq and Germany. A trade deficit occurs when a country's imports are larger than its exports.
In his written reply to the Lok Sabha, Commerce Minister Piyush Goyal said that the trade deficits depend on relative fluctuations in the imports and exports of different commodities on account of global and domestic factors like demand, supply, currency fluctuations, cost of credit and logistics costs.
He further said the increase in trade deficit despite positive growth of exports was mainly due to higher imports of products such as crude oil, electronic goods, iron and steel, chemicals, coke, fertilisers, and machinery. These products made for over 70 percent of the share in total imports in financial year 2018-19.
Trade deficit with South Korea, Japan, Germany, Iraq and Saudi Arabia increased to USD 12 billion, USD 7.9 billion, USD 6.25 billion, USD 20.58 billion and USD 22.9 billion, respectively, in 2018-19.
The minister added that the government has taken several steps to boost India's exports and minimise the impact of trade deficit, which include improving ease of doing business, scheme for development of trade related infrastructure, and scheme to mitigate disadvantage of higher cost of transportation for export.