Merchandise exports rose 22.6% in September from a year before and 29.9% from the pre-pandemic (same month in FY20) level, as orders from critical western markets and China continued to flow in.
However, imports surged at a much faster pace of 84.8% from a year before (albeit on a low base), driving up trade deficit to a record $22.6 billion in September, according to the provisional estimates released by the commerce ministry on Thursday.
Of course, imports were driven partly by a spill-over of pent-up domestic demand that remained mostly muted in the wake of the pandemic. But import bill was greatly inflated by elevated global crude oil prices, which are hovering around 3-year highs, and massive purchases of gold in the build-up to the festival season.
While exports stood at $33.79 billion in September, imports surged to $56.39 billion. The growth in exports in September was marginally better than the preliminary estimate released earlier this month.
Imports of petroleum products jumped over 199% year-on-year to $17.4 billion, supported by elevated crude oil prices. Gold purchases from overseas climbed 751% to $5.1 billion in the build-up to the festival season. Even edible oil imports shot up by 132% and coal purchases surged 83%. Of course, base effect, too, remained unfavourable.
However, policy-makers may seek comfort in the fact that merchandise exports have now exceeded the pre-pandemic level for seven months in a row. Exports between April and September hit a record $197.9 billion, up 57.5% from a year before and 24.3% from the same period in FY20.
Core export (excluding petroleum, and gems and jewellery) rose 18.8% in September from a year before, lower than the 22.6% growth in overall merchandise exports. Also, it was 33.4% higher than the level witnessed in August 2019.
Similarly, core import (excluding petroleum and gold) rose 40.5% year-on-year and 22.8% from the pre-pandemic level.
With the sharp rise in September, merchandise imports in the first half of this fiscal stood at $276 billion, up 81.7% from a year ago and 11.3% from the pre-Covid level.
Exports of petroleum products shot up by 48% in September, while those of cotton yarn, fabrics, made-ups and handloom products surged by 41%, engineering goods by 37% and organic and inorganic chemicals by 30%.
Commenting on the export data, A Sakthivel, president of exporters’ body FIEO, said recovery in key economies across the globe, coupled with the expectation of buoyant order booking position for the coming months, especially during the festive season, has led to such continuous growth in exports.
Aditi Nayar, chief economist at ICRA, said the sharp rise in goods trade deficit in September “reflects an element of inventory stocking ahead of the festive season as well as advancement of crude oil purchases in light of the looming hardening of prices”. While the deficit is expected to moderate in the coming months, it will likely range between $13 billion and $16 billion per month in the second half of this fiscal (higher than the first half), she added.