India’s exports grew a robust 20.18% in May, a six-month high, benefiting from a broad-based recovery in sectors led by petroleum. Costlier crude also caused imports to grow 15% in the month, leaving a four month high trade deficit of $14.62 billion, or about Rs 99,975 crore. Trade deficit was $13.84 billion in May 2017.
Growth in 23 out of 30 sectors, including petroleum products, organic and inorganic chemicals, and drugs and pharmaceuticals helped exports grow by one fifth to $28.86 billion in May, while a near 50% increase in oil imports drove the Country’s total imports to $43.48 billion. The Country’s exports growth in May was faster than China’s 12.6% growth.
Major commodity groups of export showing positive growth over the corresponding month of last year included petroleum products (104.47%), organic and inorganic chemicals (34.21%), drugs and pharmaceuticals (25.67%), cotton yarn (24.7%), and engineering goods (14.77%).
Aditi Nayar, Principal Economist at credit rating agency ICRA, said, “Even though merchandise export growth outpaced that of merchandise imports in May 2018, the trade deficit widened on a year-on-year basis, as a higher net oil import bill wiped away the benefits of a contraction in imports of gold and precious stones.”
The rise in imports in the month was driven by 49.46% jump in oil imports at $11.5 billion on the back of surging international crude prices.
Gold imports fell 29.85% last month to $3.48 billion compared to $4.96 billion in May 2017.
Imports of inputs such as iron and steel, nonferrous metals, fertilisers, chemicals, coal, machinery and transport equipment increased on account of firmer oil prices.
Services exports in April were $17.56 billion, as per Reserve Bank of India while imports were valued at $10.92 billion.