India’s Trade Deficit Widens Even As Gold Import Growth Moderates
India’s trade deficit stood at $11.6 billion in August.
India’s trade deficit widened in August even as gold imports showed signs of moderation and exports rose for the twelfth straight month.
Trade deficit, the difference between imports and exports, stood at $11.6 billion in August compared to $7.7 billion in the same month last year, according to data released by the Ministry of Commerce. The deficit was slightly higher than the $11.4 billion in July.
Gold imports rose 68.9 percent over last year to $1.9 billion in August. That’s the slowest increase this year. Imports of the yellow metal have been rising since February, first due to festive buying and then stocking up ahead of the Goods and Services Tax regime.
The demand for gold was expected to slow down in the second half of 2017 as buyers take time to transition to the new tax, according to the World Gold Council. Consumption is estimated to remain below a five-year average, it said. Rising gold prices as investors flock to safe havens due to tensions between the U.S. and North Korea, have dampened demand for gold ahead of Diwali in India, Bloomberg reported earlier this week.
The value of oil imports, the largest contributor to India's import bill, rose 14.2 percent to $7.7 billion in August. The benchmark Brent crude prices increased 11.3 percent during the period.
Total imports in August stood 21 percent higher than the same month last year at $35.4 billion.
Other Highlights
- Coal imports went up 50.4 percent to $1.5 billion.
- Import of iron and steel rose 42 percent to $1.3 billion.
- Pearls, precious and semi-precious stone imports increased 30.8 percent to $1.8 billion.
- Electronic goods, the second biggest contributor to India's import bill, rose 27.4 percent to $4.6 billion.
Export Recovery Continues
Indian exports extended their recovery to the twelfth straight month, rising 10.3 percent in dollar terms to $23.8 billion.
Outbound shipments of engineering goods continued to climb in August, rising 19.5 percent over last year to $6 billion. Export of petroleum products rose 36.6 percent to $3.39 billion. Chemical shipments rose 32.4 percent to over $1.4 billion.