India’s merchandise trade deficit at record $31 bn in July
04 Aug 2022
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India's merchandise trade deficit jumped to a new high of $31.02 billion in July, up from the previous high of $26.18 billion set in June, commerce secretary BVR Subrahmanyam said on Tuesday.
Against this, the country’s trade deficit in July last year was nearly a third at $10.63 billion.
For the first four months of the current fiscal (April-July 2022-23), India’s merchandise trade deficit stands at $100.01 billion, sharply up from $42.07 billion for the first four months of FY22.
As per provisional data release d by the commerce ministry, merchandise imports stood at $66.26 billion in July compared to $46.15 billion in the same month last year.
Exports in July were "almost static" compared to last year, Subrahmanyam said at a briefing, coming in at $35.24 billion.
India expects additional $8-$9 billion in trade with Russia and Sri Lanka in two months
"The external world is no longer benign," the secretary added.
India's trade deficit has widened sharply in recent months, which in turn, has put pressure on the rupee's exchange rate, pushing it down below the 80 per dollar mark.
Along with the fall in exchange rate defence, India's foreign exchange reserves have also declined by more than $70 billion from their peak of $642.45 billion.
However, Subrahmanyam expressed confidence that merchandise exports from the country would "comfortably" cross the $500-billion mark in FY23.
India's merchandise exports in FY22 totalled $429.2 billion. So far in FY23, exports have amounted to $156.41 billion.
"Restrictions on exports of wheat, iron and steel, and petroleum products have reined in the export growth," Subrahmanyam said on August 2, adding that $1 billion-2 billion worth of wheat has been retained domestically.
Also, he said, exports to Russia had shrunk by roughly half, while exports to Sri Lanka had nearly vanished. However, the RBI's decision to permit trade settlement in rupees is expected to increase exports to these countries.
Within exports, the only two bright spots were electronic goods and rice, although their sums were small. While electronic goods exports rose 46 per cent year-on-year to $1.82 billion in July, rice exports were up 30 per cent at $0.93 billion.
On the import front, the commerce secretary attributed the elevated nature of the import bill on the high prices of petroleum products and coal.
As per the commerce ministry's preliminary trade data, India imported petroleum products worth $21.13 billion in July, which was 70 per cent higher on a year-on-year basis.
Coal imports rose by an even greater magnitude, posting an increase of 164 per cent to $5.18 billion.
India's merchandise trade deficit for FY22 as a whole was $189.5 billion. As such, the current rate could see the trade gap cross $300 billion in FY23.
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