India’s trade gap widens in June as imports grow faster than exports

India's trade deficit widened sharply in June as the country imported far more goods than it exported, even though exports continued to grow.

According to the latest trade data from Crisil, India's merchandise exports rose 15.5 per cent from a year ago to $40.4 billion. However, imports increased at a much faster pace of 31 per cent, reaching $70.8 billion. As a result, the country's goods trade deficit — the gap between imports and exports — widened to $30.4 billion, up from $28.2 billion in May.

A major reason for the slower export growth was petroleum products. Exports of refined fuels lost momentum after global crude oil prices fell sharply following an easing of tensions between the United States and Iran. Petroleum exports almost halved from $8.4 billion in May to $4.9 billion in June.

Other sectors, however, performed well. Exports of gems and jewellery recorded strong growth, while chemicals, engineering goods, electronics and pharmaceutical products also saw healthy demand from overseas markets.

On the import side, India bought significantly more electronic goods, machinery, transport equipment, chemicals and coal than it did a year ago. Electronics imports alone jumped nearly 59 per cent, reflecting strong domestic demand.

Fertiliser imports more than tripled during the month as shipping through the Strait of Hormuz improved after earlier disruptions.

Imports of gold and silver, on the other hand, slowed following higher import duties introduced in May.

India also continued to earn more from services such as information technology, business services and consulting than it spent on importing them. However, the services trade surplus narrowed slightly because services imports grew faster than exports.

Agricultural exports remained a bright spot. Shipments of rice, meat, dairy products, poultry and marine products all increased during June.

Among labour-intensive industries, the picture was mixed. Gems and jewellery exports recovered strongly after recent weakness, while exports of readymade garments and leather products continued to decline.

Overall, the figures suggest that while India's exports remain resilient, stronger domestic demand and higher imports have widened the country's trade gap during June.

With agency inputs