India’s May exports up 67% YoY at $32.21 bn; commerce deficit at 8-month low


Demand for outbound shipments from India continued to be on the upward thrust, with India’s merchandise exports estimated at $32.21 billion in May, up 67.39 per cent year-on-year, and 7.93 per cent as compared with May 2019.

Exports grew 5.15 per cent on a sequential basis. The year-on-year growth will also be attributed to a weak base because of the disruption caused by a nationwide lockdown final year. Alternatively, compared with the pre-pandemic period and April 2021, the most recent data released by the government is emblematic of recovery in outside demand. The growth used to be driven by a rise in demand for engineering goods, petroleum products, gems and jewellery, pharmaceuticals and iron ore.

Preliminary data released by the trade and industry ministry showed that Merchandise exports in the first two months of the fiscal year used to be $62.84 billion, up 12.44 per cent as in comparison to April-May 2019.

Exports were not immediately affected by the imposition of the lockdown across quite a lot of states to contain the devastating resurgence of Covid-19 spread from April. Exporters said that the affect of lockdown in several states used to be limited, unlike final year when the nationwide lockdown used to be far more stringent.

India’s merchandise imports declined to a six-month low in May at $38.53 billion, as state-specific curbs amid the second one wave of the pandemic hurt domestic consumption.

Imports grew 68.54 per cent on-year. On a sequential basis, imports were down 18.66 per cent, and fell 17.47 per cent as in comparison to May 2019.

According to Aditi Nayar, chief economist at ICRA, appreciable moderation in merchandise imports in May as in comparison to April is as a result of a drastic fall in gold imports, in addition to a dip in oil imports, with state curbs hitting mobility.

Commerce deficit hit an eight-month low and narrowed to $6.32 billion, as in comparison to $15.1 billion in April and $16.84 billion in May 2019. Alternatively, it grew 74.69 per cent on-year from $3.62 billion in May 2020 because of the disruption caused by the Covid-19 induced lockdown final year.

“A predominant 63 per cent of the decline in the commerce deficit in May 2021 relative to April 2021 used to be as a result of the collapse in gold imports, with the balance led by a narrower oil deficit, led both by higher exports and lower imports,” Aditi Nayar, chief economist at ICRA said, adding that collapse in gold imports may also be attributed to large stock built up since the Union Budget for 2021-211 used to be presented.

Engineering and Export Promotion Council of India (EEPC) India Chairman Mahesh Desai said that despite logistics and manpower issues caused by the second one wave of pandemic, shipments of engineering goods remained robust in the month of May.

“Like preceding two months, exports of engineering goods saw a substantial year-on-year rise of 53.14% in May primarily as a result of low-base because of strict lockdown in the same month final year. We expect the order book of exporters to remain strong in the current financial year provided the demand trend from key markets such as US, China and Europe,” Desai said.

In May, non-petroleum and non-gems and jewellery exports used to be $23.97 billion, up 45.96 per cent on year. As in comparison to May 2019, the segment grew 11.51 per cent.

Federation of Indian Export Organisations (FIEO) President Sharad Kumar Saraf said that growth in labour-intensive sectors such as cereal preparations and miscellaneous processed item, gems and jewellery, engineering goods, marine products, among others, augurs mannered for the job scenario, which is most applicable in the current context.

“The continuing impressive growth in exports reiterate our assessment that the order booking position of our exporters isn’t just extremely good but also the gradual opening up of major global markets and improvement of the situation in the country is expected to push exports growth further,” Saraf said.

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