India’s trade deficit narrowed to an eight-month low in May at $6.3 billion as rising external demand kept exports ticking and the pandemic caused imports to dip.

Merchandise exports remained above the $30 billion mark for the third month in a row at $32.2 billion, while merchandise imports fell steeply to its lowest in six months at $38.5 billion, according to preliminary trade data released by the commerce ministry on Wednesday.

Trade minister Piyush Goyal has set an ambitious target of $400 billion of exports for FY22 against $290 billion in FY21, identifying pharmaceuticals, engineering goods, auto components, fisheries and agricultural goods as the key focus areas.

Aditi Nayar, chief economist at ICRA Ltd, said the merchandise trade deficit shrank to an eight-month low as covid-induced regional lockdowns curbed domestic demand for both gold and oil.

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