Avocados & blueberries: The fix for India’s rising trade deficit?

India’s trade deficit is widening and the prime driver behind that is the rising energy prices, owing to geopolitical conflicts and supply bottlenecks. Credit Suisse’s Neelkanth Mishra has a solution to salvage the situation, and it involves bringing down imported blueberries & avocados.

India is a net importer of commodities and energy, prices of both of which have surged over the past few months. Data shows that between 2015-21, India imported 88% of its annual consumption of oil and 29% for coal in 2020.

“It (energy) has become substantially more expensive than it used to be and therefore it is important to change our import basket,” Mishra told ETNow.

“So if we cannot and we should not be bringing down our imported energy by that volume then we need to bring down the imported avocados, we need to bring down the imported blueberries and I know they are small numbers but wherever we are dependent on imports which are to slight extent discretionary we need to bring down those imports,” he said.

This surge in energy costs will impact India’s current account deficit negatively. India’s current account deficit may widen to a 10-year high of 3.3% of GDP in the current fiscal year, as per Morgan Stanley.

Widening CAD indicates that the value of imports is exceeding the value of exports. India’s current account deficit hit a 13-quarter high in Q3FY22, although it is expected to have eased in the following quarter.


Among the ways to improve India’s balance of payments (BoP) deficit, Mishra said one was to get more capital. “We can get inclusion in global bond indices, that would bring in $30-40 billion in one year,” he said.

Credit Suisse has opined that Asia-Pacific earnings will see earnings downgrades, which will create more disruption in the global markets. And as such, Mishra says, capital flows are unlikely to pick up, and getting more capital will be a challenge.

“Although direct trade and finance exposures in the context of the ongoing conflict are limited, elevated crude oil prices can widen the current account deficit while foreign portfolio investors may remain risk-averse towards EMEs, including India,” the Reserve Bank of India had said in its annual report 2021-22.

Mishra also said that India can step up exports but covering the BoP deficit would take around 2-3 years via that route, he said.