After witnessing a rare trade surplus of $800 million in June, India’s trade deficit climbed to $ 6.77 billion, a four-month high. The latest surge is being attributed to a 171 per cent surge in gold imports, reflecting pent-up demand as well as elevated prices, with expectations of further imports in the run-up to the festive season.
India’s export earnings in the month of August declined by 12.6 per cent year on year, higher than July’s 10.2 per cent fall, as trade in major foreign exchange earners such as petroleum, gems, electronics, and textiles continued to take a hit. Outbound trade stood at $22.7 billion, completing six straight months of contraction.
Earlier, the government had been hoping to reach a single-digit contraction by August, with a tentative growth forecast for September. The data for August, released by the commerce department on Tuesday, shows cumulative exports in the first five months of the financial year fell 26.65 per cent compared to the same period in the previous year.
Imports fell by 26.04 per cent to $29.47 billion, after July’s 28.4 per cent fall. The rate of contraction of imports has continued to reduce over the past five months. Exports continue to remain hamstrung by the deep economic slowdown induced by the Covid-19 pandemic across India’s key markets of Europe, the US, and the Gulf region.
Petroleum products, the biggest revenue earner, registered a 40 per cent decline, although better than the 51.5 per cent fall seen in July this year. After stabilising in recent months, industrial products such as engineering goods exports slipped again in August. Shipments of exports of engineering goods fell 8 per cent to $19.7 billion, following similar growth in the previous month. The sector accounts for nearly one-fourth of foreign exchange earned through exports.
Consumer products such as textiles, gems and jewellery, and electronic goods, among other items, continued to show contraction, at almost similar levels. Gems and jewellery exports fell by 43.2 per cent, even as the pace of contraction is on the decline from 50 per cent in June. Apparel exports saw a 14 per cent drop in August, down from a 35 per cent fall in June.