Answer to Question #233842 in Macroeconomics for pulli

Question

why did trade deficit decrease in India during 2016-18

Answer 1

China's trade deficit decreased from - 108.9 to - 182.3 (USD billion) between 2016 and 2018.

The trend in trade deficit was necessitated by many factors. First and foremost the increasing trade deficit in India is attributed to the fact that India's exports are majorly primary and intermediate products which have not undergone the process of value addition so as to fetch higher prices in the international markets.

Secondly, the volume of exports of India more especially cotton exports shrunk significantly over the same period necessitating a decrease in trade deficit during the period under question.

Decline of India exports like ores, slag and ash eti cetera to international markets like China have greatly impacted the trade deficit of India.