India's exports contracted by 12.7 per cent, third month in a row, to $34.66 billion in April even as the trade deficit reduced to a 20-month low of $15.24 billion, the government data showed on Monday. The decline in exports is mainly on account of poor demand in India's key destinations -- the Europe and the US -- and it may take some more months for the situation to improve.

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The demand scenario is "not looking very good as far as Europe is concerned, and the US also we have seen a decline in demand.

For the next 2-3 months, I think the demand scenario does not look very optimistic," DGFT (Director General of Foreign Trade) Santosh Kumar Sarangi told reporters in New Delhi.

However, he expressed hope that things would change from September onwards.

"There is a possibility that opening up of Chinese economy combined with some boost in demand in the Europe and the US economy from August-September onwards might give a boost to global exports," he said.

Imports too declined by about 14 per cent, fifth month in a row, to $49.9 billion as against $58.06 billion recorded in the same month last year, the data showed.

Trade deficit in April last year stood at $18.36 billion. The previous lowest level was recorded in April 2021, when the deficit stood at $15.10 billion.

On imports, Sarangi said that the decline is because of cooling down of commodity prices and reduced demand for products which are considered as discretionary like gems and jewellery.

He suggested to diversify into products which have higher export demand, such as electronic goods, oil meals, oil seeds, and agricultural goods.

He added that export sectors which may get impacted in the coming months include gems and jewellery, apparel and garments, and some engineering products.

In April, export sectors which recorded negative growth included petroleum products, gems and jewellery, engineering goods, chemicals and ready-made garments of all textiles.

However, electronic goods, pharma, rice and oil meals registered positive growth.

The shipments of electronic goods increased by 26.49 per cent to $2.11 billion in the month under review.

Under merchandise exports, only 11 of the 30 key sectors exhibited positive growth in April and at imports front, 23 out of 30 key sectors recorded negative growth.

Crude oil imports dipped by 13.95 per cent to $15.17 billion. Gold imports too contracted by 41.48 per cent to $1 billion in April.

India's exports to the US in April declined by 17.16 per cent to $5.9 billion. Similarly to the UAE it dipped by 22 per cent to $2.23 billion in April.

The other key export destinations where exports reported negative growth included China, Singapore, Bangladesh, and Germany.