India’s merchandise imports continued to grow at a blazing pace, widening the gap between the foreign exchange that the country earns from its exports and the money that it has to shell out for its imports.
Imports for May rose by 33% compared to a year ago, resulting in a doubling of India’s trade gap with the rest of the world.
A country must try to balance its imports and exports and keep the gap between the two as narrow as possible to avoid running out of foreign currency to pay for important items such as oil.
India has typically had a large trade gap running into tens of billions of dollars per year, and has used the foreign exchange brought in by foreign investors and Indian workers abroad to fund fill this gap.
Total goods imports in May rose 33% on year to $37.9 bln while exports rose only by 8% to $24 bln, resulting in a gap of $13.8 bln.
In May of last year, the trade gap was only $6.3 bln.
Out of the shortfall of $13.8 bln, about $5.8 bln is likely to have been made up by a surplus in India’s services trade with the rest of the world. Thanks to IT and BPO, India typically books a net surplus in its services trade.
Oil imports during May, 2017 were valued at US$ 7692.71 million which was 29.54 percent higher than oil imports valued at US$ 5938.59 million in May 2016.
Oil imports during April-May, 2017-18 were valued at US$ 15051.98 million which was 29.82 per cent higher than the oil imports of US$ 11594.51 million in the corresponding period last year.
Part of this was due to higher prices of crude oil, which have increased by 7.94% in May 2017 compare to last year.
Non-oil imports during May, 2017 were estimated at US$ 30163.63 million which was 34.03 per cent higher than non-oil imports of US$ 22504.93 million in May, 2016.
Export growth was led by engineering goods, which rose 8.25%; Gems & Jewellery, up 6%; refined petroleum products, up 24.92% and garments, which was higher by 8.06%.
Non-petroleum and Non Gems & Jewellery exports in May 2017 were valued at US$ 17514.36 million against US$ 16404.31 million in May 2016, an increase of 6.77%.