Merchandise exports grew 57 per cent to $26 billion in May due to greater demand for India's engineering, oil and electronics goods in overseas markets.

However, the country's imports rose to a four-year-high of $41 billion, resulting in the gap between imports and exports widening to $15 billion (a 67 per cent increase) – the largest since September 2008.

The Commerce Secretary, Dr Rahul Khullar, had cautioned last month that at this rate the trade deficit for the current fiscal could touch a record $145-150 billion.

Exports in the first two months of this fiscal (April and May) grew by 45.3 per cent to $49.8 billion, while imports rose by 33.3 per cent to $73.7 billion, according to the data released by the Commerce Ministry on Friday.

This took the trade deficit to $23.9 billion ($21 billion), up 13.8 per cent.

The surge in imports by 54 per cent in May was mainly due to rising oil prices and a surge in gold imports. Oil imports in May grew by 18.57 per cent to $10.16 billion, while non-oil imports, including capital and intermediate goods, recorded 71 per cent growth to $30.74 billion.

Oil imports for April-May rose by 13 per cent to $20.35 billion, while non-oil imports jumped by 43 per cent to $53.4 billion.

In May, engineering exports registered a 120 per cent rise to $8 billion. Oil exports grew by 75 per cent to $4.5 billion due to high oil prices, while electronic goods grew by a remarkable 117 per cent to $1.03 billion.

Gold, silver imports

Growth in gold and silver imports in May went up by over six times to $8.96 billion, while the imports of these two items in April-May were worth $13.5 billion (222 per cent). The huge surge in gold imports could be due to the high prices of gold and silver and people seeing these as safer assets to possess, Dr Khullar had said.

Cautioning against concluding that the increase in imports has to do with an investment boom or a decline in industrial output, he said the high level in trade is due to investment demand, domestic consumption and export demand.

The Federation of Indian Export Organisations President, Mr Ramu Deora, said the sharp increase in exports is a sign of robust global scenario particularly in advanced economies coupled with effective government initiatives.

He said if stability of the policies is maintained and credit cost is lowered, exports will cross this year's target of $300 billion.

However, terming the rising trade deficit as serious and a cause of concern, he said domestic manufacturing should be encouraged to offset this huge deficit.

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