India’s merchandise exports in April grew 30.7% year-on-year to $40.19 billion, two billion dollars higher than estimates released earlier this month, the Commerce Ministry said on Friday.
Goods imports during the month were also two billion dollars more than earlier estimates at $60.3 billion, reflecting a 31% growth. The trade deficit in April is marginally higher than previous estimates at $20.11 billion and wider than March’s deficit of $18.5 billion.
Rating agency ICRA expects the merchandise trade deficit to expand to an all-time high of $250-255 billion in 2022-23, as exports growth will slow down to around 9% during the year in tandem with global trade flows. Imports, on the other hand, are expected to rise by around 16% with domestic demand growth expected to outpace external demand.
The uptick in exports was led by petroleum products (up 127.69%), electronic goods (71.69%), cereals (60.83%), coffee (59.38%), processed food (38.82%) and leather products (36.68%), resulting in record goods exports for April, the Ministry said.
Excluding petroleum and gems and jewellery exports, the growth rate was lower at 19.9%, with outbound shipments worth $28.46 billion. By contrast, imports excluding these categories grew much sharper to $35.7 billion, 34.4% more than a year ago.
Coal and petroleum imports were higher than earlier estimates – with the former reporting a 146.3% rise to $4.93 billion and the latter jumping 87.5% to about $20.2 billion. The value of fertilizer imports nearly trebled to $1.2 billion from $376 million in April 2021. The rise in these three import categories reflects the sharp rise in global prices.
“While imports and exports displayed a similar sharp expansion, the merchandise trade deficit widened to $20.1 billion in April 2022 from $15.3 billion in April 2021, driven by oil. Total merchandise imports remained above $60 billion for the second month in a row, given the elevated commodity prices after the Russia-Ukraine conflict,” noted Aditi Nayar, chief economist at rating agency ICRA.
While gold imports fell 72.3% to just $1.7 billion from $6.2 billion in April 2021, silver imports rose almost ten times, albeit from a lower base of $11.90 million a year ago, to $109.5 million in April 2022.
Ms. Nayar expected the rupee to face a depreciating bias and trade between 75 and 79 to a dollar till September 2022. A worsening current account deficit, combined with tighter monetary policy around the world and an aversion to emerging market assets, will put pressure on the rupee. However, India’s large forex reserves and the likely stemming of foreign investors from the debt market would contain the further depreciation from the recent record low, she said.
