India's Trade Deficit Narrows Marginally In October

India trade deficit fell marginally in October as exports rose and imports eased.

Trade deficit stood at $19.73 billion, compared to $22.59 billion in September. In September, the monthly deficit was at an all-time high.

• Exports rose 5.5% month-on-month to $35.65 billion in October. On an annual basis, it increased 43.1%.

• Imports fell 1.8% sequentially to $55.37 billion. It increased 62.5% over the preceding year.

The export momentum continues to be encouraging but imports have also started to grow at a rapid rate both due to higher of crude oil imports as well as higher domestic demand for non-oil products, Suman Chowdhury, chief analytical officer at Acuite Research, told BloombergQuint.

Rise in non-oil imports indicates a recovery in the economy and further, sharply higher demand for gold, and gold imports have continued to shoot up, he said. Merchandise trade deficit for April-October 2021, at $98 billion, has almost touched the $100 billion in the pre-pandemic April-October 2019 period, reflecting the acceleration in the trade normalization trajectory in the current year, Chowdhury said.

Accordingly, we expect the current account balance to turn from a frankly unwanted surplus in Q1 FY22 to a deficit of about $13 billion in Q2 FY22, as economic activity gathers pace and the consumption revival strengthens, Aditi Nayar, chief economist at ICRA, said.

Key Export Items (YoY)

• Petroleum products rose 240.2% to $5.3 billion.

• Gems and jewellery jumped 44.2% to $4.2 billion.

• Readymade garments increased 6.4% to $1.3 billion.

• Drugs and pharmaceuticals fell 0.9% to $2.1 billion.

• Engineering goods rose 50.9% to $9.4 billion.

• Electronic goods increased 39.6% to $1.4 billion.

Key Import Items (YoY)

• Gold imports rose 104.3% to $5.1 billion.

• Coal, coke and briquettes increased 118.9% to $3.3 billion.

• Petroleum, crude and and products up 140.4% at $14.4 billion.

• Machinery, electrical and non-electrical contracted 41.8% to $3.5 billion.

• Electronic goods rose 23.1% to $6.8 billion.

• Pearls, precious & semi-precious stones rose 8.4% to $2.5 billion.

• Organic and inorganic chemicals rose 67.9% to $2.6 billion.