India June exports up 17%; trade deficit widens to record $25.6bn

MUMBAI (ICIS)–India’s merchandise exports in June rose by 16.8% year on year to $37.94bn, while strong prices of oil and other commodities led to a 51% surge in imports, causing the south Asian country’s trade deficit to widen to a record high.

June trade deficit stood at $25.6bn, more than double the $9.61bn recorded in the same period last year, according to data from the Ministry of Commerce, as coal and oil imports surged amid soaring global prices and depreciation of the Indian rupee.

In the April-June 2022 quarter, total merchandise exports grew 22.2% year on year to $116.7bn.

Merchandise exports have been on a downtrend since March 2022 due to weakening demand from the US and EU.

In June, shipments of petroleum products continued to surge, logging a 98% year-on-year increase to $7.83bn. This was due to the continued high exports of auto fuel by domestic refiners to recover the high costs of crude oil imports.

Exports of organic and inorganic chemicals grew by 5 % to $2.8bn, while exports of pharmaceutical products fell by 1.3% to $1.99bn.

Manmade fabrics and yarn exports dropped by nearly 23% to $952m, while plastics exports fell by 23.2% to $752m.

Meanwhile, the south Asian country’s merchandise imports in June stood at $63.6bn, up by 51% year on year, while total imports during the April-June quarter showed a 47.3% increase to $187bn.

Imports of crude petroleum and products for June rose 94.2% by to $20.7bn on high crude oil prices and the continued weakness of the Indian rupee.

Organic and inorganic chemicals imports for the month increased nearly 37% to $3.4bn; while those of artificial resins and plastic materials were up by 46.7%% at $2.2bn.

India continues to face a power crisis due to coal shortage with coal imports in June jumping to $6.4bn from $1.9bn in June 2021.

In a bid to slow down the devaluation of the rupee against the US dollar, the Indian government recently hiked the import duty on gold to 15% from 10.75%.

Gold imports for June nearly tripled to $2.61bn in June from $969m in the same period last year.

India also imposed export tariffs on petrol, diesel, and jet fuel of Rs6/litre, Rs13/litre, and Rs6/litre respectively, on 1 July.

Indian Finance Minister Nirmala Sitharaman said that the profits made by some oil refiners on exporting fuel at the expense of domestic supplies had prompted the government to introduce the export tax on petrol, diesel and jet fuel.

The export tariffs will be reviewed every two weeks, to calibrate them if the need arises, Sitharaman had said on 2 July.

The government is watchful and mindful of the impact of falling rupee on the country’s imports, Sitharaman said, adding that India was facing a difficulty in importing crude oil at affordable prices.

A weak rupee would have an immediate impact on imports, which would become expensive, she said, adding: “A lot of our industries depend on some essential goods to be imported upon for their production.”

The rupee was trading at Rs79.06 against the US dollar on Tuesday afternoon.