New Delhi - High oil prices widened India's May trade deficit even as exports rose by 20.18% to $28.86 billion from $24.01 billion worth of merchandise shipped out during the corresponding month of last year.
According to data released by the Ministry of Commerce and Industry, petroleum products, organic and inorganic chemicals and drugs and pharmaceuticals showed a high export growth rate.
"Non-petroleum and non-gems and jewellery exports during May 2018 were valued at $19.94 billion as compared to $17.51 billion during May 2017 exhibiting a positive growth of 13.85%," the ministry said in a statement.
As per the data, the country's imports during the month under review rose by 14.85% to $43.48 billion in May 2018 from $37.86 billion in the like period of 2017.
Segment-wise, oil imports during May 2018 jumped by 49.46% to $11.50 billion from $7.69 billion imported during May 2017.
The ministry pointed out that global Brent prices ($/bbl) have increased by 50.68% in May 2018 vis-à-vis May 2017.
"Non-oil and non-gold imports in May 2018 valued at $28.50 billion has recorded a positive growth of 13.09% as compared to non-oil and non-gold import in May 2017," the statement said.
Consequently, India's merchandise trade deficit widened to $14.62 billion during last month as against $13.84 billion in the corresponding period the previous year.
ICRA Principal Economist Aditi Nayar said: "Even though merchandise export growth outpaced that of merchandise imports in May 2018, the trade deficit widened on a YoY basis, as a higher net oil import bill wiped away the benefits of a contraction in imports of gold and precious stones."
"Nevertheless, the merchandise trade deficit for May 2018 modestly exceeded our forecast, with a smaller than anticipated contraction in gold imports."
Nayar pointed out that growth of "non-oil non-gold merchandise" imports rebound to double-digits in May 2018 was driven by inputs such as iron and steel, non ferrous metals, fertilizers, chemicals, coal, machinery and transport equipment.
EEPC (Engineering Export Promotion Council) India Chairman Ravi Sehgal said the challenge "is to keep the momentum, while growing US economy would help, the US-China trade war must be watched about".
In another data point, the Reserve Bank of India (RBI) said that the trade balance in services for April, 2018 was estimated at $6.65 billion. The central bank's data comes out with a lag of around 45 days.
"Taking merchandise and services together, overall trade deficit for April-May 2018-19 is estimated at $ 21.69 billion as compared to $21.41 billion during April-May 2017-18," the statement said.
Indian merchandise exports in 2017-18 grew by 9.8% over the previous year, while services exports were up by 17.8%.