India’s Trade Deficit Narrows In August To $17.39 Billion
India’s trade deficit narrowed in August from a five-year high, adding to comfort along with a rebound in the rupee and a fall in sovereign bonds yields in the last two days.
The gap between exports and imports stood at $17.39 billion, compared with $12.72 billion in the same month last year, according to data from the Ministry of Commerce. The trade gap had widened to a five-year high of $18 billion in July.
A slightly narrower trade shortfall provides relief for Prime Minister Narendra Modi as he prepares to meet policymakers in an attempt to stem the rout in the rupee, which is Asia’s worst performing currency this year. The Indian rupee strengthened for two straight days to 71.85 per dollar after retail inflation eased to less than 4 percent.
Imports in August rose 25.4 percent over last year to $45.2 billion, led by higher inbound shipments of petroleum, gold and capital goods. The value of petroleum and crude—the biggest burden on India's import bill— rose 51.6 percent to $11.83 billion. The price of benchmark Brent crude oil was 42.3 percent higher in August compared with a year ago.
- Import of gold also nearly doubled to $3.6 billion as traders stock up ahead of the auspicious festival buying season.
- Import of coal, coke and briquettes rose 44.3 percent to $2.28 billion.
- Import of electrical and non-electrical machinery went up 46.2 percent to $3.8 billion.
- Electronic goods imports went up 22.5 percent to $5.58 billion.
- Import of chemicals rose 35 percent to $2.1 billion.
A weaker currency is good news for Indian exports and that showed up in the numbers. The value of outbound shipments improved by 19.2 percent to $23.36 billion led by growth in export of engineering goods, petroleum products, gems and jewellery and chemicals.
- Export of engineering goods rose 21.2 percent to $7.2 billion.
- Petroleum product exports rose 31.7 percent to $3.8 billion.
- Gems and jewellery exports rose 24 percent to $3.3 billion.
- Chemical exports went up 40 percent to $1.9 billion
- Pharmaceutical exports increased 18.2 percent to $1.68 billion.