India exported goods worth US$34.57 billion in February, up about 25% from the same month last year, while imports grew faster by 36% to US$55.45 billion, new estimates showed on Monday published by the Department of Commerce.
The trade deficit widened to US$20.9 billion in February from a five-month low of US$17.4 billion in January and is expected to remain elevated in the coming months given high commodity and oil prices.
Total merchandise exports for the first 11 months of 2021-22 are US$374.81 billion, close to the government’s full-year target of US$400 billion. This represents a 28.4% increase from pre-COVID exports. Full-year imports topped $550 billion over the same period, up 24.2% from pre-pandemic levels.
While the surge in exports was fueled by petroleum and engineered products, stronger growth in non-gold imports was responsible for the goods trade deficit widening significantly from the $13.1 billion recorded in February 2021, said Aditi Nayar, ICRA’s chief economist .
$4.77 billion worth of gold was imported in February, down 9.65% from February 2021 but almost double the previous month’s figure.
“While higher commodity prices will fuel imports in March, the volume of oil imports will play a key role in determining the size of the trade deficit. We expect the trade deficit to remain above $20 billion in March,” Ms Nayar said, adding that exports are likely to reach $410 billion in 2021-22.
Exporters of technical goods, which averaged more than 9 billion euros this year
“While the industry is grappling with high freight costs, the increase in global commodity prices is fast becoming another major challenge and the upcoming increase in diesel and gasoline prices would have its impact,” said Engineering Export Promotion Council Chairman Mahesh Desai, hoping the government would help exporters deal with these factors.