Merchandise exports reached $ 40.2 billion in April, a record for the first month of any fiscal year, up 30.7% from a year earlier. However, imports jumped 31% to $ 60.3 billion in April, driven by higher commodity prices, especially energy products. The trade deficit widened to 20 20.1 billion in April from 18 18.5 billion the previous month.
According to Iqra estimates, without a significant easing of international commodity prices, the FY23 trade deficit for most of the month will likely exceed the significant $ 20-billion mark. As a result, CAD is projected to increase to $ 20-23 billion in the June quarter, compared to $ 15.5-17.5 billion in the previous three months, according to Icra. Of course, senior government officials have expressed concern about CAD funding.
Among the higher-priced segments, the growth in exports in April was led by petroleum products (128%), followed by electronics (72%) and chemicals (28%). Even core exports (excluding petroleum and gems and jewelery) rose 19.9% to $ 28.5 billion in April, reflecting modest external demand and the impact of higher commodity prices.
Similarly, core imports rose 34.4% to $ 35.7 billion in April. Among major commodities, coal purchases rose 146% to $ 4.9 billion, petroleum 88% to $ 20.2 billion and electronics 33% to $ 6.7 billion.
Although orders from certain jurisdictions are still coming, supply-side barriers after the Russia-Ukraine war have hurt domestic exporters’ ability to ship goods. Rising international shipping costs have made matters worse. The World Trade Organization (WTO) has also cut its global trade growth forecast for 2022 by 3% from its previous estimate of 4.7%, which will also affect the export potential of India.
However, Commerce and Industry Minister Piyush Goel had earlier expressed confidence that exports would continue to pick up in the current financial year, as the benefits of the recently concluded free trade agreement with the UAE and another agreement with Australia outweighed the potential losses. No geopolitical tensions.
Significantly, exports of commercial goods reached a record $ 422 billion in FY22, as industrial revival in a developed economy (before the Ukraine war in late February) sparked demand for Indian goods. The country’s exports have been below par for the past decade, fluctuating between $ 250 billion and 330 billion a year since FY11; The highest export was achieved at Y 330 billion FY19. Thus, a sustainable increase in exports over the next few years will be crucial for the recovery of India’s lost market share, analysts say.
“The benefits of the newly signed FTA and PLI scheme will further help us to build on the milestones achieved in the previous financial year,” said A. Shaktivel, President, FIEO, one of the leading exporters.