India’s merchandise trade deficit widened to $24.16 billion in August, the highest in 10 months, as imports jumped led by high demand of gold ahead of the festive season.
The country’s merchandise exports rose to $34.48 billion in August from $32.25 billion recorded in the previous month, as per data released by the Ministry of Commerce and Industry on Friday.
Imports increased at a sharper pace rising from $52.92 billion in July to $58.64 billion in August. Briefing the media, Commerce Secretary Sunil Barthwal said, “Gold imports have seen a substantial rise probably due to the incoming festive season.” The value of gold imports jumped to $4.9 billion in August from $3.5 billion recorded in the same month last year.
Jump in imports has led to a sharp increase in the trade deficit. The gap between imports and exports widened from $20.67 billion in July. However, on a year-on-year basis there is a marginal decline in the trade deficit. It stood at $24.86 billion in August 2022.
Analysts said the widening trade gap will put pressure on India’s current account deficit. With monthly trade deficit averaging much higher during July-August vis-à-vis April-June 2023, India’s current account deficit is likely to widen the latter quarter, said Aditi Nayar, Chief Economist, ICRA.
On a year-on-year basis there was a sharp decline in India’s exports as well as imports during the month under review. Exports in August were 6.86 per cent down compared with the same month of last year’s $37.02 billion. Imports fell from $61.88 billion in August 2022 to $58.64 billion in August 2023, registering a decline of 5.23 per cent.
India’s overall exports (merchandise and services combined) in August stood at $60.87 billion, which is 4.17 per cent lower when compared with the same month last year. Overall imports dipped by 5.97 per cent year-on-year to $72.50 billion in August.
When merchandise and services are taken together, the trade deficit in August stood at $11.63 billion, which is lower than $13.58 billion recorded in the same month last year.
Cumulative merchandise trade deficit for April-August 2023 is estimated at $98.88 billion, sharply lower from $112.85 billion recorded in April-August 2022 period.
After eight consecutive months of year-on-year decline, engineering goods exports have turned positive with total shipments value rising by 7.73 per cent to $9.05 billion in August.
“We remain optimistic about resurgence in engineering exports in the coming months as global demand conditions improve and geo-political issues abate,” said Arun Kumar Garodia, Chairman, Engineering Export
Promotion Council of India.