India’s exports hit a record $35.2 bn as demand revives2 min read . Updated: 03 Aug 2021, 05:59 AM IST
- Merchandise imports increased to $46.4 bn in July, widening the trade deficit to $11.2 bn
India exported goods worth a record $35.2 billion in July, signalling that the rapid economic recovery in key Western markets is increasing demand for Indian products.
Merchandise imports also shot up to $46.4 billion, the second highest in history, leading to a widening of the trade deficit to $11.2 billion during the month, according to preliminary data released by the commerce ministry.
Exports remained above $30 billion for the fifth consecutive month in July with the previous peak in March at $34.5 billion. In Q1FY22, exports posted record shipments of $95 billion.
The maximum increase in exports by value were to the US ($6.7 billion), the UAE ($2.4 billion) and Belgium ($826 million), while exports to Malaysia, Iran and Tanzania declined the most.
The maximum increase in imports were from the UAE ($3.4 billion), Iraq ($2.7 billion) and Switzerland ($2.2 billion), while imports from France, Germany and Kazakhstan declined the most in the month.
The top export items in the month were petroleum products, engineering goods, and gems and jewellery, while the top import items included crude oil, gold and precious stones, and vegetable oil.
“Make in India, Make for the world: India’s merchandise exports in July 2021 was $35.17 bn, an increase of 34% over July 2019. PM Narendra Modi ji’s vision for Aatmanirbhar Bharat has given a boost to exports," trade minister Piyush Goyal tweeted.
Non-oil exports were robust in July but remained below the March level, said Aditi Nayar, chief economist at Icra. “A spike in oil exports boosted the overall merchandise exports to a record high level in July. A sustenance of oil exports at this level would significantly boost the expansion in merchandise exports in FY22," she said.
Gold imports surged by $2.5 billion in July compared to the same month in 2019, with the phased reopening of the economy. “Gold imports have crossed $12 billion in the first four months of this fiscal and appear set to surpass last year’s level of $34.6 billion, with a pick-up likely in the festive period," Nayar said.
The government has set a merchandise exports target of $400 billion for FY22 and $1 trillion in the next five years. “So, in the next six years, services exports will be $500 billion, and merchandise exports will be $1 trillion. With annual $1.5 trillion total exports, India will have a significant share in world trade," commerce secretary B.V.R. Subramanian had said in July.
The International Monetary Fund (IMF) last week kept its global growth forecast unchanged at 6% for 2021, but marked down prospects for emerging market and developing economies, especially for emerging Asia, and revised up forecasts for advanced economies because of the divergence in vaccine roll-out. “In countries with a high vaccination coverage, such as the UK and Canada, the impact would be mild. Meanwhile, countries lagging in vaccination, such as India and Indonesia, would suffer the most among G20 economies," it said.
For India, IMF slashed economic growth projection for FY22 from 12.5% estimated in April to 9.5%, citing a slow recovery in consumer confidence because of the second covid wave and the tardy vaccination programme.
IMF also projected world trade to grow at 9.7% in 2021 after a contraction of 8.3% in 2020. “The merchandise trade recovery is set to broaden after being initially concentrated in pandemic-related purchases, consumer durables and medical equipment. Services trade is expected to recover more slowly, consistent with subdued cross-border travel until the virus transmission declines to low levels," it said.
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