Record trade deficit due to import surge in May

India’s trade deficit soared to record $23.3 billion in May as export growth slowed to 15-month low, while imports zoomed on high oil & commodity prices.

In May exports grew 15.5% to $37.3 billion, the most sluggish pace of expansion since February 2021. In contrast, imports shot up over 56% to $60.6 billion, marking only the second time that the value of shipments into the country has gone past the $60-billion level after $60.7 billion in March 2022.

While oil imports rose almost 92% to $18.1 billion — accounting for almost 30% of the goods shipped into the country in May — gold was the other major driver, jumping 8.6 times to $5.8 billion to emerge as the second largest item in the import basket.

Besides, coal imports soared three times from just under $2 billion in May 2021 to $5. 3 billion last month. As prices soared, its share of India’s imports was just a little lower than electronics ($5.4 billion). Price of crude petroleum, coal and gold went up significantly after Russia’s invasion of Ukraine.