Merchandise exports rose 25% in Feb.

Imports surge 36%, trade deficit widens to $20.9 billion

India exported merchandise worth $34.57 billion in February, about 25% higher than in the year-earlier period month, while imports grew at a faster pace of 36% to touch $55.45 billion, as per fresh estimates released on Monday by the Commerce Ministry. 

The trade deficit widened to $20.9 billion in February from the five-month low of $17.4 billion in January and is expected to stay elevated in coming months in view of high commodity and oil prices. 

Total merchandise exports during the first 11 months of 2021-22 stand at $374.81 billion, close to the $400 billion target set by the government for the full year. This marks a 28.4% increase from pre-COVID exports. Imports for the full year have crossed $550 billion in the same period, 24.2% higher than pre-pandemic levels. 

While the uptick in exports was driven by petroleum and engineering products, a sharper growth in non-gold imports was responsible for the merchandise trade deficit rising significantly from the $13.1 billion recorded in February 2021, said Aditi Nayar, chief economist at ICRA.    

Gold worth $4.77 billion was imported in February, 9.65% lower than February 2021, but almost double the imports in the preceding month. 

“While higher commodity prices will inflame imports in March, the volume of oil imports will play a key role in determining the size of the trade deficit. We expect the trade deficit to remain above $20 billion in March,” Ms. Nayar said, adding that exports should clock $410 billion in 2021-22. 

Engineering goods exporters, with outbound shipments averaging more than $9 billion this year, are also concerned about the impact of high input costs and anticipated fuel price increases.