India’s merchandise exports rose 22.3% to $33.81 billion in February, while imports shot up 35% to surpass $55 billion, widening the trade deficit to $21.2 billion, as per preliminary foreign trade estimates.
The trade deficit, which shrank to about $17 billion in January, had earlier hit a record $22.9 billion in November 2021, and had averaged $21.7 billion between September and December.
February’s deficit was more than twice as wide as the pre-pandemic level of February 2020. Fertiliser imports surged more than sevenfold last month to touch $1.6 billion, while coal imports more than doubled to $2.8 billion.
Gold imports, at $4.68 billion, were 11.5% lower than February 2021, but almost doubled from January’s $2.4 billion, a level that had contributed to narrowing the fiscal deficit that month.
The value of non-petroleum exports in February was $29.7 billion, 22.2% more than pre-COVID levels, while non-petroleum imports surged faster, rising 47.3% over February 2020 to $31.7 billion.
“A rebound in oil and gold demand amid the waning of the third wave, along with rising global commodity prices fanned by escalating geopolitical tensions, boosted imports and bloated the merchandise trade deficit in February,” commented Aditi Nayar, chief economist at ICRA.
“Interestingly, non-oil non-gold imports moderated on a sequential basis, even as the pace of year-on-year growth rose in February relative to January,” she noted, adding that the merchandise deficit in March would be determined by the duration of the Russia-Ukraine conflict and the impact on commodity and crude oil prices.
India’s cumulative outbound trade for 2021-22 appears on track to cross the $400 billion target, having surpassed $374 billion by February, almost 46% more than the pre-pandemic exports during the 11 months from April 2019 to February 2020. Imports, however, crossed $550 billion, 59.2% higher than pre-COVID levels, almost doubling the trade deficit to $176 billion.
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