India's May trade deficit rises to 5-month high of $22 bn, exports decline 10% to $35 bn

India's merchandise trade deficit in May rose to a five-month high of $22.12 billion as against $15.2 billion in the preceding month, according to government data released on June 15. The merchandise exports stood at $34.98 billion, while imports came in at $57.10 billion during the month, the data released by the government stated.

The overall trade deficit has narrowed to $10.35 billion in May 2023, as compared to $12.20 billion in the year-ago period. According to the government data, due to the global demand slowdown, exports have now contracted for the fourth month in a row, after contracting 12.7 percent in April.

Services exports were $25.30 billion and imports $13.53 billion, it said. The imports in this section dipped to $13.53 billion, which is nearly 11 per cent lower as against $15.20 billion reported in May 2022.

"Trade deficit has come down substantially. Total trade deficit down by 35.41 percent for April and May," Commerce Secretary Sunil Bharatwal said.

He added that the Department of Commerce and Department for Promotion of Industry and Internal Trade are working on an exports strategy and focusing on 40 countries.

The trade deficit highlights the challenges for a particular economy, here India, which is trying to recover from the lows of pandemic and looming global recession fears. A higher trade deficit comes as a risk for the current account deficit, which can affect investor sentiment and hurt the appeal of the local currency. In the last two years, India's exports jumped from $500 billion to $767 billion in 2022-23.

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