Indian imports continued to outpace exports in February as demand remained weak in major exports markets like the United States and Europe, nudging the government to revise up the full-year trade deficit projections on Friday. A widening trade deficit will likely worsen India's current account deficit and further weaken the rupee.
Merchandise exports grew an annual 4.3 percent to $24.6 billion in February, while imports grew 20.6 percent to $39.8 billion, Trade Secretary Rahul Khullar said on Friday, citing provisional trade data. The trade deficit widened to $15.2 billion during the month, from $14.8 billion in January. With exports struggling to maintain the growth rate seen between April and September, Khullar revised up trade deficit projection for the fiscal year ending on March 31 to $175 to $180 billion from an earlier estimate of $160 billion.
"Over the last five months there has been a very large ballooning of the balance of trade deficit," he said. The trade deficit was $104 billion in the last fiscal year. Exports reached $267.4 billion between April and February - bolstered by demand for engineering goods, petroleum products and pharmaceuticals - compared with the full-year target of $300 billion.