Exports rise 45% to $33 bn in August; trade deficit at four-month high

This, despite a 45% YoY spike in shipment values; non-oil, non-bullion import growth was 34% YoY

India exported goods worth $33.14 billion in August, up 45.17 per cent on-year, as demand continued to remain robust from other countries, revealed the preliminary data released by the commerce and industry ministry.

Outbound shipments were dominated by higher demand for items such as engineering and petroleum products, gems and jewellery. The 45-per cent growth can also be partially attributed to a low base in August 2020 due to disruption caused by Covid-19. However, the base effect is on the wane.

Even as growth witnessed 2-per cent decline on a sequential basis, compared to August 2019, it was still 27.5 per cent. Outbound shipments hit an all-time high of $35.17 billion in July.

On a cumulative basis, India’s merchandise exports in April-August were $163.67 billion, up 66.92 per cent on-year and up 22.93 per cent, compared to the same period in 2019. This translates into India achieving 41 per cent of its export target of $400 billion for the current fiscal year.

Merchandise imports grew 51.5 per cent in August to 47.01 billion, up 17.9 per cent, compared to August 2019. This resulted in a trade deficit of $13.87 billion in August, compared to a trade deficit of $8.2 billion during the same time period a year ago.
 
“With merchandise imports continuing to scale up, even as exports receded from their all-time high, trade deficit widened to a higher-than-anticipated $13.9 billion in August, marking a four-month high. We expect the current account to record a modest deficit of $4-6 billion in the ongoing quarter,” said Aditi Nayar, chief economist, ICRA.

“Gold imports surged further to a five-month high of $6.7 billion in August, and were responsible for an 88 per cent rise in merchandise trade deficit, relative to July. Unless a weaker agricultural outlook restrains demand, gold imports may well touch $40 billion in 2021-22,” said Nayar.

The value of non-petroleum and non-gems and jewellery exports in August was $25.15 billion, up 31.66 per cent on-year, and witnessed a 28.53-per cent jump in August 2019.

In the case of imports of non-oil, non-gold, silver, and precious metals, growth was 34 per cent on-year at $26.36 billion, but had a marginal positive growth of 2.6 per cent over August 2019.

A Sakthivel, president, Federation of Indian Export Organisations, said continuous growth in exports for six months not only augurs well for the economy, but also goes to show the resilience of exports.

“Steady recovery in global trade, added with the expectation of buoyant order booking position for the coming months, has also led to such continuous growth in exports,” added Sakthivel.