Exports hit record $35.5 billion in October

Imports of petroleum products jumped over 141% year-on-year to $14.4 billion, while gold purchases from overseas climbed 104% to $5.1 billion ahead of Dhanteras

Merchandise exports hit a record $35.5 billion in October, registering a 42.3% rise from a year before and 35.2% from the pre-pandemic (same month in FY20) level. The exports were supported by strong order flow from key markets such as the US and China in the wake of an economic resurgence there and elevated global commodity prices.

But at $55.4 billion, imports surged at a faster pace of 62.5% in October from a year before and 45.8% from the pre-pandemic level. This kept trade deficit at an elevated level of $19.9 billion in October, although it was lower than the record $22.6 billion witnessed in September, according to the preliminary estimates released by the commerce ministry on Monday.

Of course, domestic demand has been improving in recent months after Covid-induced compression last fiscal. But import bill was greatly inflated by elevated global crude oil prices, which are hovering around 3-year highs, and massive purchases of gold in the build-up to the festival season.

Imports of petroleum products jumped over 141% year-on-year to $14.4 billion, while gold purchases from overseas climbed 104% to $5.1 billion ahead of Dhanteras. Coal imports surged 119% and edible oil imports shot up by 60%. Of course, base effect, too, remained unfavourable.

However, policy-makers may seek comfort in the fact that trade recovery has taken roots, with merchandise exports having exceeded the pre-pandemic level for eight months in a row. Exports between April and October hit a record $232.6 billion, up 54.5% from a year before and 25.5% from the same period in FY20.

Core export (excluding petroleum and gems and jewellery) rose 27.5% in October from a year before and 36.6% higher than the level witnessed in October 2019. Similarly, core import (excluding petroleum and gold) rose 39.3% year-on-year and 30.7% from the pre-pandemic level.

With the sharp rise in September and October, merchandise imports in the first seven months of this fiscal stood at $331.3 billion, up 78.7% from a year ago and 15.3% from the pre-Covid level.

Aditi Nayar, chief economist at ICRA, said: “Non-oil non gold imports surged further to $35.8 billion in October 2021, with a broad-based uptick across various commodity groups reflecting rising commodity prices, the expectation of healthy festive demand and a turnaround in domestic economic activity.”