Trade deficit at five-year high of $18 billion in July on oil imports

India’s trade deficit in July widened to a five-year high of $18.02 billion as petroleum imports surged during the month by more than half compared to imports during the same month last year.

The country’s goods exports in July continued on the growth track increasing 14.32 per cent (year-on-year) to $25.77 billion propped by sectors such as electronics, engineering goods, gems & jewellery and chemicals, according to an official release of the Commerce Ministry on Tuesday.

Imports, however, grew more than double of exports at 28.81 per cent to $43.79 billion resulting in the sharp increase in the trade deficit. The trade deficit in July is the highest since May 2013 when it had widened to $19.37 billion. The deficit was at $16.6 billion last month.

Petroleum imports increased by a whopping 57.41 per cent to $12.34 billion in July compared to $7.84 billion in July 2017. There was also a substantial increase in imports of electric and non-electric machinery, gold (which increased 40 per cent), electronic goods and chemicals.

While overall exports of goods increased, the worrying factor was a dip in exports of a number of labour-intensive sectors such as garments, carpets, leather and marine products. “The SME sectors of exports are still reeling under pressure because of the liquidity crunch as banks and financial institutions have continuously been tightening their lending norms and ITC refund for exports still poses a challenge,” said FIEO President Ganesh Kumar Gupta.

Cumulatively, exports grew at 14.23 per cent to $108.24 billion during April-July. Imports for the period were at $171.20 billion, a positive growth of 17.05 per cent over imports in the same period last year.

Trade deficit in the first four months of 2018-19 was $62.96 billion compared to $51.50 billion in the first four months of 2017-18.

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