India exported merchandise worth $34.57 billion in February, about 25% higher than in the year-earlier period month, while imports grew at a faster pace of 36% to touch $55.45 billion, as per fresh estimates released on Monday by the Commerce Ministry.
The trade deficit widened to $20.9 billion in February from the five-month low of $17.4 billion in January and is expected to stay elevated in coming months in view of high commodity and oil prices.
Total merchandise exports during the first 11 months of 2021-22 stand at $374.81 billion, close to the $400 billion target set by the government for the full year. This marks a 28.4% increase from pre-COVID exports. Imports for the full year have crossed $550 billion in the same period, 24.2% higher than pre-pandemic levels.
While the uptick in exports was driven by petroleum and engineering products, a sharper growth in non-gold imports was responsible for the merchandise trade deficit rising significantly from the $13.1 billion recorded in February 2021, said Aditi Nayar, chief economist at ICRA.
Gold worth $4.77 billion was imported in February, 9.65% lower than February 2021, but almost double the imports in the preceding month.
“While higher commodity prices will inflame 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 should clock $410 billion in 2021-22.
Engineering goods exporters, with outbound shipments averaging more than $9 billion this year, are also concerned about the impact of high input costs and anticipated fuel price increases.
“While the industry has been grappling with high freight charges, the rise in global commodity prices is fast emerging as another major challenge and the imminent hike in diesel and petrol prices would have its impact,” said Engineering Export Promotion Council chairman Mahesh Desai, hoping the government would help exporters cope with these factors.
