India exported merchandise worth $38.19 billion in April 2022, a 24.2% increase from a year earlier but 9.5% lower than the record $42.2 billion shipped out in March, official estimates released on Tuesday show.
The trade deficit, however, expanded to $20.07 billion from $18.5 billion in March, as imports grew at a faster 26.6% pace to $58.26 billion. Sequentially, goods imports declined 4.1% last month from March’s level.
Gold imports fell by a sharp 73% year-on-year to just $1.7 billion, even as coal imports more than doubled to over $4.7 billion from $2 billion a year earlier. Petroleum imports comprising crude and products surged 81.2% to exceed $19.5 billion, and made up a third of the total imports in the month.
“India’s goods trade deficit has crossed $200 billion for a 12-month period for the first time in April 2022,” said Richard Rossow, Wadhwani chair in U.S.-India Policy Studies at the Washington-based security think tank, CSIS. Petroleum imports alone had accounted for $172 billion during this period, he pointed out.
ICRA chief economist Aditi Nayar also noted that higher oil imports were entirely responsible for the trade deficit’s rise from $15.3 billion in April 2021. “Unless commodity prices recede appreciably, we expect the merchandise trade deficit to print above $20 billion in a majority of the months of 2022-23,” she warned.
India’s goods exports had hit a record $420 billion in 2021-22, while imports also hit an all-time high of about $612 billion, leading to a $192 billion deficit in the last financial year.
“Although the non-oil trade deficit remained stable in April, 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,” Ms. Nayar observed.
Among India’s top 10 export commodities, gems and jewellery exports dipped by a marginal 2.1% in April, while rice exports fell 14.24%. Engineering goods continued to see an healthy uptick in exports, with outbound shipments up 15.4% to touch $9.2 billion.
Readymade garments exports jumped 16.4% from April 2021 to hit $1.5 billion, but were 13.2% lower than March 2022. Similarly, organic chemicals exports were up 26.7% year-on-year, but fell 8.1% month-on-month to a little over $2.5 billion.
Drugs and pharmaceuticals, now India’s fifth-largest exporting sector, saw a far sharper sequential decline in exports of 17.8% to $1.96 billion, from $2.39 billion in March 2022. On a year-on-year basis too, the sector’s growth rate eased to 3.93%, from March’s 4.2% pace.
Union Commerce and Industry Minister Piyush Goyal, who is steering the process to set a higher export target for this fiscal, had said last month that the ministry was working on including the pharma sector into the Remission of Duties and Taxes on Export Products (RoDTEP) export incentive scheme. Exports of chemicals and iron and steel, have also been left out of the scheme introduced last year.
While the signing of free trade pacts with the UAE and Australia is expected to offer new opportunities even as global trade growth is expected to slow down in the wake of the conflict in Europe, exporters have sought government attention to resolve critical operational concerns.
“High logistics costs and the unprecedented surge in raw material prices are hurting all sectors,” pointed out Engineering Exports Promotion Council chief Mahesh Desai. “The government is well aware of the issues facing the sector and we hope policy actions would be taken to minimise the impact,” he added.