India’s trade deficit hit a record high of $22.91 billion in November when petroleum, gold, silver and mineral imports drove up the country’s overall inbound shipments by 56.5% to a staggering $52.9 billion while exports hit a nine-month low at $30.04 billion.
The trade deficit more than doubled from $10.19 billion in November 2020. Last month’s merchandise exports were 27.16% higher than those in November 2020.
“The merchandise trade deficit for November is not only twice as high as November 2020, but also significantly higher than the level in November 2019, which is a cause for concern regarding the implications for the size of the current account deficit in H2 FY22,” said Aditi Nayar, chief economist at rating agency ICRA.
On the positive side, last month’s merchandise exports were 27.16% higher than those in November 2020. Federation of Indian Export Organisations president A Sakthivel said many of the sectors that contributed majorly to the exports basket during the month are labour-intensive sectors, further helping job creation in the country.
Merchandise imports in the first eight months of this fiscal were $384.34 billion against $219.82 billion during April-November 2020, registering a 74.84% growth.
Gold imports rose 39.7% in November to $4.2 billion while petroleum imports were up 132.4% at $14.7 billion.Petroleum products, engineering goods, organic & inorganic chemicals, cotton yarn, handloom products, and electronic goods were the top export sectors.
“Non-petroleum and non-gems and jewellery exports in November were $23.68 billion, registering a positive growth of 22.26% over nonpetroleum and non-gems and jewellery exports of $19.37 billion in November 2020,” the ministry said in a statement.
EEPC India chairman Mahesh Desai said, “Engineering goods exports continued the growth momentum and rose 37% in November to $8.07 billion but emergence of Omicron has certainly posed some downside risks to the strong uptrend going forward.”
He said the increase in raw material prices has further put pressure on the margin, leaving very little scope for making further investment by a large number of MSMEs (micro, small and medium enterprises) which dominate the engineering goods sector.