Exports jump 31% in April, trade deficit still tops $20bn
Merchandise exports hit $40.2 billion in April, a record for the first month of any fiscal year, after jumping 30.7% from a year earlier. However, imports jumped at a faster pace of 31% in April to $60.3 billion, boosted by high commodity prices, especially energy products. This trade deficit widened in April to $20.1 billion from $18.5 billion the previous month.
Without a substantial easing in international commodity prices, the trade deficit will likely exceed the crucial $20 billion mark for most months of FY23, according to an Icra estimate. Consequently, the CAD is expected to reach $20-23 billion in the June quarter, compared to $15.5-17.5 billion in the previous three months, according to Icra. Of course, senior government officials assuaged concerns about DAC funding.
Among high value-added segments, the increase in exports in April was led by petroleum products (128%), followed by electronics (72%), chemicals (28%). Even core exports (excluding oil, gems and jewelry) rose 19.9% year-on-year in April to $28.5 billion, reflecting the impact of decent external demand and high commodity prices. raw materials.
Similarly, core imports jumped at a faster pace of 34.4% in April to $35.7 billion. Among major commodity segments, purchases of coal jumped 146% to $4.9 billion, oil 88% to $20.2 billion and electronics 33% to $6.7 billion. of dollars.
Although orders continue to pour in from some jurisdictions, supply disruptions following the Russian-Ukrainian war have affected the ability of domestic exporters to ship goods. Soaring international shipping costs have made the situation worse. The World Trade Organization has also cut its global trade growth forecast for 2022 to 3% from an earlier projection of 4.7%, which would also weigh on India’s export outlook.
However, Trade and Industry Minister Piyush Goyal earlier expressed confidence that exports will also maintain the good pace in the current fiscal year as the benefits of the recently concluded free trade agreement with the United Arab Emirates and another deal with Australia will outweigh any potential losses caused by any geopolitical tension.
Importantly, merchandise exports hit a record $422 billion in FY22 as an industrial resurgence in advanced economies (before the war in Ukraine in late February) boosted demand for goods. indians. The country’s exports have remained below normal for the past decade, fluctuating between $250 billion and $330 billion a year since fiscal 2011; the highest export of $330 billion was in fiscal year 2019. Thus, a sustained increase in exports for a few years will be crucial for India to regain its lost market share, analysts said .
A Sakthivel, chairman of the apex export body FIEO, said: “The benefits of the newly signed FTAs and the PLI program will further help us to build on the milestones achieved in the previous fiscal year.”