India’s merchandise exports have grown 2.55% in June to $35.2 billion. Image for representation purposes only. File
| Photo Credit: S. Siva Saravanan
India’s merchandise exports grew for the third straight month in June, rising 2.55% to $35.2 billion, but the import bill climbed by a faster 5% to $56.2 billion, widening the trade deficit by 9.4% from a year ago, as per quick trade estimates released by the Commerce Ministry on Monday.
Commerce Secretary Sunil Barthwal said that total merchandise and services exports have hit a record high of $200.3 billion in the first quarter of 2024-25, surpassing the previous high of $197.1 billion recorded in 2022-23. While Services exports numbers for the last month will be released by the Central bank, the Ministry has pegged the number at $30.3 billion, 8.9% higher than a year ago.
Noting that global growth is looking up and inflation is trending down, Mr. Barthwal said that if growth impulses sustain, India could well cross $800 billion of total exports this year. “So that is a good takeaway from the quarterly figures, which gives us optimism,” the Secretary said. He added that the government is focusing on six key sectors and 20 countries to boost exports.
Total exports stood at a record high of $778.2 billion in 2023-24, 0.42% over the previous year. Exports will have to rise 2.8% through this year to hit the $800 billion mark, but as officials acknowledged, there are “many ifs and buts” in the mix, including festering geopolitical risks.
This June’s goods exports and imports were the second highest in 10 years, next only to the $42.3 billion of exports and $64.35 billion of imports recorded in June 2022, Mr. Barthwal asserted. The major growth drivers were engineering and electronics goods, up 10.3% and 16.9%, respectively, as well as drugs and pharmaceuticals (9.9%), chemicals (3.3%), and coffee (up 70%), the top trade official said.
Worryingly, petroleum exports slumped 18.3% in June to $5.5 billion, while imports rose 19.6% to $15.05 billion. However, this marked an improvement in the oil deficit which peaked at $13.2 billion in May, QuantEco Research economists said in a research note.
Another 10 of India’s top 30 export items clocked a decline in shipment values, including the labour-intensive sectors of handicrafts (-16.6%), jute (-11.1%), marine products (-7.7%) leather (-2.2%) and gems and jewellery (-1.4%).
On the imports front, the value of gold shipped in fell 38.7% year-on-year to $3.06 billion, but silver imports jumped 377.4% to $210.7 million. Electronics goods imports rose 16% to $7.6 billion, while pulses imports were up 69.1%.
For the first quarter, the merchandise trade deficit has expanded to $62.3 billion from $56.2 billion a year ago. ICRA chief economist Aditi Nayar said this is likely to push up India’s current account deficit to about 1.4% of GDP from 1% in the same quarter a year ago, marking a turnaround of the transient 0.6% of GDP surplus recorded between January and March 2024.