Indian export growth slowed markedly in June, with a 4.4% increase on a year earlier, official figures show. That was outpaced by a 19.0% rise in imports driven by an acceleration in imports of coking coal (24.2%) and unusually high deliveries of transportation equipment (86.3% higher). Nonetheless the trade deficit of $12.9 billion was broadly in-line with economists’ expectations of $12.5 billion according to Reuters.

Chart shows total Indian trade in goods. Calculations include data from Directorate General of Commercial Intelligence and Statistics Source: Panjiva

From a product perspective the main change from prior months causing the export slowdown was a 2.7% drop in the value of gems exported from 15.0% growth two months earlier. In apparel there were reversals in cotton (down 1.7%), leather goods (6.7% lower) and completed clothing. The latter dropped 1.4% having been 31.7% higher a year earlier. That is likely to be demand-led, with U.S. imports of apparel falling 16%, as outlined in Panjiva research of July 10.

Chart shows total Indian trade in goods, segmented by product. Calculations include data from Directorate General of Commercial Intelligence and Statistics Source: Panjiva

Shipments to the U.S. more broadly increased 4.8% in June, bringing the second quarter expansion to 8.5%, Panjiva data for seaborne shipments shows. That was well ahead of the more developed Asian markets (South Korea was unchanged and Japan fell 1.8%) but lagged emerging economies including Vietnam (10.3% higher) and Thailand (6.4%).

Over the longer-term though India has outperformed Thailand and has only just begun to lag Vietnam. Both Vietnam and Thailand have attracted manufacturing industries in appliances and consumer electronics, but face trade cases in the U.S. Vietnam may also become the subject of the administration’s broader “Omnibus” review of the trade deficit.

Chart segments U.S. seaborne imports by country of origin Source: Panjiva

India’s growth in U.S.-bound shipments has seen a number of stages. In 2012 through 2013 this was led by an expansion in exports of apparel and other textiles. Since 2013 machinery – including capital equipment – has expanded more rapidly. In total over the past five years they have performed similarly though with apparel climbing 9.7% and machinery by 10.0% on a compound annual basis. A more recent resurgence in building materials shipments has seen that sector grow the fastest, with  14.4% growth in the past 12 months vs. the national average of 8.5%.

The next stage for India’s growth in trade with the U.S. will depend on the outcome of the “comprehensive review” of trade relations between India and the U.S. following a meeting between Prime Minister Modi and President Trump. That is not as detailed a development plan in the style of U.S. deals with China and Japan, but does include calls for “creative ways” to increase bilateral trade. It seems likely energy, and specifically LNG, will be an initial focus.

Chart segments U.S. seaborne imports from India by product, right hand axis shows total. Source: Panjiva