Even As Trade Deficit Increases, Indian Exports Rise 16.8 Per Cent To $37.9 Billion In June 2022
India’s trade deficit in June 2022 moved up to $25.63 billion as merchandise import in June 2022 surged 51.02 per cent to $63.58 billion from $42.1 billion in June 2021.
Amid a persistent widening of India’s trade deficit, merchandise exports of the country rose by 16.8 per cent year-on-year to $37.94 billion in June 2022 from $32.49 billion in June 2021.
Petroleum products with export growth of 98.01 per cent, electronic goods with export growth of 50.66 cent and RMG of all textiles with export growth of 44.67 per cent led the way in high increase in exports during June 2022, the Commerce Ministry said on Monday (4 July).
According to president of the Federation of Indian Exporters Organisation, A Sakthivel, petroleum products, gems and jewellery, electronic goods, RMG of all textiles, rice and organic and inorganic chemicals were among the top sectors which led the exports growth during the month. On a positive note, labour-intensive sectors also contributed to the exports basket, which augurs well for job creation in the country.
The country’s merchandise export during the April-June quarter of FY 2022-23 was a 22.2 per cent jump y-oy to $116.7 billion from $95.54 billion in the first quarter of FY22, which is also the highest ever exports during Q1FY23.
Seen amidst challenging ongoing geo-political and rising global uncertainties, the June exports look impressive as the highest flow of goods last month but were a modest improvement on a sequential basis from $37.3 billion exports in May 2022.
Exports growth may have been constrained by the base effect as well as the contraction posed by engineering goods, drugs and pharma, cotton yarn etc., points out Aditi Nayar, Chief Economist, ICRA.
India’s trade deficit in June 2022 moved up to $25.63 billion as merchandise import in June 2022 surged 51.02 per cent to $63.58 billion from $42.1 billion in June 2021. On a quarterly basis as well, the trade deficit during April-June of this fiscal rose to $70.25 billion as merchandise imports in the first quarter of FY23 grew to $187.02 billion, a 47.31 per cent increase over $126.96 billion in the corresponding quarter of FY22.
Crude and coal were responsible for around three-fourth of the yoy rise in merchandise imports in June 2022, driving the widening of the current account deficit. “The worrying factor here is the increase in June trade deficit despite an expected fall in the gold imports,” says Nayar.
With a steady uptick in the size of the merchandise trade deficit over the course of the quarter, ICRA expects the current account deficit to more than double to $30 billion in Q1 FY2023, from the modest $13 billion in the previous quarter.
A closer look at the June data shows value of non-petroleum exports in June 2022 at $30.12 billion, registering a positive growth of 5.53 per cent over non-petroleum exports of $28.54 billion in June 2021. The cumulative value of non-petroleum exports in the June quarter of FY23 was $92.49 billion, an increase of 11.92 per cent over $82.65 billion in the same quarter in the year ago period.
Value of non-petroleum imports was $42.84 billion in June 2022 with a positive growth of 36.36 per cent over non-petroleum imports of $31.42 billion in June 2021. The cumulative value of non-petroleum imports in the April-June period of 2022-23 was $126.95 billion, showing an increase of 32.18 per cent compared to non-oil imports of $96.04 billion in April-June 2021-22.
Value of non-petroleum and non-gems and jewellery exports -- which comprises a basket of gold, silver and precious metals -- in June 2022 was $26.75 billion, registering a positive growth of 4.0 per cent over non-petroleum and non-gems and jewellery exports of $25.72 billion in June 2021.
The cumulative value of this category of exports in the June quarter of FY23 was $82.43 billion, an increase of 12.19 per cent over the cumulative value of exports of the same basket of goods at $73.47 billion during the same quarter in a year ago period.
Value of gold, silver and precious metals imports, was $36.7 billion in June 2022 with a positive growth of 31.71 perf cent over these gold, silver and precious metals imports of $27.87 billion in June 2021. On a cumulative basis, gold, silver and precious metals imports in April -June 2022-23 was $107.14 billion, recording a positive growth of 32.55 per cent, as compared to this import basket worth $80.83 billion in April -June 2021-22.
ICRA expects merchandise trade deficit to remain in excess of $20 billion in the remainder of 2022. However, robust services surpluses can partly absorb the shock and rising imports of gold may lead to impressive gems and jewellery exports in the coming months.
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