Indian Exports Touch Record $37 Billion in Dec-21

One of the big stories that the Commerce Minister, Piyush Goyal, likes to talk about is the surge in exports. For the first 9 months of FY22, ended December, India’s total exports came in at $300 billion. At this run rate, the total exports for the fiscal year should cross $400 billion, marking a record for the full financial year.

On 03-January, the Ministry of Commerce published the preliminary trade numbers for the month of December 2021. The actual numbers will be known only around the middle of January, but this is intended to give an idea about the trajectory of India’s trade. The total exports for Dec-21 stood at a record level of $37.2 billion.

It is not just the export number but even the growth in exports has been phenomenal. Exports for Dec-21 grew 37% over Dec-20 and 37.6% over Dec-19. In short, the growth is not just about COVID base effect, but exports actually have grown above pre-COVID levels. What are the sectors that actually led this surge in merchandise exports.

Out of the $37.22 billion of exports in Dec-21, non-petroleum exports stood at $31.67 billion. Petroleum product exports grew 140% YoY at $5.61 billion. Among the major non-oil export growth stories, engineering goods grew 37.27%, Gems & Jewellery 15.8%, Chemicals 26.01%, Electronic goods 33.3%, Textiles 22.1%, cotton yarn 45.7% and plastics 56.5%.

Import surge magnifies trade deficit

While celebrating the spike in exports, it must be remembered that merchandise imports also scaled all-time high levels. Total imports in Dec-21 came in at $59.27 billion while the trade deficit came in uncomfortably high at $21.99 billion. With cumulative trade deficit for FY22 already at $126 billion, at this rate, we may end the year with $180 billion trade deficit.

Among the major segments that saw a spike in imports in Dec-21, crude oil imports were up 65.2% on YoY basis, electronic goods 29.7%, machinery imports at 23.2%, organic & inorganic chemicals at 71.5%, precious stones at 20.3%, Coal/Coke at 72.1%, artificial resins at 36.8% and vegetable oils and 50.5%.

One area of concern remains gold imports. The rate growth at 4.6% may be tepid, but at $4.7 billion in Dec-21, gold imports still remain high. In year 2021, India imported $55 billion worth of gold, something the RBI has been traditionally uncomfortable with. After all, it expends precious foreign exchange to finance imports of an unproductive asset like gold. 

To sum it up, export growth is gratifying but it would be hard to sustain this kind of a high trade deficit for too long.

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