India's Trade Deficit Widens To A Record High In June
The trade deficit widened to a record high in June as exports moderated and imports continued to rise.
India's trade deficit widened in June as exports moderated and imports continued to rise sequentially, led by oil and coal.
The trade deficit rose to $25.6 billion in June, a record high, compared with $24.3 billion in the preceding month, according to preliminary data by the Ministry of Commerce and Industry on Monday.
Exports rose 16.8% year-on-year to $37.9 billion. On a month-on-month basis, exports fell 2.6%.
Imports rose 51% year-on-year to $63.6 billion. They rose by 0.6% over the previous month.
Non-petroleum and non-gems & jewellery exports in June were at $26.75 billion, a growth of 4% year-on-year.
Non-petroleum, non-gems & jewellery imports were at $36.70 billion, a growth of 31.7% year-on-year.
Despite an expected fall in the gold imports, the merchandise trade deficit widened further to a worrying $25.6 billion in June 2022, with a sequential dip in exports and a rise in the non-gold imports relative to May 2022, Aditi Nayar, chief economist at ICRA Ltd., said. "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 FY23, from the modest $13 billion in the previous quarter."
For the full fiscal, current account deficit is expected to print in the range of $100-105 billion in FY23, according to Nayar's estimates.
Key Export Items
Engineering goods exports stood at $9.1 billion, down 1.6% year-on-year.
Petroleum product exports were at $9.1 billion, 98% higher than a year earlier.
Gems and jewellery exports were at $3.4 billion, 19.4% higher on an annual basis.
Organic and inorganic chemical exports were at $2.8 billion, 5% higher on an annual basis.
Drugs and pharmaceutical exports were at $2 billion, 1.3% lower over a year earlier.
“In general, exports have remained resilient, driven by strong shipments of electronic goods, petroleum products and ready-made textiles,” said Madhavi Arora, lead economist at Emkay Global.
Key Import Items
Petroleum, crude and product imports were up 94.2% over a year earlier at $20.7 billion.
Imports of coal, coke and briquettes were 241.8% higher than a year ago at $6.4 billion.
Electronic goods imports were at $5.8 billion, up 26.9% over a year earlier.
Machinery, electrical and non-electrical goods were at $3.6 billion, up 14.1% over a year ago.
Gold imports stood at $2.6 billion, 169.5% lower than a year ago.
Core imports rose by 6% MoM, reflecting growing demand in the domestic economy, said Arora. With oil imports climbing further and coal imports surging to $ 6.4 billion in June from an average of $ 2.6 billion per month in FY22, the energy crunch was once again evident, evoking memories of the energy shock of 2011,” said Arora.