Per data shared by the Government of India, India’s export sector witnessed a jump of 69.35% at $32.7 billion in May. However, the country’s trade deficit stands at $6.28 billion. The report further stated that the surge in exports was driven by the robust growth in petroleum products, gems, jewellery, and engineering sectors. Last year during the same period, India’s exports were reported at $19 billion, while the year before it, i.e., May 2019, it stood at $29.85 billion.
Import growth and trade deficit – May 2021
May 2021 also witnessed a sharp surge in India’s imports. It grew by 73.64% to $38.55 billion from $22.2 billion in May 2020. Accordingly, it led to a trade deficit of $6.28 billion. In May 2019, the imports were recorded at $46.68 billion, while the trade deficit for the month being reviewed amounted to $3.15 billion.
In a nutshell – Import growth for May 2021
|Import May 2020||Import May 2021||Trade deficit||Increase/Decrease (%)|
|$22.2 billion||$38.55 billion||$6.28 billion||Increase of 73.64%|
Export and import in April – May 2021
The exports for April and May in 2021 increased to $62.89 billion against the $29.41 billion during the same period in 2020.
Similarly, the imports for April and May 2021 were recorded at $84.27 billion. The figure manifests a boost from $39.32 billion during the same period last year.
The recorded trade deficit was $21.38 billion during the reviewed period against the $9.91 billion for April and May 2020.
The value of petroleum product exports for May 2021 was $5.33 billion, while for gems and jewellery, it was $8.64 billion. Additionally, the engineering sector reported exports worth $2.96 billion.
Commodity-wise import break-up – May 2021
|Commodity||May 2021||May 2020|
|Oil||$9.45 billion||$3.49 billion|
|Gold||$679 million||$76.31 million|
Impact of exports and imports on economy
India’s imports and exports tend to influence its GDP, inflationary levels, and interest rate. Such trade activities also lay a significant impact on the country’s exchange rate.
An increase in exports helps in increasing the aggregate demand and boosts economic growth. In addition, a surge in export is responsible for improving the employment rate and lower the current account deficit.
Conversely, surging import and trade deficit impacts a country’s exchange rate negatively. For instance, a weak domestic currency makes imports expensive, while a high inflation rate can shoot up the cost of production and raw material, thereby impacting exports.
Growth in export and import is considered essential for the sustainable development and overall health of an economy. However, export growth should always exceed import growth to ensure optimal trade and currency health balance.
The month of May indicates substantial growth in exports and imports. Collectively, the figures look pretty impressive so far. Plus, the country’s trade deficit hit an 8-month low in May. Therefore, a low margin of trade deficit seems manageable and is not a cause of alarm in its current form.