October exports up 42% to $35.47 bn, trade deficit narrows to $19.9 bn

Growth driven by engineering goods, petroleum products, gems and jewellery, and organic and inorganic chemicals

Merchandise exports continued to remain robust in the month of October, rising 42 per cent on-year to $35.47 billion, preliminary data released by the commerce and industry ministry showed.

The growth was driven by higher demand for items such as engineering goods, petroleum products, gems and jewellery as well as organic and inorganic chemicals.

Outbound shipments grew significantly as compared with the pre-Covid period, up 35.21 per cent from $26.23 billion in October 2019.

On a cumulative basis, India’s merchandise exports in April-October stood at $232.58 billion, up 54.51 per cent YoY and rising by a fourth over the same period in 2019. This means India has achieved 58 per cent of its export target of $400 billion for the current fiscal.

Imports continued to remain high mainly due to the festive season. India imported goods worth $55.37 billion, up 62.49 per cent YoY and 45.76 per cent over October 2019.

Trade deficit, however, fell to $19.9 billion in October after expanding to a record high of $22.59 billion in September. The widening of the deficit was led by a surge in imports of goods ahead of the festival season and the hardening of commodity prices.

“The merchandise trade deficit compressed only modestly to $19.9 billion in October, from the record-high $22.6 billion in September 2021, with a heartening sequential uptick in non-oil exports, accompanied by a decline in oil imports after the spike seen in the previous month,” Aditi Nayar, chief economist at ICRA said.

“Predictably, gold imports remained strong amidst the onset of the festive season, and we expect the aggregate imports to spike to $40-45 billion in FY2022, especially if the rabi outlook supports rural sentiment,” she said, adding that non oil non gold imports surged in October, with a broad-based uptick across various commodity groups reflecting rising commodity prices, the expectation of healthy festive demand and a turnaround in domestic economic activity.

Federation of India Export Organizations (FIEO) President A Sakthivel said that the monthly exports performance of  $35.47 billion with an impressive double-digit growth of more than 42 per cent, signifies the importance of opening up and further recovery of economies across the globe coupled with buoyant order booking position across sectors.

“At this rate of growth, we may exceed exports targets for the current financial year. A resurgence in Covid infections in some countries in the West certainly pose some downside risks but we remain bullish. In the coming months, logistics situation should ease and further push the growth momentum,” Engineering and Export Promotion Council of India (EEPC) India Chairman Mahesh Desai.