India’s merchandise exports and imports rose to a record in December, causing the trade deficit to remain elevated despite having narrowed over the preceding month.

Trade deficit eased to $21.68 billion in December 2021 from $22.91 billion in November, according to data published by the Ministry of Commerce and Industry on Thursday.

• Exports rose 38.9% year-on-year to $37.8 billion and imports increased 38.6% over the preceding year to $59.5 billion.

• Month-on-month, exports rose 25.8% and imports increased 12.4%.

"Though the trade deficit is growing exponentially, it's primarily due to petroleum and gems and jewellery imports," Prahalathan Iyer, chief general manager at India Exim Bank, told BloombergQuint. "India has headroom to accommodate further import growth that goes into manufacturing and export of value added products."

Trade deficit under non-petroleum and non-jewellery segment amounted to $35 billion during April-December 2021, compared to a much higher headline deficit, he said.

Key Export Items

Most major exports rose in December after declining the previous month.

• Engineering goods exports stood at $9.8 billion, up 38.4% year-on-year.

• Petroleum product exports were $5.9 billion, which is 152% higher over the preceding year.

• Gems and jewellery exports were at $3 billion, up 16.4% on an annual basis.

• Drugs and pharmaceuticals exports were at $2.3 billion, a rise of 5.2% on an annual basis.

Key Import Items

• Petroleum, crude and product imports rose 67.9% over the preceding year to $16.2 billion.

• Electronic goods imports stood at $6.4 billion, up 27.6% over a year earlier.

• Gold imports stood at $4.7 billion, increasing 5.4% from a year ago.

• Machinery, electrical and nonelectrical imports were at $3.8 billion, an increase of 20.6% over December 2020.

• Organic and inorganic chemicals imports rose 73.1% year-on-year to $3.3 billion.

• Imports of coal, coke and briquettes were 72.6% higher year-on-year at $2.8 billion.