Merchandise exports plunged 36.5% and imports fell 51.1% in May, resulting in a trade deficit of just $3.15 billion. In April, merchandise exports and imports had declined by 60.3% and 58.7%, respectively.

Partial start of businesses across the country and orders from markets like the US and the European Union arrest in fall of exports compared to April. Merchandise exports recovered faster than imports, recording a sharp month-on-month expansion of 84% as compared to 30% for the latter, suggesting that the easing of logistical issues may have accelerated shipments of inventory even as labour availability remained an issue in some areas.

Exports –

Among major items, only export of rice, spices, iron ore, and drugs and pharmaceuticals registered a growth of 7.64%, 10.55%, 103.74% and 17.32% respectively. However, the demand for many products such as Gems and jewellery (-68.83 per cent), leather (-75 per cent), petroleum products (-68.46 per cent), engineering goods (-24.25 per cent), and ready-made garments (RMG) of all textiles (-66.19 per cent) was low.


Import of Oil, Gold, electronic goods, machinery and coal declined heavily in May. Oil imports (largest component of import bill) stood at USD 3.49 billion in May – 71.98 per cent lower compared to USD 12.44 billion in the same month last year. Gold imports (second largest item in import bill) in May also dipped 98.4 per cent to USD 76.31 million.


Trade minister Piyush Goyal said that exports in the first week of June at $4.94 billion have bounced back to almost the same level ($5.03 billion) during the same period a year ago. As major economies try to reopen, demand would be restricted towards the most essential items, said Ravi Sehgal, chairman, Engineering Export Promotion Council of India. “Even within engineering exports, we need to rework our strategy. Sub-sectors such as medical devices would be doing well while core infrastructure industries may take time to recover,” he said. The World Trade Organization has projected global merchandise trade to drop by 13% to 32% in 2020 because of the pandemic.


India WPI Inflation May 2020

India’s wholesale inflation fell 3.21% to the lowest in more than four years, led by a fall in fuel and power prices. Before this, there was a decline in the WPI at 3.68 % in November 2015.

  • Primary articles inflation fell to -2.92% in May against -0.79% in April.
  • Fuel and power inflation was at -19.83% against -10.12% in April.
  • Food articles inflation stood at 1.13% compared with 2.55% in the previous month.
  • Among food articles, wholesale prices of vegetables fell 12.48% in May after rising by 2.22% in April.
  • Non-food articles inflation was at -3.53% against -1.17



India’s wholesale prices index (WPI) entered deflation territory in May, as expected. However, the year-on-year decline in the WPI was sharper than expected, as some data gaps persist. Today’s WPI print also shows sharp divergences between retail and wholesale prices. ICRA Principal Economist Aditi Nayar said, while the rise in prices of some commodities like crude oil, may arrest the fall in the WPI going ahead, we may see food prices continue to be under pressure.

Impact on RBI Policy 

The Reserve Bank last month cut policy rates by 40 basis points, taking the key repo rate to its lowest ever 4%. Decline in WPI inflation further opens the gate for cut in Repo rate. Aditi Nayar, principal economist at ICRA expected another cut of 25 basis points in the next MPC meeting.


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