Services Are India's Export Strong Suit

India has been battling a large trade deficit lately. A closer look at a breakdown of the country's net exports of goods and services shows where the pain points are. While exports are exhibiting a trade deficit and large fluctations, services are showing a growing trade surplus. Yet, the country's good performance in services exports could not yet lift the country out of an overall trade deficit with the rest of the world.

Indian merchandise exports have been exceptionally weak throughout 2024, with the deficit for goods traded widening to $37.8 billion in November, before recovering to $21.5 billion in March. However, merchandise export were still weaker compared to one year ago, when the March goods trade deficit stood at just $15.6 billion.

Among the U.S. trade war that has been narrowing in on China, other Asian nations are eyeing stronger exports to the United States, providing an alternative to highly tariffed Chinese goods. However, in the case of India, domestic manufacturing is not in a position of export strength to easily swoop in and gain U.S. export shares.