India’s Foreign Trade Raises Concerns: What Startups Can Do?

India’s foreign trade narrative is going through a drastic low. New data from the Ministry of Commerce and Industry has unveiled a dramatic surge in the trade deficit, raising questions about whether the country’s economic ship is sailing in the right direction.

In November 2024, the merchandise trade deficit swelled to $37.84 billion, up from $27.1 billion in October, as imports outpaced exports at an alarming rate. This economic disparity is not just a number—it signals an urgent call to action for policymakers, businesses, and the burgeoning Indian startup ecosystem. Wondering what startups can do here? Read on as TICE analyses the role of startups in overcoming these concerns, while highlighting the key numbers.

Can Startups Step Up Amidst Rising Imports and Declining Exports?

Startups have long been seen as the backbone of India’s economic transformation, and this trade conundrum presents an opportunity for them to innovate solutions. Merchandise exports in November stood at $33.75 billion, showing a 9.6% year-on-year increase, but imports surged by a staggering 27.48% to $87.63 billion. This growing gap underscores the need for India to strengthen its domestic production capabilities, a mission where startups can play a pivotal role by driving innovation in manufacturing, sustainability, and technology.

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Diving into the Numbers

Between April and November 2024, goods and services exports collectively rose by 7.61% year-on-year to $536.25 billion. Imports during this period, however, grew even faster, increasing by 9.55% to $619.20 billion, resulting in a cumulative trade deficit of $82.95 billion—a jump of 23.96% compared to last year.

While exports of petroleum products and gems & jewelry recorded declines, positive trends emerged in engineering goods, electronics, pharmaceuticals, chemicals, textiles, and cotton yarn. Startups focusing on advanced manufacturing, deep tech, and export-oriented goods have a golden opportunity to tap into these growing markets and reduce India’s reliance on imports.

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Gold Imports Surge: A Challenge or an Opportunity?

India’s gold imports reached a record $14.8 billion in November. Between April and November 2024, gold imports climbed by 49% year-on-year to $49.08 billion. Geopolitical tensions, festive demand, and reduced customs duties contributed to this surge. However, this also opens up avenues for startups in fintech and investment-tech to create innovative products that redirect consumer investments from gold to other high-yielding asset classes, thereby reducing dependence on gold imports.

A Persistent Trade Deficit Since 1980: How Startups Can Change the Narrative

India’s trade deficit, a challenge since 1980, is driven by its dependency on imported mineral oils, petroleum, and electronics. However, India’s startup ecosystem has proven its ability to disrupt industries and offer scalable solutions. Deep-tech startups working on renewable energy, electronics manufacturing, and sustainable alternatives could address these pain points, significantly reducing import reliance over time.

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Trade Relations and New Markets

Between April and November 2024, India’s imports from China grew by 10%, highlighting its reliance on Chinese goods. However, exports to the US, UAE, and Europe saw an uptick. Indian startups in sectors like SaaS, fintech, and agri-tech are uniquely positioned to penetrate these global markets and balance the trade equation. With the right policy support, they could further strengthen India’s export portfolio.

The Role of Startups in Achieving India’s Ambitious Export Target

The Commerce Secretary remains optimistic about achieving India’s $800 billion export target. Startups can play a crucial role in this vision by contributing to export-driven growth across key sectors. From engineering goods to pharmaceuticals and textiles, startup-driven innovations can enhance product quality, optimize supply chains, and explore untapped markets.

India’s foreign trade challenges are a clarion call for innovation and disruption. The country’s robust startup ecosystem can bridge gaps by reducing import dependency and boosting exports through advanced manufacturing, renewable energy, and tech solutions. Policymakers must create a conducive environment for startups to scale globally, while also incentivizing domestic production.

With a strategic focus on innovation, collaboration, and market expansion, startups can transform India’s trade story from a deficit-driven narrative to a growth-centric one. The road ahead is challenging but brimming with opportunities for India’s entrepreneurial minds to reshape its economic future.

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