India’s merchandise exports rose 22.3% to $33.81 billion in February, while imports surged 35% to over $55 billion, widening the trade deficit to $21.2 billion, according to preliminary foreign trade estimates.
The trade deficit, which shrank to about $17 billion in January, had previously hit a record $22.9 billion in November 2021 and averaged $21.7 billion between September and December.
The February deficit was more than double the pre-pandemic February 2020 level. Fertilizer imports surged more than sevenfold to $1.6 billion last month, while coal imports surged to $2.8 billion more than doubled.
Gold imports were $4.68 billion, down 11.5% from February 2021 but nearly doubling from January’s $2.4 billion, a level that helped reduce the budget deficit this month had contributed.
The value of non-petroleum exports was US$29.7 billion in February, up 22.2% from pre-COVID, while non-petroleum imports grew faster and by 47.3% from February 2020 to 31.7 billion dollars increased.
“A rebound in oil and gold demand amid the third wave lull, coupled with rising global commodity prices fueled by escalating geopolitical tensions, boosted imports and widened the goods trade deficit in February,” commented Aditi Nayar, chief economist at ICRA.
“Interestingly, even as the pace of annual growth picked up in February compared to January, non-oil, non-gold imports weakened sequentially,” she noted, adding that the March trade deficit would be driven by the length of the Russia-Ukraine conflict and the impact on commodity and crude oil prices.
India’s cumulative foreign trade for 2021-22 appears on track to surpass the US$400 billion target, having surpassed US$374 billion by February, nearly 46% more than pre-pandemic exports in the United States 11 months from April 2019 to February 2020. surpassed US$550 billion, up 59.2% from pre-COVID, almost doubling the trade deficit to US$176 billion.
