Rising oil imports widen trade deficit in May

Trade deficit widened in May on rising oil imports. International crude prices surged impacting India's oil import bill. The official data showed oil imports were up 49.46% to $11.5 billion in May.
Highlights: 
India’s trade deficit has been rising of late. In 2017-18, it almost doubled from the previous year as import bill continued to inflate.

A whopping nearly 50% rise in oil imports majorly widened India's trade deficit to a four-month high of $14.62 billion in May even though India’s exports rose 20.2% to $28.9 billion, its highest since November 2017.

Commerce Minister Suresh Prabhu said exports in May rose by 20.18% to $28.86 billion but imports were also up 14.85% to $43.48 billion.

Trade deficit widened in May on rising oil imports. International crude prices surged impacting India's oil import bill. The official data showed oil imports were up 49.46% to $11.5 billion in May.

The second biggest culprit in the import basket – the gold import – however dropped by 29.85% $3.48 billion in May compared to $4.96 billion in the same period a year ago.

Country's apex engineering export promotion council reacted by saying exports growing by 20% is certainly a good news but the challenge is to keep the momentum While growing US economy would help, the US-China trade war must be watched about. Back home rising raw material cost will be a challenge, EEPC India Chairman Ravi Sehgal said.

India’s trade deficit has been rising of late. In 2017-18, it almost doubled from the previous year as import bill continued to inflate.

For the full fiscal 2017-18, imports rose nearly 20% to $459.6 billion. Petroleum and crude oil imports continued to be the largest contributor to India’s import bill. Shipments of electronic goods and machinery too saw an increase. Brent crude oil prices have gone above $74 a barrel this year from nearly $46 a barrel in June last year. Gold imports, however, have declined but rising crude prices have almost negated the gains arising out of gold.

Recently, exporters expressed concern when the Reserve Bank of India hiked the policy interest repo rate by 25 basis points saying the move would have a detrimental effect on exports. They said when the interest rates in the global market was in between 2% and 3%, in India it ranged above 10% which left them behind their competitors.

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Rising oil imports widen trade deficit in May

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