Gold jewelry is displayed on a shelf at a Dwarkadas Chandumal Jewellers store in Mumbai, India (Photographer: Dhiraj Singh/Bloomberg)  

India’s Trade Deficit Hits 29-Month High As Gold Imports Remain Strong

India's trade deficit widened to levels not seen since November 2014, as the continued recovery in gold imports offset the eighth straight month of an increase in exports.

The trade deficit in April widened to $13.2 billion, according to data released by the Ministry of Commerce on Monday. The deficit stood at $10.4 billion a month ago and at $4.8 billion in April 2016.

Imports in April rose 49 percent to $37.8 billion compared to a year ago, led by a significant increase in imports of gold and crude oil products. The value of gold imports increased 211 percent from last April to $3.8 billion, continuing the uptick which began in January 2017 after a lull during demonetisation. The festive season of Akshaya Tritaya had pushed up gold imports in March as jewellers had stocked up in anticipation of a recovery in demand.

India’s Trade Deficit Hits 29-Month High As Gold Imports Remain Strong

Value of oil imports increased 30.1 percent to $7.3 billion. This was mainly due to a 25.4 percent year-on-year increase in the global prices of Brent crude in April.

Exports in April grew, albeit at a slower pace than the last two months, to $24.6 billion, almost 20 percent higher compared to a year ago.

Exports went up on account of higher shipments of engineering goods, ready-made garments and petroleum products. The value of engineering goods exports, which had contributed significantly to the highest export growth in over five years last month, went up 28.2 percent to $6.1 billion. Exports of petroleum products went up 48.7 percent to $2.9 billion, while the value of ready-made garments exported went up 31.7 percent to $1.7 billion.