How has the export and import data been for the month of February 2022?

Each month, the Ministry of Commerce released the preliminary data at the start of the month on the previous month trade details. The final numbers are released around 15th of the month but the preliminary numbers do give an approximate idea bout exports, imports, and the deficit. It was a robust month of Feb-22 for merchandise exports (physical goods) and the good news is that India is on target to achieve Piyush Goyal’s dream of $400 billion annual exports. Of course, the cause of concern is the trade deficit data.

For the month of February 2022, India’s merchandise exports were up 22.3% yoy at $33.81 billion. That is nearly 35% higher compared to the Feb-21 export figure. On the other hand, the merchandise imports for February 2022 were higher by 35% yoy at $55 billion. This eventually led to the widening of the trade deficit to $21.2 billion, which is around the median trade figure reported in the last 6 months by India.

The big challenge continues to be the merchandise trade deficit. It had fallen to $17 billion in Jan-22, but in Feb it is back to the median. It may be recollected that in November 2021, the trade deficit had touched a record level of $22.9 billion. We will come to the main reason for the spike in trade deficit later, but two import items surged amidst local shortages. Fertiliser imports surged 7-fold to $1.6 billion and coal imports doubled to $2.8 billion.

Sadly, the unproductive item of gold imports was back at a high of $4.68 billion after having fallen sharply to $2.4 billion in January 2022. That is doubling of gold imports sequentially due to heightened tensions. Gold imports are frowned upon by RBI as it depletes forex reserves but add little to productivity. Even crude imports have surged. While volumes may not have surged, the spike in crude price by 70% in last 3 months did the damage.

Let us also take a look at the cumulative trade numbers till date. Cumulative exports stand at $374 billion so $400 billion for FY22 is on the cards. Imports till date area already above $550 billion so we are poised to cross $600 billion for FY22. That would mean total combined trade of over $1 trillion and a trade deficit of more than 20% or $200 billion. The last item could be worrisome for rupee value and current account deficit.