What is India Trade Deficit?
India Trade Deficit means India buys more things from other countries than it sells to them. If India spends more money to bring goods in, and earns less money from sending goods out, that is called a trade deficit. When the gap becomes smaller, we say the India Trade Deficit shrinks.
Now, good news! In November 2023, India’s trade deficit with Australia became smaller by 15%. This change came because of something called the Free Trade Agreement (FTA).
What is FTA?
FTA means Free Trade Agreement. This is when two countries decide to trade with fewer rules and fewer extra costs like taxes. India and Australia signed this deal in December last year. Because of this FTA, trading between India and Australia became easier and faster.
This FTA helped India sell more goods to Australia. It also helped India buy things from Australia at better prices. Because of that, the India Trade Deficit became smaller.
What India Sells to Australia
India sends many useful goods to Australia. These goods include:
- Medicines (drugs) to help people stay healthy.
- Tools and machines for work.
- Metal scraps, which can be used again to make new things.
By selling more of these goods, India is earning more money from Australia. This helps reduce the India Trade Deficit.
What India Buys from Australia
India also buys things from Australia. One big thing is coal. Coal is used to make electricity and energy. With the FTA, buying coal became easier. This helps India get what it needs without too many extra costs.
So India is selling more and buying smartly. That is why the India Trade Deficit is shrinking.
Why This is Good News
The Commerce Secretary of India, Sunil Barthwal, is very happy. He said India is now sending more medicines and machines to Australia. He hopes this good trend will continue.
For India, this is very good because it means:
- More factories in India will work.
- More workers in India will get jobs.
- More money will come into India.
- The India Trade Deficit will keep getting smaller.
Money Moving Between India and Australia
It is not just about goods. It is also about money.
- In the first half of 2023, India invested 2 trillion Australian dollars in trade. This was much bigger than before.
- At the same time, Australia also sent back 5 billion dollars into India.
This exchange of money shows that both countries are growing together. It is like sharing toys in a fair way. This also helps reduce the India Trade Deficit.
Next Step: CEPA
Now, both countries are planning something even bigger. It is called CEPA – Comprehensive Economic Cooperation and Partnership Agreement.
This CEPA will go beyond just selling and buying goods. It will also include:
- Money matters.
- Exchange of ideas.
- Online shopping and digital trade.
Commerce Secretary Barthwal said this CEPA will bring even more changes. It will help India and Australia become closer partners. And yes, it will help reduce the India Trade Deficit even more.
When Will CEPA Start?
The plan is to start CEPA in 2024. If this happens, India can trade more with Australia in a safe and strong way. Many people in business are waiting for this next step.
Everyone hopes CEPA will be like a new chapter in India’s trade story. If CEPA works well, the India Trade Deficit will keep getting smaller and smaller.
Why Shrinking India Trade Deficit Matters
When the India Trade Deficit shrinks, it means:
- India is selling more things.
- India is bringing in more money.
- Factories in India are working more.
- Farmers, workers, and companies are happy.
- India is growing stronger in the world market.
A smaller deficit means India is doing better in trade. That makes India’s economy stronger and safer.
The Big Picture
Right now, India is showing that it can trade smartly. By using FTA with Australia, India made its trade deficit smaller. Soon, with CEPA, India can make even more progress.
This is just the beginning. If India keeps selling more goods, keeps making smart deals, and keeps growing trade, the India Trade Deficit will get smaller year after year.
Conclusion
The story of India and Australia shows us one big lesson: working together makes both countries stronger.
- India sold more goods.
- Australia sold coal.
- Both shared money.
- Both planned a new deal.
Because of all this, the India Trade Deficit shrank by 15%. This is good news for India’s people, workers, and economy.Soon, CEPA will come, and it may make the trade even better. With every step, India is moving forward, and the India Trade Deficit is shrinking more.
