Indian Exports Surge For Second Straight Month But Trade Deficit Widens
The surge in exports was offset by higher gold and oil imports.
India's exports grew for a second straight month, but the trade deficit widened as the surge in gold and oil imports offset the rise in exports.
Exports in March rose 27.6 percent from the same month last year to $29.2 billion, data released by the commerce ministry showed. This is the highest recorded growth since September 2011, according to Bloomberg data. Imports surged 45.3 percent year-on-year to $39.6 billion.
As a result, the trade deficit in March widened to $10.4 billion from $4.4 billion in the same month a year ago and $8.9 billion in February.
The engineering goods segment, that includes automobiles and auto parts, saw a 46.6 percent rise in exports to $7.8 billion compared to last year. Gems and jewellery exports went up 12.5 percent to $4.1 billion. Exports of petroleum products too jumped 69 percent to $3.7 billion.
Export growth was stronger than expected and broad based, said Nomura Global Research in a report released on Thursday evening.
While oil exports rose sharply (69.1 percent y-o-y), non-oil exports also surged 23.2 percent. The pick-up was also rather broad-based, with exports of all key export sectors – engineering goods (capital goods), agriculture products, gems & jewellery, textiles and pharmaceuticals – rising sharply.Nomura Global Research
Higher exports were offset by the surge in gold imports as jewellers stocked up in anticipation of a demand recovery during the wedding season and the auspicious Hindu gold-buying festival of Akshaya Tritya.
The value of gold imports in March increased nearly 330 percent percent to $4.1 billion from last year. Oil imports rose more than 100 percent to $9.7 billion.
Exports from India to the European Union grew the most at 9.2 percent. The growth in exports to the U.S. stood at 8.9 percent, while it was 7.8 percent higher for China.
Overall, the trade data suggest that stronger global demand and higher export prices are driving an exports recovery. However, there are risks to this uptrend from protectionist policies in the U.S., a slowdown in China and fading price effects. The recovery in imports reflects higher commodity prices and a likely improvement in domestic demand, particularly consumption, with ongoing remonetisation.Nomura Global Research