India’s exports grew at a slower pace in January, after recording the highest-ever monthly outbound shipments of goods in December, showed data released by the commerce and industry ministry on Tuesday.
However, exports remained above the $30 billion-mark for the eleventh consecutive month amid a surge in Omicron cases across the globe. Merchandise exports grew 27.54 per cent year-on-year (YoY) to $34.5 billion in January as demand for Indian products remained robust.
Engineering goods, petroleum products, gems and jewellery, organic and inorganic chemicals, drugs and pharmaceuticals, were the top export categories.
However, outbound shipments fell 8.7 per cent sequentially. In the first 10 months of the current fiscal, exports totalled $335.88 billion, up over 46 per cent YoY. The government has set an export target of $400 billion for financial year 2021-22 (FY22).
Imports, too, remained high, with shipments worth $51.93 billion coming into the country, up 23.54 per cent YoY. As a result, India was a net importer, with a trade deficit of $17.42 billion.
According to Aditi Nayar, chief economist, ICRA, the curbs on mobility and the demand for gold with the onset of the third wave, helped to pull back the merchandise trade deficit to a five-month low in January.
India imported gold worth $2.4 billion, down 40.5 per cent YoY. However, on a cumulative basis, inbound shipments of gold grew 94 per cent YoY to $40.4 billion from April to January, which experts believe was because of pent-up demand. Gold is the second largest component in India’s import bill.
“In our view, the surge in gold imports in 2021 was driven by the pent-up demand of 2020. We believe gold imports will moderate to $30-35 billion in 2022. We expect the current account deficit to widen to a gaping $26-29 billion in Q3, before easing back to $15-17 billion in Q4,” Nayar said.
Non-petroleum and non-gems and jewellery exports, also an indication of domestic industrial demand, stood at $27.1 billion in January, up 19.4 per cent YoY.
Prahalathan Iyer, chief general manager, research and analysis, India Exim Bank, said while the export performance has been promising this year, imports have remained high, especially since September.
“Trade deficit is likely to touch the peak level of $190 billion witnessed in FY13. Nevertheless, the trade surplus generated under the services sector is likely to be partially offsetting the deficit by more than $100 billion,” Iyer said.