Exports Jump To A Record; Trade Deficit Widens To Three-Month High In July

India’s trade deficit continued to widen in July on a pick-up in imports, while exports rose to a record.

Trade deficit widened to $10.97 billion in July, the highest after April, from $9.37 billion in June, according to data released by the government on Friday.

• Merchandise exports rose 9% month-on-month to $35.4 billion. This is higher than the $35.17 billion preliminary estimate released earlier this month.

• Merchandise imports increased 10.8% to $46.4 billion, in line with the preliminary estimates.

• On an annual basis, exports rose 49.9% and imports increased 62.9% on a low base.

.

The July month witnessed a record level of exports, said Prahalathan Iyer, chief general manager, research & analysis, at India Exim Bank. The rise in exports of non-petroleum, and non-gems and jewellery items is an interesting trend, he said. The segment has grown 32.3% over July 2019, higher than the 28.2% growth over the July 2020 level.

Aditi Nayar, chief economist at ICRA Ltd., said the merchandise trade deficit was almost entirely contributed by petroleum products and precious metals and stones, with the net deficit of the balance items limited to a muted $0.6 billion, shrinking from an average of $2.2 billion in the previous quarter. "As the economy recovers further, we expect the non-oil non-precious trade deficit to revert to an average of $2.5 billion per month over the next few quarters."

Key Export Items

• Petroleum products rose 45.5% month-to-month to $5.9 billion.

• Gems & jewellery jumped 22.4% to $3.5 billion.

• Readymade garments increased 38.6% to $1.4 billion.

• Drugs and pharmaceuticals up 6.1% at $2.1 billion.

• Engineering goods rose 2.5% to $9.5 billion.

• Electronic goods increased 19% to $1.2 billion.
  

Key Import Items

• Gold saw a sharp surge in imports, rising 333.4% month-on-month to $4.2 billion in July.

• Coal, coke and briquettes rose 4.6% to $2 billion.

• Petroleum, crude and and products up 20.8% at $12.9 billion.

• Machinery, electrical & non-electrical contracted 8.8% to $2.8 billion.

• Electronic goods rose 15.7% to $5.3 billion.

• Pearls, precious and semi precious stones up 2.2% at $2.6 billion.