Exports grew 15% in May, trade deficit widens to $23.33 billion

India’s trade deficit widened to a record $23.33 billion in May 2022 as imports grew at a faster pace than exports amid high commodity prices due to the Russia-Ukraine war, according to the preliminary data released by the Ministry of Commerce and Industry.

The previous highest monthly trade deficit was $22.91 billion in November 2021. The deficit stood at $6.28 billion in May 2021.

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Imports increased 56.14% to $60.62 billion in May on account of a sharp jump in petroleum products amid rising global crude oil prices. Petroleum and crude oil imports during May 2022 surged 91.6% to $18.14 billion.

Gold imports saw a 759% rise to $5.8 billion and electronic goods jump 28.5% to $5.44 billion. Coal, coke and briquettes imports grew by 2.6 times to $5.3 billion, as against $2 billion in May 2021.

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India’s merchandise exports surged 15.46% year on year to $37.29 billion in May. Export growth declined by 7.2% compared to last month, after witnessing record outbound shipments of over $40 billion in March and April.

Among the top 10 major commodity groups covering 81% of total exports in May, all sectors except plastics, cotton yarns, and fabrics saw increases. Engineering goods, petroleum products, gems and jewellery, and organic and inorganic chemicals were the top exported goods.

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Exports of chemicals rose by 12% to $2.5 billion in the month under review. Similarly, exports of pharma and ready-made garments of all textiles grew by 5.78% and 23% to $1.98 billion and $1.36 billion respectively.

Despite the global headwinds, Indian engineering exports stood at $9.29 billion in May, posting growth of 7.84% year on year, showing that the sector was standing on firm footing and could withstand challenges, said Mahesh Desai, Chairman of Engineering Export Promotion Council India.

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He added that in the short and medium-term, there were concerns regarding demand slowdown in advanced economies which could potentially dent the ongoing momentum.

In April 2022, the World Trade Organisation (WTO) slashed its global trade forecast to 3% in 2022 from its earlier projection of 4.7% due to the ongoing conflict between Russia and Ukraine and Covid-19 curbs in China. The international trade body has said the prospects for the global economy had darkened since the outbreak of war in Ukraine.

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While India was able to beat the $400 billion export target in fiscal 2022, government officials said it might take some more time to fix the current financial year’s target as the geopolitical tensions had caused uncertainty among various sectors.