India’s trade deficit declined to an eight-month low in May, helped by limited domestic demand for gold and oil amid the second Covid-19 wave and lockdown-like restrictions in states, official data released on Wednesday showed.
India exported merchandise worth USD32.21 billion in May 2021, 67 percent higher on a year-on-year basis and nearly 8 percent over May 2019’s pre-pandemic numbers.

Major sectors that saw a spurt in exports in May, compared to the pre-COVID times, included cereals, iron ore, cotton yarn and handloom products, jute, rice and ceramics. However, leather, tea, readymade garments, oil seeds, handicrafts and gems and jewellery, saw a significant dip over the same period.

The Federation of Indian Exporters’ Organisations chief Sharad Kumar Saraf said that 19 out of 30 major product groups have recorded impressive growth over May 2020, and the gradual opening up of major global markets is bolstering orders.

ICRA chief economist Aditi Nayar attributed the contraction in the trade deficit to USD6.3 billion in May from USD15.1 billion in April 2021 to the State-wise restrictions that widened over May and curbed domestic demand for both gold and oil.

Engineering Exports Promotion Council president Mahesh Desai said the release of assured duty refunds will provide a major push to the sector which recorded a 53% growth in May over last year and 16% over May 2019 levels.

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