Merchandise exports hit $33.14 billion in August, up 45.2 per cent year- on-year, backed by strong international demand, according to data released by the Commerce Ministry.
Last month added to a strong export performance in the first four months of this fiscal, which has seen exports rise by about two-thirds to $163.7 billion compared to April-August FY21 and about 23 per cent higher than April-August FY20 which was not hit by the pandemic. The government is targeting merchandise exports of $400 billion for FY22.
Imports too saw an increase, up 51.1 per cent year-on-year in August to $47 billion, raising the trade deficit for this fiscal thus far to $55.9 billion up from $22.7 billion a year ago.
What are the key causes behind rising exports?
The key drivers behind growth in exports have been higher shipments of engineering goods, petroleum products, gems and jewellery and textiles and garments.
A sharp rise in demand from the US, UAE and China have led to an increase in demand for engineering goods this fiscal, according to the Engineering Exports Promotion Council. Engineering goods exports rose 58.8 per cent over that in August 2020.
Petroleum product exports rose 139.8 per cent, bolstered both by a recovery in demand for mobility and a sharp uptick in the price of crude oil and petroleum products compared to the year ago period. Exports of gems and jewellery rose 88 per cent on the back of renewed demand compared to the year-ago period.
How is India’s export performance compared to the pre-pandemic period?
While total exports during the first five months have risen by 23 per cent compared to April-August in FY20, non-oil and non-jewellery exports have risen by only 3.3 per cent, indicating that higher crude oil prices and a recovery in demand for gems and jewellery have played a significant role in pushing up the overall value of exports.
What is driving higher imports and the trade deficit?
Significant increases in gold imports have been the key driver in the higher merchandise trade deficit. 📣 Express Explained is now on Telegram. Click here to join our channel (@ieexplained) and stay updated with the latest
“Gold imports surged further to a five month high of $6.7 in August 2021, and were responsible for 88 per cent of the rise in the merchandise trade deficit relative to July 2021,” said Aditi Nayar, chief economist, Icra Ratings.
Gold imports rose by 82.2 per cent in August compared to the year-ago period.
The import of crude oil and petroleum products remained stable relative to July 2021, but were up 80.4 per cent from the year-ago period on the back of a significant increase in crude oil prices and improved demand for petroleum products.