India posted a trade surplus for the first time in nearly two decades this week. According to trade data released by the Ministry of Commerce, India’s imports plunged sharply in June, leading to a trade surplus of $790 million, the first in over 18 years. While normally something to celebrate (after all, a surplus means that India is selling more than it’s buying), in the current context, this is actually a cause for concern. Analysts have pointed out that the decreased imports are because of severely depressed domestic demand for many mainstream industrial products, which in turn form an important component for Indian manufacturing and the subsequent export supply chain. Reduced demand for these materials indicates slowing manufacturing, and a wider slowing economy. However, there is a silver lining, as the state of India’s exports has improved from the steep falls the sector saw in April and May. Renewed trade with neighbors like Bangladesh and Afghanistan indicates a slow return to stability for certain export sectors. Meanwhile, mere weeks after announcing tax relief measures for exporters, the government has started to shift focus on compliance, making invoice matching compulsory for input tax credit refunds. A separate investigation has also identified over 7,500 exporters who are deemed “risky” by various agencies, including 1,300+ exporters (among them seven ‘star exporters’) who have been found untraceable after wrongly claiming GST refunds amounting to Rs. 1,875 crores. As the government amps up its investigation into this large-scale tax fraud, one can only wonder the effect it will have on working capital availability for the larger export ecosystem. With a slowing economy apparently on the books, Indian exports may be in for a period of uncertainty and slower-than-expected recovery.