Trade deficit zooms 271.9% in May even as India registers record goods exports

India exported $38.94 billion worth of goods in May 2022, 20.55% more than the value of goods exported in May 2021. The imports grew much faster, 62.83% month-on-month growth, to touch $ 63.22 billion during the last month. The merchandise trade deficit in May 2022, at $24.29 billion, was 271.96% higher than the $6.53 billion registered in May 2021.

The top sectors, which led the export growth during the month were petroleum products, engineering goods, electronic goods, organic & inorganic chemicals, ready-made garments, gems & jewellery, drugs & pharmaceuticals, leather products, etc. The import was led by commodities like silver and gold, coal and petroleum products.

The high growth in imports was not just because of the increase in the prices of crude petroleum and precious metals. While the export of non-petroleum and non-gems & jewellery in May 2022 was $27.16 billion, up by 13.1 % over non-petroleum and non-gems & jewellery exports of $24.02 billion in May 2021, imports of non-petroleum, non-gems & jewellery (gold, silver & precious metals) were $ 34.79 billion in May 2022 with a positive growth of 31.66 % over non-petroleum, non-gems & jewellery imports of $26.42 billion in May 2021.

Overall exports (merchandise and services combined) in May 2022 are estimated to be worth $62.21 billion, a growth of 24.03 % over the same period last year. The estimated value of services export for May 2022 is $23.28 billion.

Responding to the trade data, A Sakthivel, president, the Federation of Indian Export Organisations (FIEO) says it shows the continued resilience of the export sector amid rising global uncertainties. He also points out that several labour-intensive sectors also contributed to the export basket, which itself is a good sign, as it is helping job creation. He also adds that rising imports of gold may result in impressive exports of gems and jewellery products from India in the coming months. The benefits of the newly signed free trade agreements (FTAs) and the production-linked incentive (PLI) scheme will further help in building the export momentum, he says.