India’s trade deficit widened to a record $24.29 billion in May 2022, almost four times higher than last May, with the doubling of oil import bill, resulting in a surge in goods imports.

Exports posted a growth of 20.55 per cent (year-on-year) to $38.94 billion, driven by petroleum products, engineering goods, electronics, readymade garments and chemicals, per quick estimates released by Commerce Ministry on Wednesday.

Import of goods, however, increased at a sharper 62.83 per cent in May to $63.22 billion, fuelled by a doubling of petroleum and crude imports to $19.19 billion and a 789 per cent increase in gold imports to $6 billion, increasing the trade deficit by a whopping 272 per cent, the figures revealed.

‘Pick up in manufacturing’

Non-petroleum and non-gems & jewellery exports in May grew 13.1 per cent to $27.16 billion indicating growth in exports across sectors. Import of non-petroleum and non-gems & jewellery (gold, silver and precious metals) posted a growth of 31.66 per cent in May to $34.79 billion.

“Leaving aside the global crude price spike, and associated growth in our import bill, the positive aspect is the growth in import of non-petroleum and non-gold items. This indicates a pick up in manufacturing activity,” said Prahalathan Iyer, Chief General Manager, Research & Analysis, India Exim Bank.

Labour-intensive sectors such as garments, leather and gems & jewellery, contributed to the exports basket, which itself is a good sign, further helping job creation in the country, said FIEO President A Sakthivel. “Rising imports of gold may lead to impressive gems & jewellery exports in the next one-two months,” he added.

FY23 target: None yet

Exports in April-May 2022 increased 24.86 per cent to $78.72 billion. Similarly, import of goods in the first two months of the ongoing fiscal increased 45.42 per cent to $123.41 billion. Trade deficit at $44.69 billion, was double that of the same period last year.

India’s exports in 2021-22 had touched an all time high of $417.8 billion, a 43 per cent growth over the previous fiscal, surpassing the $400-billion target set by the government. This fiscal, the Commerce Ministry is yet to fix an export target due to global uncertainties heightened by the prolonged war between Russia and Ukraine and the Covid-19 pandemic.

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