India‘s merchandise trade deficit in August widened to $27.98 billion from $11.71 billion a year earlier, revised data released by the government showed on September 14.

India’s merchandise exports rose to $33.92 billion from $33.38 billion in the same month last year, while imports rose to $61.90 billion in August from $45.09 billion last year. Rise in import values last month has been witnessed in major commodity groups like coal, coke and briquettes (133.64% to $4.5 billion), chemicals (43% to around $3 billion), and vegetable oil (41.55% to nearly $2 billion). Also, export products that witnessed positive growth last month included electronic goods, rice, oil meals, tea, coffee and chemicals.

Export of petroleum products jumped by 22.76% to $5.71 billion. Similarly, chemicals and pharma shipments rose by 13.47% and 6.76% to $2.53 billion and $2.14 billion, respectively. Sectors, which saw negative growth last month included engineering (14.19% to $8.3 billion), gems and jewellery (about 3% to $3.33 billion), ready-made garments of all textiles (0.34% to $1.23 billion), and plastic (1.10% to $747.21 million).

Meanwhile, India’s current account deficit (CAD) will widen to 5% of the GDP in the September quarter due to higher merchandise trade deficit, domestic ratings agency Icra said.

“The current account deficit (CAD) is projected to widen to an all-time high of USD 41-43 billion in Q2 FY23 from the USD 30 billion expected in Q1 FY23. It is expected to widen to 5 per cent of GDP in Q2 FY23, the second highest level since Q3FY12,” Icra said in a note. The agency said with the re-emergence of foreign portfolio investors (FPIs) equity inflows, it expects the rupee to trade between 78.5-81 against the US dollar in the rest of calendar year 2022 amid the global headwinds. “While forex reserves have seen a drawdown of USD 45.4 billion in FY23 so far (till Aug 26, 2022), they remain large, and are likely to prevent a disorderly depreciation of the Indian rupee,” it added.