With reference to the international trade of India at present, which of the following statements is/are correct?

1. India’s merchandise exports are less than its merchandise imports.

2. India’s imports of iron and steel, chemicals, fertilisers and machinery have decreased in recent years.

3. India’s exports of services are more than its imports of services.

4. India suffers from an overall trade/current account deficit.

Select the correct answer using the code given below:

The correct answer is 1, 3 and 4 only.

To understand why this option is correct, let us analyze each of the statements step-by-step based on the trends in India's international trade:

1. Statement 1 is correct: India's merchandise exports are indeed less than its merchandise imports. India has historically run a merchandise trade deficit because its import bill for essential commodities—such as crude oil, electronic items, gold, coal, and heavy machinery—far exceeds the value of the goods it exports. This leads to a persistent trade deficit in the goods (merchandise) category.

2. Statement 2 is incorrect: India's imports of iron and steel, chemicals, fertilisers, and machinery have generally witnessed an increasing trend in recent years due to growing domestic demand, industrialization, infrastructure development, and agricultural requirements. Therefore, the statement claiming they have decreased is incorrect.

3. Statement 3 is correct: India is a global leader in service exports, particularly in Information Technology (IT), software services, business process outsourcing, and professional consulting. The revenue generated from exporting these services is consistently higher than what India spends on importing services, resulting in a healthy services trade surplus.

4. Statement 4 is correct: Although India enjoys a significant surplus in its services trade, this surplus is not always large enough to offset the massive deficit in merchandise trade. Consequently, India typically faces an overall trade deficit, which translates into a Current Account Deficit (CAD) in its balance of payments.

Thus, statements 1, 3, and 4 are correct, making 1, 3 and 4 only the correct choice.