India’s Trade Deficit Widens As Gold Imports Double In June

India’s trade gap continued to widen in June as higher gold and oil imports dwarfed the tenth straight month of export growth.

The trade deficit, the difference between imports and exports, increased to $12.9 billion in June from $8.1 billion in the same month last year, data from the Ministry of Commerce showed. The deficit, however, narrowed from a 30-month high of $13.8 billion in May.

Imports in June went up 19 percent over last year to $36.5 billion as inbound gold shipments doubled from last year to $2.4 billion. Gold imports have been on the rise since February after a slowdown during demonetisation.

Gold traders stocked up ahead of the implementation of Goods and Services Tax fearing a higher tax. The yellow metal is one of the major contributors to the country’s import bill, after oil. India is among the top two consumers and the demand remains high as it is widely gifted at weddings and during festivals.

Oil imports in June increased 12 percent to $8125.5 million. Prices of the benchmark Brent crude oil declined 3.2 percent in June compared to last year. Oil imports, like gold, have been rising throughout the year.

India also imported 86 percent more pearls and precious stones in June compared to the previous year. The value of such imports went up to $3.3 billion. Electronic goods imports too showed a 24 percent growth to $4.2 billion.

Exports Up For 10 Months Now

Exports rose for the tenth straight month in June, growing 4.4 percent to $23.5 billion compared to the same month a year ago.

Growth in exports was led by a 14.8 percent rise in the value of engineering goods shipped overseas to $5.9 billion.

Petroleum product exports grew 3.6 percent to $2.6 billion. Exports of gems and jewellery, one of the highest contributor to India’s shipments, fell 2.7 percent to $3.4 billion.