India's monthly trade deficit has been widening from an average of under $15 billion per month for a better part of last year to $23-25 billion in the past few months.

The markets fear that, on one hand, imports are not coming down because of high crude prices and, on the other, exports may fall because of the impending recession in the export destination areas.

Already exports are flattening from a high of $40 billion in March to $38 billion in April to $37. 8 in May and $37.9 billion in June. The rate of growth of exports is even more indicative of perhaps this pressure.

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Exports which were growing by over 40 percent earlier in 2022, the first three months, have moderated from 30 percent growth in March to 24 percent growth in April, 20 percent in May and only 16.6 percent in June.

In an interview with CNBC-TV18, Ajai Sahay CEO and Director General of the Federation of Indian Export Organisations (FIEO) and Siddhartha Rajagopal, ED of TEXPROCIL (Textiles Export Promotion Council), discussed at length whether India’s exports are likely to slow even more if recession stalks Europe and US and if that is what is pushing down the rupee.

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According to Sahai, there has been a slowdown in demand. “Global trade, at this point of time, is facing the triple whammy as far as merchandise exports are concerned,” he said.

He said that consumption was shifting towards services and most advanced economies are on the verge of entering a recession.

“It is not only the problem of the developed economies, of course, but they are also entering a recession. If you look into many of the emerging economies, or if you look into some of the developing economies also, they are in extreme foreign exchange crisis,” said Sahai.

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Meanwhile, Rajagopal expects the markets to revive after September-October.

He said that there is volatility in the currency market and managing rupee volatility is a bit of a concern.

For the entire discussion, watch the accompanying video