India’s imports hit record high; trade deficit widens to $30 billion in August

New Delhi: India’s trade deficit widened to a ten-month high of $29.65 billion in August from $23.5 billion in July, as the country’s imports hit a record high while exports declined due to muted global demand, especially in Europe, official data showed on Tuesday.

Goods exports dipped by 9.32 per cent year-on-year to $34.71 billion in August. However, on a month-month basis it was marginally higher from $33.98 billion recorded in July.

India’s imports surged to a record high of $64.36 billion, year-on-year increase of 3.3 per cent. During the month of July imports stood at $57.48 billion.

The increase in import bill pushed the trade deficit to $29.65 billion in August, the second highest ever monthly gap between the value of the country’s imports and exports.

Addressing a media briefing, Commerce Secretary Sunil Barthwal said exports in August were lower mainly because of decline in the value of the shipments of petroleum and gems & jewellery products.

Barthwal said decline in global crude oil prices is the main reason behind the lower value of exports of petroleum products while gems and jewellery exports have been impacted due to sanctions on procurement of diamonds from Russia.

Interestingly, the value of imports of petroleum products jumped during the month despite decline in price, indicating an increase in volume. “There is a huge consumption demand coming from the economy, which is growing at double the rate of other countries,” said Barthwal explaining the reasons behind the surge in import bills.

President of Federation of Indian Export Organisations (FIEO) Ashwani Kumar said continuous global economic uncertainties coupled with drop in commodity prices and logistical challenges have impacted exports. “Some of the exporters have diverted to the domestic market as profitability in exports have taken a hit with sharp rise in international freight (both ship and air),” Kumar said referring to the logistics challenges.

Had it not been for these trade disruptions led by logistical challenges such as lack of shipping space, irregular shipping schedule, ships skipping Indian ports and declining commodity prices, the merchandise exports would have recorded positive growth in exports, he added.

India’s total exports (merchandise and services combined) declined by 2.38 per cent to $65.40 billion in August from $67 billion recorded in the same month last year. While the country’s combined imports of services and goods in August stood at $80.06 billion, which is 3.45% higher when compared with the same month last year.