India Trade Deficit Widens To $23.8 Billion In May

India's merchandise trade deficit expanded in May as the rise in imports outpaced the increase in exports.

In absolute terms, the trade gap widened to $23.8 billion in May, as compared with $19.1 billion in April, according to a press briefing by the Ministry of Commerce and Industry on Friday.

• Exports rose by 9.1% year-on-year to $38.1 billion.

• Imports increased 7.7% year-on-year to $61.9 billion.

• Exports rose 9% month-on-month as compared with April.

• Imports rose 14.5% month-on-month from April.

In sequential terms, 71% of the enlargement in the merchandise trade deficit in May, relative to April, was driven by the net oil balance, with a sharp rise in volume amid some cooling in prices, Aditi Nayar, chief economist at ICRA, said.

The rise in exports is a reflection of slowing down of inflation in advanced economies, Commerce Secretary Sunil Barthwal said, at a press briefing. With inflationary pressure coming down in those countries, high purchasing power with their consumers will raise demand for imports and this positive trend will continue, he said.

• Exports of engineering goods stood at $10 billion, 7.4% lower year-on-year.

• Petroleum product exports were at $6.8 billion, 15.8% higher than a year earlier.

• Gems and jewellery exports were at $2.8 billion, 2.2% lower on an annual basis.

• Organic and inorganic chemical exports were at $2.3 billion, 3.2% higher on an annual basis.

• Drugs and pharmaceutical exports were at $2.3 billion, 10.5% higher from over a year earlier.

• Electronic exports were at $3 billion, 23% higher from over a year earlier.

• Petroleum, crude, and product imports were down 28.1% from a year ago at $19.9 billion.

• Organic and inorganic chemical imports were at $2.5 billion, 0.5% lower on an annual basis.

• Imports of coal, coke, and briquettes were down 26.5% than a year ago at $3.3 billion.

• Imports of electronic goods were at $7.1 billion, 6.7% higher over a year earlier. 

• Machinery, electrical and non-electrical goods were at $4.1 billion, down 0.3% over the previous year.  

• Gold imports stood at $3.3 billion, 9.8% lower than a year ago.

"With the merchandise trade deficit enlarging by about $6 billion in April-May 2024 relative to the year-ago months, we expect the current account deficit to rise to about 1.5% of GDP in this quarter, from about 1.1% of GDP in Q1 FY24," according to Nayar.