Trade deficit widens to $192 billion in FY22; imports at record high

Value of inbound petroleum shipments nearly doubles; account for 26% of total imports

India’s trade deficit widened to $192 billion in financial year 2021-22 (FY22) as imports hit a record high of $610 billion because the value of inbound petroleum shipments nearly doubled as compared to a year earlier.

The sharp 94.33 per cent jump in petroleum imports’ value was because of the rise in global crude oil prices as a result of the Russian invasion of Ukraine. The Share of petroleum imports out of India’s total imports was 26 per cent in FY22, preliminary data released by the commerce and industry ministry showed.

Apart from petroleum products, imports of electronic goods and gold grew by a third and resulted in widening of the trade defi it. The value of goods exported witnessed 40 per cent growth, hitting a record $417.8 billion and surpassing the target set by the government by 5 per cent, driven by higher demand for engineering goods, petroleum products, and gems and jewellery.

However, imports grew at a faster pace. India’s merchandise imports in FY22 grew 54.71 per cent from $394.44 billion in FY21. 

 

This resulted in merchandise trade crossing the $1 trillion mark for the first time ever.

In March, exports touched $40.38 billion, as compared to $34 billion during the corresponding period a year earlier. The value of petroleum imports jumped 80 per cent year-on-year (YoY) in the month.

“For the first time, India’s monthly merchandise exports exceeded $40 billion, reaching $40.38 billion in March, an increase of 14.53 per cent over $35.26 billion in March 2021 and an increase of 87.89 per cent over $21.49 billion in March 2020. 

India’s merchandise import in March 2022 was $59.07 billion, an increase of 20.79 per cent over $48.90 billion in March 2021 and an increase of 87.68 per cent over $31.47 billion in March 2020,” an official statement said.

The trade deficit in March 2022 was $18.69 billion.

According to Aditi Nayar, chief economist at ICRA, the crash in gold imports in March amidst robust exports helped to curtail the merchandise trade deficit to $18.7 billion, below ICRA’s expectation of at least $20 billion. 

“We expect the current account deficit to recede under $19 billion in Q4FY22 (January-March),” she said.

“The trade deficit for non-oil non-gold/jewellery items stood at $55 billion or 1.7 per cent of GDP in FY2022, accounting for around one quarter of the total merchandise trade deficit,” she said.

Value of non-petroleum and non-gems and jewellery exports in March was $29.38 billion, registering a growth of 4.79 per cent on the year-on-year basis.