Merchandise exports grew 16.8% in June from a year earlier. However, a 51% surge in imports, resulting in high cost of oil and different commodities, drove up the trade deficit to a dizzy high of US$25.6 billion. According to ministry sources, exports hit US$37.95 billion in June, which is lesser than the May figure of US$38.9 billion.
Imports, however, surged to US$63.6 billion in June, against US$42.1 billion a year earlier. Though the spike in imports indicates enhancing home demand (even non-oil and non-gem stones and jewelry imports rising by 31.7% in June), it is going to strain the cutting-edge account deficit (CAD), says reports.
An ICRA report predicts the CAD more than double to US$30 billion from US$ 13 billion.
Fresh demanding situations within the international delivery chains, curbs on the export of wheat and iron ore and metallic products, etc., too, are going to weigh at the country`s export overall performance in June. The import invoice soared by 242% year-on-year basis due to a rise in coal imports to $6.4 billion and chronic surge in purchases of crude oil & petroleum products (94%) and gold (169%). A spurt in charges of crude oil and coal simply served to inflate the import invoice of commodity importer like India.
Among excessive-cost segments, the upward thrust in exports in June is accounted by petroleum products (98%), electronics (51%) and garments (45%). At $26.8 billion, other exports (with the exception of petroleum and gem stones and jewelry) increase was pulled down to 4% in June from 6% in May. A Sakthivel, president of FIEO, states though export increase amid headwinds is a good sign, big increase in imports is an issue of concern.