India’s merchandise exports rose 30.7% year on year to $40.19 billion in April, up $2 billion from estimates released earlier this month, the Commerce Ministry said on Friday.
Imports of goods during the month also came in at $60.3 billion, up $2 billion from earlier estimates, up 31%. The April trade deficit of $20.11 billion is slightly higher than previous estimates and larger than the March deficit of $18.5 billion.
Rating agency ICRA expects the goods trade deficit to widen to an all-time high of $250-255 billion in 2022-23 as export growth slows to around 9% over the year, in line with global trade flows. Imports, on the other hand, are expected to increase by around 16%, with domestic demand growth expected to outpace external demand.
The increase in exports was led by petroleum products (up 127.69%), electronic goods (71.69%), grains (60.83%), coffee (59.38%), processed foods (38.82%) and leather products (36.68%). Record merchandise exports for April, the ministry said.
Excluding petroleum, precious stones and jewelry exports, the growth rate was lower at 19.9%, with $28.46 billion worth of outbound shipments. In contrast, imports excluding these categories rose much more sharply to $35.7 billion, up 34.4% from a year ago.
Coal and petroleum imports were higher than previous estimates – with the former reporting a 146.3% increase to $4.93 billion and the latter rising 87.5% to about $20.2 billion. The value of fertilizer imports has almost tripled to $1.2 billion from $376 million in April 2021. The increase in these three import categories reflects the sharp increase in global prices.
“While imports and exports grew at similar rates, the goods trade deficit widened to $20.1 billion in April 2022 from $15.3 billion in April 2021, fueled by oil. Amid increased commodity prices after the Russia-Ukraine conflict, total merchandise imports remained above $60 billion for the second straight month,” noted Aditi Nayar, chief economist at ICRA rating agency.
While gold imports fell 72.3% to just $1.7 billion from $6.2 billion in April 2021, silver imports increased nearly 10-fold, albeit from a lower baseline of $11.90 million a year ago to $109.5 million in April 2022.
Ms Nayar expected the rupee to face a depreciating bias, trading between 75 and 79 per dollar by September 2022. A worsening current account deficit, combined with tighter monetary policy around the world and an aversion to emerging market assets, will put pressure on the rupee. However, India’s large foreign exchange reserves and likely withdrawal of foreign investors from the debt market would curb further depreciation from recent record lows, she said.
