Imports expanded 2.05% last month while exports grew 5.37%, leaving a trade deficit of $14.75 billion, according to preliminary data released by the commerce ministry. Non-petroleum and non-jewellery imports grew 5.94%.

India’s merchandise exports as well as imports expanded for the second consecutive month in January, signaling a turnaround in domestic and external demand after the pandemic devastated value of trade in Asia’s third largest economy.

Imports expanded 2.05% last month while exports grew 5.37%, leaving a trade deficit of $14.75 billion, according to preliminary data released by the commerce ministry. Non-petroleum and non-jewellery imports grew 5.94%.

“The rise in both merchandise exports and imports in January 2021 is heartening, signifying a continued strengthening of the domestic growth recovery. With the merchandise trade deficit having risen to $14-15 billion over the last two months, we expect the current account balance to slip back into a deficit in H2 FY21,” Aditi Nayar, principal economist at ICRA Ltd said.

Major export items that helped India’s outbound shipments turn the corner include drugs and pharmaceuticals (up 16.4%), engineering goods (18.69%) and iron ore (108.66%). A sharp contraction in readymade garments (-10.73%) and petroleum products (-37.34%) kept overall growth minimal.

The rise in imports was led by gold (154.7%), electronic goods (16.98%) and pearls (50.2%) while petroleum products (-27.72%) and transport equipment (-25.26%) continued to contract. Trade Promotion Council of India Chairman Mohit Singla said the data suggests India’s trade has been on the path of quick recovery. “The global trade flow has been streamlining fast and bottlenecks owing to the pandemic are easing out gradually,” he added.