The Commerce Ministry said on Friday that India’s merchandise exports increased 30.7 percent year on year to $40.19 billion in April, two billion dollars higher than estimates released earlier this month.
Imports of goods were also two billion dollars higher than previously estimated, at $60.3 billion, representing a 31% increase. The trade deficit in April was $20.11 billion, slightly higher than previous estimates and larger than the $18.5 billion deficit in March.
The merchandise trade deficit is expected to reach an all-time high of $250-255 billion in 2022-23, according to rating agency ICRA, as export growth slows to around 9% in line with global trade flows. Imports, on the other hand, are expected to increase by around 16%, with domestic demand expected to grow faster than external demand.
Petroleum products and Electronic goods are highest exports
Petroleum products (up 127.69 percent), electronic goods (71.69 percent), cereals (60.83 percent), coffee (59.38 percent), processed food (38.82 percent), and leather products (36.68 percent) accounted for the majority of the increase in exports, according to the Ministry.
With outbound shipments worth $28.46 billion, the growth rate was lower at 19.9%, excluding petroleum and gems and jewellery exports. Imports excluding these categories, on the other hand, increased 34.4 percent year over year to $35.7 billion.
Imports of coal and petroleum were higher than expected, with the former up 146.3 percent to $4.93 billion and the latter up 87.5 percent to around $20.2 billion. Fertilizer imports nearly tripled to $1.2 billion in April 2021, from $376 million. The sharp rise in global prices is reflected in these three import categories.
“While imports and exports both grew rapidly, the merchandise trade deficit increased to $20.1 billion in April 2022 from $15.3 billion in April 2021, owing to the rise in oil prices. Given the elevated commodity prices following the Russia-Ukraine conflict, total merchandise imports remained above $60 billion for the second month in a row,” said Aditi Nayar, chief economist at rating agency ICRA.
While gold imports fell 72.3 percent to $1.7 billion in April 2022 from $6.2 billion in April 2021, silver imports nearly tenfold to $109.5 million in April 2022, albeit from a lower base of $11.90 million a year ago.
Ms. Nayar predicted that the rupee would depreciate and trade between 75 and 79 cents to the dollar until September 2022. The rupee will be under pressure due to a worsening current account deficit, tighter monetary policy around the world, and aversion to emerging-market assets. However, she believes that India’s large foreign exchange reserves and the likely withdrawal of foreign investors from the debt market will limit further depreciation from the recent record low.