India’s merchandise exports grew 30.7 per cent to $40.19 billion in April, led by demand for petroleum products, electronic goods and chemicals, even as the trade deficit widened due to high oil prices, data released by the commerce and industry ministry showed.
India imported goods worth $60.3 billion, up nearly 30 per cent on year in April. Trade deficit widened to $20.1 billion as compared to $15.29 billion in April last year.
Higher trade deficit was mainly due to rise in oil prices that continued to remain elevated over the Russia-Ukraine conflict since February 24. Petroleum and crude oil imports comprise a third of India’s total imports. Such inbound shipments rose by 87.54 per cent to $20.2 billion in April.
Prahalathan Iyer, Chief General Manager, India Exim Bank, said high trade deficit was result of a spike in oil prices, which alone has contributed additional $10 billion to the trade deficit.
Aditi Nayar, Chief Economist, ICRA, said total merchandise imports remained above $60 billion for the second month in a row, given the elevated commodity prices after the Russia-Ukraine conflict.
Coal, coke and briquettes imports more than doubled to $4.93 billion, as compared to $2 billion in April 2021.
On the other hand, import of gold declined 72 per cent to $1.72 billion in April.
According to ICRA forecast, India’s merchandise exports are expected to rise about 9 per cent in FY23, with expectations of a sharp slowdown in world trade volumes, being partly offset by higher commodity prices during the duration of the Russia-Ukraine conflict.
The government had set a $400-billion target for exports in FY22. The target was exceeded. The target for the current fiscal year is yet to be firmed up, amid uncertainties due to the geopolitical tensions in Eastern Europe.
ICRA estimates also state that merchandise imports are set to expand by a faster 16 per cent in FY23, as domestic demand growth is likely to outpace external demand.
“Accordingly, we expect the trade deficit to widen to an all-time high of $250-255 billion in FY23. However, a robust services trade surplus is expected to temper the worsening in the current account deficit (CAD) to $95-100 billion in FY23 (2.7 per cent of GDP) from $41.5-43.5 billion (1.3 per cent of GDP) in FY22,” according to ICRA.
“Starting the financial year with such an impressive beginning will further add to the motivation of the exporting community for much higher growth during the financial year,” said FIEO President A Sakthivel.