India’s trade deficit widens on higher gold import bill

Sign up for the India Edition newsletter by Menaka Doshi – an insider's guide to the emerging economic powerhouse, and the billionaires and businesses behind its rise, delivered weekly.

India’s trade deficit widened to a four-month high in April as strong domestic demand bumped up the nation’s import bill.

The gap between exports and imports stood at $19.1 billion in April, Trade Ministry data showed Wednesday. The reading is higher than the $17.3 billion deficit forecast by economists in a Bloomberg survey. The trade deficit had shrunk to an 11-month low of $15.6 billion in March. 

The imports grew 10.3% from a year earlier to $54.09 billion in April, while exports rose 1.1% to $34.99 billion during the month. The inbound shipments were $57.28 billion in March, while outbound shipments stood at $41.68 billion.

The import bill was high on account of a rise in inbound shipments of gold, petroleum products, electronics products and pulses, the data showed. While oil imports stood at $16.46 billion in April, while gold imports stood at $3.11 billion, compared to $1.53 billion the previous month. 

As the world’s third-biggest consumer of oil, India is particularly vulnerable to higher crude prices. India’s crude oil basket averaged $89.46 a barrel in April, its highest since October, according to Oil Ministry data. 

As such, demand for Indian goods at home and abroad remains strong. The economy is expected to grow more than 7% in the current financial year.

“We remain hopeful of growth in trade in the current fiscal year,” Trade Secretary Sunil Barthwal told reporters in New Delhi. Exports of electronics, organic and inorganic chemicals, petroleum products did extremely well in April, he said.

Exports will benefit as orders have started flowing in from Europe and other countries, and freight cost has declined on some routes, Ajay Sahai, director general of Federation of Indian Exports Organization, said ahead of the data.

While the global merchandise trade is expected to rebound only moderately this year compared to a 2023 contraction, India’s goods exports will likely hold up, Sahai said. The World Trade Organization has predicted total goods trade to increase 2.6% in 2024, after a contraction of 1.2% last year. 

While India’s trade gap has widened, the country’s current account deficit remains at manageable levels. The gap narrowed to 1.2% of gross domestic product in the October-December quarter.

Here’s more from the briefing:

• India and EU will hold 8th round of trade talks talks between June 24-28
• The government has recommended mandatory testing and sampling of all spice shipments to Singapore and Hong Kong. Last month, the countries halted sales of some spices produced by Indian companies MDH and Everest over suspected elevated levels of ethylene oxide, a cancer-causing pesticide

(Updates with a chart and more details.)