Festive season spike in gold imports pushes India’s trade deficit to record high

New Delhi: India’s trade deficit, or the difference between the country’s exports and imports, soared to a record high of $31.46 billion in October, an 18 per cent jump from the same month last year, driven by a surge in gold imports ahead of Diwali, official data showed on Wednesday.

The country’s imports rose to $65 billion in October, 12.3 per cent higher when compared with $57.9 billion in October 2022. Exports grew at a slower pace, rising by 6.2 per cent year-on-year to $33.57 last month.

The value of gold imports in October almost doubled to $7.2 billion compared with the same month last year. Cumulative imports of gold in the first seven months of the current financial year stood at $29.5 billion, 5.5 per cent higher from the year ago period.

The sharp jump in gold imports was partly due to the difference in the festival calendar, Commerce Secretary Sunil Barthwal told reporters. In 2022, Diwali was in October while this year it fell in November. Gold imports typically peak during the preceding month of Diwali.

October saw a positive growth in the country’s imports as well as exports for the first time in the current fiscal. Exports rose after eight consecutive months of decline, while imports jumped after registering a year-on-year decline for nine months in a row.

October data reflects ‘green shoots’ of recovery in outbound shipments, Barthwal said, adding that China continues to be India’s largest source of imports followed by Russia, United Arab Emirates, United States, and Saudi Arabia. On exports, he said high global interest rates have impacted demands for Indian goods.

“While the positive growth witnessed in the past months is reassuring, geo-political tensions and demand slowdown in major advanced economies continue to be a matter of concern for the exporting community,” said Arun Kumar Garodia, Chairman, Engineering Export Promotion Council of India.

Export of electronics goods surged by 28.2% year-on-year in October, while outbound shipments of the same jumped by 7.2%.

Weakness in exports as well as imports in the first half of the current fiscal has helped narrow the fiscal deficit cumulatively so far this year. Trade deficit for April-October 2023 declined to $147.1 billion as against $167.1 billion for the same period last year, down 12 per cent.

India’s overall exports (merchandise and services combined) in October stood at $62.2 billion, up 9.4% year-on-year, while during the same month overall imports jumped by 11.1% to $79.4 billion.

Bracelets and bangles in a row in street market.
Gold colored bracelets