Trade deficit widens to $14.62 billion
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Trade deficit widens to $14.62 billion

News:

  1. India’s trade merchandise trade deficit widened

Important facts:

  1. Trade deficit widened to $14.62 billion in May 2018.
  2. The shortfall was $13.72 billion in April 2018 and $13.84 billion in May 2017.
  3. Reasons:
  • 50% increase in global Brent price
  • Exports in May grow faster on the back of engineering goods, petro products, chemicals and pharma.

Export related figures:

  • Exports during 2018 were valued at $28.86 billion as compared to $ 24.1 billion in May 2017.
  • Merchandise exports in April had grown by only 5.17% while imports grew 4.6%.
  • Exports grew 8.32% in May 2017, while imports grew 33.1%.
  • Cumulative value of exports for the period April-May 2018-19 was $54.77 billion .

Imports:

  • Imports during May 2018 were valued at $43.48 billion which was 14.85% higher in dollar terms.

5.Major export groups that witnessed strong growth include:

  • Engineering goods (14.8%)
  • Petroleum products(104.5%
  • Organic and inorganic chemicas(34.2%)
  • Drugs and pharmacuticles (25.7%)
  • Cotton yarn/fabrics/made-ups and handloom products(24.7%).
  • Oil imports during May 2018 were valued at $11.5 billion which was 49.5% higher in dollar terms and 56.7% higher in rupee terms compared to $7.69 billion in May 2017.

6.Challenges:

  • To sustain the growth momentum
  • The U.S.-China trade war must be watched.
  • Rising raw material costs will be a challenge
  1. Conclusion:

With the U.S. confirming 25% tariffs on $50 billion Chinese imports and the Chinese stating they would retaliate, it is time for India to keep engaged with both the U.S. and China to safeguard our own interest.

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