NEW DELHI (Reuters) - India’s goods exports rose in January for the fifth straight month on the back of stronger commodity prices, despite growing protectionist and anti-trade sentiment in the United States and Europe.
Merchandise exports grew 4.32 percent year-on-year to $22.12 billion, while imports rose 10.7 percent to $31.96 billion, the Ministry of Commerce and Industry said in a statement.
Oil prices - up nearly 18 percent since the end of November - forced up the bill for crude oil, India’s largest import item, by 61.1 percent to $8.1 billion, threatening to reverse recent declines in inflation.
Countering that, oil exports also rose, by 29 percent to $2.7 billion, as some crude oil is processed and re-exported by Indian oil refiners such as Reliance Industries.
The monthly trade deficit narrowed slightly to $9.8 billion. The deficit fell nearly $20 billion in 2015/16 as the cost of oil imports halved thanks to a slide in prices, a trade windfall to Prime Minister Narendra Modi’s government.
Merchandise exports account for just 1.6 percent of global trade, compared with nearly 14 percent for China. Modi wants to lift India’s share to 5 percent by 2020.
His ambitions, however, face headwinds from rising anti-trade sentiment worldwide.
U.S. President Donald Trump’s “America First” trade policy as well as Britain’s surprise vote last year to leave the European Union have clouded the global trade outlook.
With elections due in a number of major euro zone countries this year, very few see a let up in protectionist rhetoric.
“India is likely to face continued headwinds on the exports front due to the play out of Brexit and the anti-globalisation stance of U.S. President Donald Trump,” Fitch subsidiary India Ratings’ economist Sunil Kumar Sinha said.
India’s Finance Minister Arun Jaitley has warned that a popular backlash against globalisation is a major risk for the nascent recovery in Indian exports.
A particular worry is Trump’s immigration policies, which could cast a shadow on the fortunes of India’s $146 billion IT services industry in its biggest market.
Underscoring the challenge, net services exports between April and December fell to $48.3 billion from $53.6 billion a year ago.
Editing by Douglas Busvine and Louise Ireland