India's exports grew 20.18 percent to $28.86 billion in May, the highest in six months.
In a major boost to the government, India’s exports grew 20.18 percent to $28.86 billion in May, recording the highest number in six months. Even though exports outpaced imports, higher oil import bill wiped away the benefits of a contraction in gold imports. “Based on the available data for April-May 2018, the current account deficit may widen to US$15-16 billion or around 2.4% of GDP in the ongoing quarter, from US$14 billion in Q1 FY 2018, with higher commodity prices counteracting the likely contraction in gold imports,” Aditi Nayar of ICRA told FE Online.
India’s trade deficit widened to a four-month high of $14.62 billion in May as imports surged nearly 15 percent, the government said Friday. Exports in May rose by 28.18 percent to a six-month high of $28.86 billion while imports were up 14.85 percent to $43.48 billion. The trade deficit widened to $14.62 billion from $13.84 billion in May 2017. Oil imports were up 4946 percent to $11.5 billion on back of a surge in international crude prices.
Meanwhile, according to an SBI report released last week said that India should try to tap sectors such as pharmaceuticals and agriculture — particularly in commodities like rice — in the Chinese market with an aim to bridge the widening trade gap. Once India is able to tap those (agriculture and pharma) markets and increase its exports, the trade deficit will be quite balanced. In FY17, India’s trade deficit with China expanded to $51.11 billion from $38.72 billion in FY13.
Furthermore, data showed that the trade deficit further widened to $62.94 billion in FY18. While India is looking to export more, China is looking to import more. Amid fears of trade war under the protectionist policy of US President Donald Trump, China is planning to hold its first import-only fair later this year.