India achieved an all-time high annual merchandise exports of $417.81 billion in FY 2021-22, an increase of 43.18% over $291.81 billion in FY2020-21 and an increase of 33.33% over $313.36 billion in FY2019-20. In March 2022, for the first time, monthly exports exceeded $40 Billion, reaching $40.38 billion, an increase of 14.53% over $35.26 billion in March 2021 and an increase of 87.89% over $21.49 billion in March 2020. These figures are encouraging.

Imports increased as well, however. Imports in April 2021-March 2022 was $610.22 billion, an increase of 54.71% over $394.44 billion in FY2020-2021 and an increase of 28.55% over $474.71 billion in FY2019-2020. As a result, trade deficit for the period stood at $192.41 billion. Value of non-petroleum imports in April 2021-March 2022 was $449.54 billion, showing an increase of 44.2% compared to non-oil imports of $311.75 billion in FY20-21.

It is encouraging that labour-intensive sectors like engineering goods, gems & jewellery, electronic goods, handloom products, jute products, etc. performed well during the period as these sectors are labour-intensive with higher employment generation prowess. Also, India’s increasing exports to developed economies including US, UK, Germany, Singapore, etc. indicates increasing strength of manufacturing in exports.

Meanwhile, manufacturing sector growth slowed last month due to softer rise in demand. The latest results showed slower expansions in factory orders and production as well as a renewed decline in new export orders. Besides, it cited that price indices increased since February to signal mounting pressures. Amid this inflationary pressure, it can be expected that the RBI will retain its key lending rates during the upcoming monetary policy review.