Exports up 15.46% in May; trade deficit widens to a record $23.3 billion

India’s trade deficit widened to a record $23.33 billion in May as imports grew at a faster pace compared to exports amid high commodity prices owing to the Russia-Ukraine conflict, the preliminary data released by the commerce and industry ministry showed on Thursday.

The previous highest monthly trade deficit was $22.91 billion in November 2021. The deficit stood at $6.28 billion in May last year.

Imports surged 56.14 per cent to $60.62 billion in May on the back of a sharp jump in petroleum products amid rising global crude oil prices. The share of petroleum products in India’s total imports was 30 per cent in May, growing 91.6 per cent year-on-year to $18.1 billion. Gold imports witnessed a 759 per cent jump to $5.8 billion; electronic goods rose 28.5 per cent to $5.44 billion; and coal imports grew by 2.6 times to $5.3 billion in May.

India’s merchandise exports grew 15.46 per cent YoY to $37.29 billion in May. Export growth fell by 7.2 per cent compared to last month, after witnessing record outbound shipments of over $40 billion in March and April.

Of the top 10 major commodity groups covering 81 per cent of the total exports in May, all sectors except plastics, cotton yarns, and fabrics continued to rise. Engineering goods, petroleum products, gems and jewellery, organic and inorganic chemicals were top exported products. 

Engineering Export Promotion Council India Chairman Mahesh Desai said that despite global headwinds, Indian engineering exports stood at $ 9.29 billion in May, recording growth of 7.84 per cent compared to last year, showing that the sector was standing on firm footing and could withstand challenges.

He further said that in the short and medium term, there were fears of demand slowdown in advanced economies which could potentially dent the ongoing momentum.

In April, the World Trade Organization (WTO) had lowered its global trade forecast to 3 per cent in 2022 from its previous projection of 4.7 per cent due to the ongoing conflict between Russia and Ukraine and Covid-19 curbs in China. The global trade body had said the prospects for the global economy had darkened since the outbreak of war in Ukraine.

While India was able to surpass the $400-billion export target in FY22, government officials said it might take some more time to fix the current financial year’s target as the geopolitical tensions had caused uncertainty among various sectors.