India’s exports grew at a slower pace in January, after recording the highest monthly shipments of goods on record in December, according to data released by the Ministry of Trade and Industry on Tuesday.
However, exports remained above the $30 billion mark for the eleventh straight month amid an increase in Omicron cases across the world. Merchandise exports rose 27.54% year-on-year (YoY) to $34.5 billion in January as demand for Indian goods remained robust.
Mechanical products, petroleum products, precious stones and jewellery, organic and inorganic chemicals, medicines and pharmaceuticals were the main export categories.
However, outbound shipments fell 8.7% sequentially. In the first 10 months of the current fiscal year, exports totaled $335.88 billion, up more than 46% year-on-year. The government has set an export target of $400 billion for the fiscal year 2021-22 (FY22).
Imports also remained high, with shipments worth $51.93 billion entering the country, up 23.54 percent year-on-year. As a result, India was a net importer, with a trade deficit of $17.42 billion.
CIFAR Chief Economist Aditi Nayar said restrictions on mobility and demand for gold with the onset of the third wave helped push the merchandise trade deficit to a five-month low in January.
India imported gold worth $2.4 billion, down 40.5% year-on-year. However, on a cumulative basis, inbound shipments of gold rose 94% year-on-year to $40.4 billion from April to January, which experts said was due to pent-up demand. Gold is the second largest component of India’s import bill.
“In our view, the surge in gold imports in 2021 was driven by pent-up demand from 2020. We expect gold imports to moderate to $30-35 billion in 2022. We expect the deficit in the current account will widen to $26. 29 billion in the third quarter, before falling back to 15-17 billion in the fourth quarter,” Nayar said.
Non-oil and non-gems and jewelry exports, also an indication of domestic industrial demand, totaled $27.1 billion in January, up 19.4% year-on-year.
Prahalathan Iyer, chief managing director, research and analysis, India Exim Bank, said while export performance has been promising this year, imports have remained strong, particularly since September.
“The trade deficit is expected to reach the record level of $190 billion recorded in FY13. Nevertheless, the trade surplus generated in the services sector is expected to partially offset the deficit of more than $100 billion,” he said. said Iyer.