Exports grow 16.8%; merchandise trade deficit hit fresh high in June

India’s merchandise trade deficit hit a fresh high of $25.63 billion in June as imports surged 51% to $63.6 billion, significantly outpacing the 16.8% rise in exports, preliminary trade data show.

The previous record trade gap was May’s $24.3 billion.

While exports increased to almost $38 billion last month, overseas purchases of goods, including coal and gold, swelled imports.

Coal imports more than tripled, while imports of gold grew over 169% to exceed $2.6 billion. And petroleum imports rose 94.2%.

The value of non-petroleum imports was $42.84 billion in June, reflecting a growth of 36.4%, while non-oil and non-gold, silver and precious metals imports rose 31.7% to $36.7 billion.

“Despite an expected fall in the gold imports, the merchandise trade deficit widened further to a worrying $25.6 billion… with a sequential dip in exports and a rise in the non-gold imports relative to May,” said ICRA chief economist Aditi Nayar.

“With a steady uptick in the size of the merchandise trade deficit over the course of the quarter, we expect the current account deficit to more than double to $30 billion in Q1 of 2022-23, from the modest $13 billion in the previous quarter,” she said.

Key exports slide

Four of India’s top 10 export items saw a contraction.

Engineering goods, a major growth driver in the last year, slid 1.6%, drugs and pharmaceuticals fell 1.3%, cotton yarn and handloom products shrank 22.5% and plastic and linoleum contracted 23.2%.