India's exports go up in April but trade deficit widens

Imports during the month under review grew by 26.55 per cent to Rs 4.43 lakh crore

After record Goods and Services Tax collection, the start of the financial year 2022-23 witnessed a handsome over $38 billion in merchandise exports in a single month but imports also witnessed a jump of over 26 per cent to over $58 billion widening the trade deficit to $20.07 billion.

Imports jumped at a faster pace due to the rising cost of oil imports, the data from the Commerce Ministry showed. The trade deficit is likely to rise in the coming months due to rising prices of crude oil as India remains a net importer of the commodity.

Unless commodity prices recede appreciably, we expect the merchandise trade deficit to print above $20 billion in the majority of the months of FY2023, Chief Economist at ICRA Aditi Nayar said.

The increase in the merchandise trade deficit from $15.3 billion in April 2021 to $20.1 billion in April 2022 was entirely on account of oil. Although the non-oil trade deficit remained stable, there was a shift in its composition, with a plunge in gold imports being offset by a rise in non-oil non-gold imports such as coal and chemicals, an unsavoury yet expected fallout of the higher commodity prices engendered by the Russia-Ukraine conflict, Nayar observed.

ICRA said, "following the spike in the services trade surplus to a robust record high of $11.5 billion in March 2022, we now expect the current account deficit to have eased to $15.5-17.5 billion in Q4 FY2022. We tentatively peg the current account deficit in the range of $20-23 billion for Q1 FY2023, bloated by higher commodity prices".

On the exports side, the value of non-petroleum exports in April stood at $30.46 billion, a rise of over 12 per cent compared to the same period last year.

Top exporting sectors were engineering goods, petroleum products, organic & inorganic chemicals, drugs & pharmaceuticals, electronic goods, readymade garments of all textiles, cotton yarn/fabrics/made-ups, handloom products and plastic & linoleum.

Labour-intensive sectors also contributed to the export basket, which itself is a good sign, further helping job creation in the country, Federation of Indian export organisation President A Shaktivel said.

He said that the benefits of the newly signed Free Trade Agreements and the Production-linked Scheme will further help us in building on the milestones achieved during the previous fiscal.

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