India’s merchandise exports grew by 9% year-on-year in May, reaching $38.13 billion. This increase was driven by a revival in demand from traditional export markets like the US and Europe. However, the country’s trade deficit also widened to a seven-month high of $24 billion due to rising oil imports.
Electronics, engineering goods, and petroleum led the export growth. Meanwhile, imports rose at a slower pace of 7.6% to $61.91 billion. Experts attributed the wider trade gap to a surge in net oil imports.
On a positive note, exports of services like IT and tourism also witnessed healthy growth of 11% to $30.16 billion. This indicates an improvement in purchasing power within major economies.
Commerce Secretary Sunil Barthwal highlighted the positive trend, suggesting that double-digit export growth reflects a decline in inflation within major economies. This improves the purchasing power of these markets, benefiting Indian exports.
Exports to key destinations like the US, UAE, and Netherlands saw significant increases. This aligns with the faster-than-expected recovery of the US economy, prompting the World Bank to revise its global growth outlook upwards.
However, there were some setbacks. Exports to Australia dipped slightly, and imports from the UAE, another FTA partner, jumped sharply.
The good news is that sectors like electronics, engineering, and textiles witnessed a surge in exports in May. Industry leaders expressed optimism about future growth, citing improved demand from key markets and a potential rise in order bookings.
Despite the positive outlook, challenges remain. High ocean freight rates and increased competition from China due to potential import duties pose a threat to Indian exports.
