India’s merchandise trade deficit widened to $22.12 billion in May, the highest in five months, as exports contracted for the fourth month in a row due to weak global demands.
The country’s merchandise exports dipped by 10.3 per cent to $34.98 billion in May as compared to $39 billion recorded in the same month last year, as per data released by the Ministry of Commerce and Industry.
Imports also declined, albeit at a slower pace leading to a widening in the trade deficit. India’s merchandise imports declined to $57.10 billion in May as compared to $61.13 billion recorded in the same month last year, a decline of 6.6 per cent.
Export in May was nearly the same as recorded in April when it stood at $34.66 billion. However, the value of imports in May was 14 per cent higher when compared with the previous month. This led to a sharp jump in the trade deficit from $15.24 billion in April to $22.12 billion in May.
Commerce Secretary Sunil Barathwal blamed global economic slowdown for the dip in India’s exports.“It is the global slowdown that is affecting our trade,” he said.
Services exports rose marginally to $25.30 billion in May 2023 from $25.13 billion recorded in the same month last year. Services imports dropped to $13.53 billion in May 2023 as compared to $15.20 billion in May 2022.
India recorded a $11.77 billion surplus in services trade. When merchandise and services trade data were taken together the overall deficit stood at $10.35 billion in May, which is lower than $12.20 billion recorded in the same month last year.
Commerce secretary said the global economic slowdown has not hit the services exports. “Services exports are looking positive. We are not worried about facing a slowdown there," he added.
Overall exports (merchandise and services combined) dropped by 5.99 per cent to $60.29 billion in May. Overall imports in May 2023 is estimated at $70.64 billion, 7.45 per cent lower when compared with the May 2022 figure.
Under merchandise exports, 17 out of the 30 key sectors witnessed a decline in May on a year-on-year basis. “The slowdown in major advanced economies has been casting a shadow on global trade and primarily as a result of this engineering goods shipments registered de-growth in FY23,” said EEPC India Chairman Arun Kumar Garodia.
For engineering exports, the trend has been negative in the current financial year as well. Engineering exports fell by over 4 per cent year-on-year to $9.30 billion in May.
“It has been a tough time for engineering goods manufacturers-exporters with demand from most key markets slowing down,” Garodia said.