India’s product exports increased by 24.2 percent year on year in April to $38.2 billion, the third-highest level ever, because of rising commodity prices despite the ongoing Russia-Ukraine conflict, according to preliminary trade data issued by the commerce ministry on Tuesday. The previous month had seen $42.2 billion in outbound shipments, which was a new high.
Imports increased by 26.6 percent to $58.3 billion in April, resulting in a $20.1 billion trade deficit for the month. Petroleum products (113.2%), electronic goods (64%), and chemicals (26.7%) dominated export growth in April, while engineering goods (15.4%), medicines (3.9%), and readymade clothes (16.4%) grew at a slower pace.
Despite a 73% dip in gold imports to $1.7 billion in April, imports grew at a healthy pace.
Coal accounted for 136.4 percent of total import growth, followed by crude oil (81.2 percent), chemicals (46.7 percent), vegetable oil (33.6 percent), and electronic goods (33.6 percent) (28.6 percent).
Aditi Nayar, the chief economist at ICRA, predicted that the merchandise trade imbalance will be above $20 billion for the majority of FY23 unless commodity prices fell significantly. “Oil was solely responsible for the growth in the merchandise trade deficit. Although the non-oil trade deficit remained stable, its composition changed, with a drop in gold imports being offset by an increase in non-oil non-gold imports such as coal and chemicals — an unpalatable but expected side effect of higher commodity prices brought on by the Russia-Ukraine conflict,” she explained.
Since the commencement of the war in Ukraine on February 24, the outlook for the global economy has deteriorated. Due to the protracted dispute and a potentially more transmissible Omicron subtype encircling China, the World Trade Organization (WTO) cut its global trade prediction for 2022 to 3% from 4.7 percent last month. Despite exceeding the $400 billion export objective by $20 billion in FY22, the commerce ministry has not set a new target for FY23, owing to the global trade uncertainties.