Trade deficit widens to $14.62 billion

Exports in May grow faster on the back of engineering goods, petro products, chemicals and pharma

Union Commerce Minister Suresh Prabhu addresses a press conference in New Delhi. File

India’s merchandise trade deficit widened to $14.62 billion in May 2018, official data released on Friday showed. The shortfall was $13.72 billion in April 2018 and $13.84 billion in May 2017.

“Exports during May 2018 were valued at $28.86 billion as compared to $24.01 billion during May 2017 exhibiting a positive growth of 20.18%,” the government said in a release. “Imports during May 2018 were valued at $43.48 billion which was 14.85% higher in dollar terms.”

Smart uptick

In contrast, merchandise exports in April had grown by only 5.17%, while imports grew 4.6%. The export growth in May 2018 was better than that seen in May last year, while the import growth was slower. Exports grew 8.32% in May 2017, while imports grew 33.1%.

The major export groups that witnessed strong growth in May 2018 included engineering goods (14.8%), petroleum products (104.5%), organic and inorganic chemicals (34.2%), drugs and pharmaceuticals (25.7%), and cotton yarn/fabrics/made-ups and handloom products (24.7%).

“Exports growing by 20% is certainly good news but the challenge is to keep the momentum,” said Ravi Sehgal, chairman, Engineering Export Promotion Council of India. “While a growing U.S. economy would help, the U.S.-China trade war must be watched. Back home, rising raw material costs will be a challenge.”

‘Vigil needed’

“Escalating trade war between the U.S. and China would vitiate the global trading environment, making it imperative for India as well to keep a vigil on the fast-moving developments,” Mr. Sehgal added. “With the U.S. confirming 25% tariffs on $50 billion Chinese imports and the Chinese stating they would retaliate, it is time for India to keep engaged with both the U.S. and China to safeguard our own interest.”

The government said, “Cumulative value of exports for the period April-May 2018-19 was $54.77 billion as against $48.65 billion registering a positive growth of 12.58% in dollar terms and 16.37% in rupee terms over the same period last year.”

“Oil imports during May 2018 were valued at $11.5 billion which was 49.5% higher in dollar terms and 56.7% higher in rupee terms compared to $7.69 billion in May 2017,” the government said.

“Oil imports during April-May 2018-19 were valued at $21.91 billion which was 45.6% higher in dollar terms and 50.5% higher in rupee terms compared to $15.05 billion in the corresponding period last year,” the government added in the release.

The government, however, did mention that global Brent prices had increased by 50.7% in May 2018 compared with their levels in May 2017, as per commodity price data from the World Bank.