India's merchandise trade deficit soars to 5 month high

The overall exports, including merchandise and services, amounted to $60.29 in May

The merchandise trade deficit surged to a five-month high of $22.1 billion in May, compared to $15.2 billion in April, trade data released by the commerce ministry on June 15 showed.

The exports have contracted for fourth months in a row, after contracting 12.7 per cent in April due to the global demand slowdown, according to government data.

The exports in merchandise sector fell by 10.2 percent on-year to $35 billion in May, whereas, the imports in this category declined by 6.5 percent on-year to $57.1 billion.

Month-on-month, the merchandise exports were almost flat, as it stood at $34.6 billion in April, whereas, the imports marked a surge of nearly 14 percent in May, coming in at $49.9 billion in the previous month.

Officials of the commerce ministry, attributed this fall to global economic slowdown.

"Figures only for first quarter of this year show significant slowdown in exports. It is the global slowdown that is affecting our trade," Commerce Secretary Sunil Barathwal said at a press conference in Delhi.

He added that the government will focus on the "Make in India" and "Make for the World" campaigns to ramp up the exports.

"Whatever we are making in India should not focus only on domestic consumption but also focus on material that can be exported," the commerce secretary said.

The commerce ministry is also looking to forge an alliance between investment and trade, and will focus on 11 countries and 8 commodity groups in the initial phase, he added.

The exports in the services category came in at $25.30 billion in May, which is similar to $25.13 billion recorded in the year-ago period.

"Services exports are looking positive. We are not worried about facing a slowdown there," the commerce secretary added.

The imports in services category fell to $13.53 billion, which is nearly 11 percent lower as against $15.20 billion reported in May 2022.

However, the secretary insisted that country's overall trade deficit, which has narrowed to $10.35 billion in May 2023, as compared to $12.20 billion in the year-ago period, be taken into account.

"We must look at data from the point of view of financial years instead of looking at it month-on-month. This will give us better understanding of trade trends," the secretary said.

The overall exports, including merchandise and services, amounted to $60.29 in May, which is lower as against $64.13 billion in the corresponding month of the previous year. The overall imports dropped to $70.64 billion as compared to $76.32 in the year-ago period.

The combined trade deficit for April had plunged to $1.38 billion, which was a 21-month low.