India's merchandise exports rose 6% to a record $447 billion during the financial year 2022-23, aided by healthy growth in outbound shipments of sectors such as petroleum, pharma and chemicals and marine, Commerce and Industry Minister Piyush Goyal said on Thursday.
The country's imports grew in double digits to $714 billion in FY23, up 16.5% as against $613 billion in FY22.
"I am delighted to share with you the outstanding export performance for 2022-23, with India's overall exports scaling new heights at $770 billion, registering 14% growth over the previous year and all-time high record growing from $500 billion in 2020-21 to $676 billion in 2021-22," Goyal told reporters in Rome.
Trade Gap Widens
India's trade deficit widened to $19.73 billion in March from $17.43 billion in February, according to data shared by the Ministry of Commerce and Industry. Merchandise exports dropped 13.9% year-on-year to $38.38 billion in March while imports fell 7.9% year-on-year to $58.11 billion.
Services exports rose to $27.75 billion in March 2023 compared with $26.95 billion in the year-ago period. Imports of services fell to $14.07 billion last month from $15.35 billion in March 2022.
India's current account deficit had declined to $18.2 billion (2.2% of GDP) in Q3 FY23 from $30.9 billion (3.7% of GDP) in Q2 and $22.2 billion (2.7% of GDP) a year ago. In Q3, CAD narrowed significantly to 2.2% from 3.7% in Q2 on account of lower merchandise trade deficit and robust growth in services exports. The current account deficit (CAD) for the first three quarters of FY23 stood at 2.7% of GDP.
"Strong software services export growth was witnessed across key verticals such as IT services, Business Process Management (BPM), and engineering research and design (ER&D), supported by a rise in global capability centres (GCCs)," Reserve Bank of India governor Shaktikanta Das said after the recent monetary policy meeting.
The current account deficit is expected to remain moderate in Q4 FY23 and in the year 2023-24 at a level that is both viable and eminently manageable, Das added.
According to the World Bank, India's current account deficit is projected to narrow to 2.1% of GDP from an estimated 3% in FY23 on the back of robust service exports and a narrowing merchandise trade deficit.
Ratings agency CareEdge expects CAD to moderate to 1.6% of GDP driven by healthy services sector exports. A better-than-expected current account will be supportive of the overall balance of payment scenario, which will reduce the country’s external vulnerability amid global economic uncertainties, the ratings agency said earlier this month.