Trade deficit jumps to $10.5 bn on high gold imports

New Delhi – India’s trade deficit rose to $10.55 billion in October after narrowing to two-and-a-half-year low of $6.7 billion in the previous month as purchases of gold and silver picked up ahead of the festive season, government data showed Monday.

The value of gold imports jumped to $1.37 billion in October as compared to $800 million in the previous month. India celebrates a slew of festivals in October and November, that traditionally pushes up the demands for precious metals.

In the recent months the government has taken a slew of measures including a sharp increase in duties to curb gold and silver imports.

Addressing a media briefing here, Commerce Secretary S.R. Rao said the government’s efforts have yielded results.

“Curbs on gold and silver imports have worked,” Rao said adding there were positive trend in India’s foreign trade as exports growth was consistent.

According to data released by the commerce and industry ministry here, the value of merchandise exports in October was $27.27 billion, as compared to $24.03 billion recorded in the same month last year, registering an year-on-year growth of 13.47 percent.

Imports fell by 14.50 percent to $37.82 billion during the month under review as compared to $44.24 billion recorded in the corresponding month of last year.

This has left trade deficit of $10.55 billion in October. Trade deficit had narrowed to $6.76 billion in September, the lowest level in 30 months.

Oil imports rose by 1.7 percent to $15.21 billion in October, while non-oil imports slumped by 22.8 percent to $22.60 billion.

Cumulative trade deficit for April-October period of the current financial year is recorded at $90.68 billion, sharply lower than $112.03 billion registered in the corresponding period of last year.

Reacting on the data, M. Rafeeque Ahmed, president, Federation of Indian Export Organisations (FIEO), said double-digit growth in exports in the past four months have helped narrow trade deficit.

Ahmed expressed hope that trade deficit for the current financial year would come down to $140 billion from $192 billion recorded in 2012-13.

“Exports will post even better results in forthcoming months as all major sectors of exports are in positive zone helping us to cross the target of $325 billion,” Ahmed said.

Cumulative value of exports for the period April-October $179.37 billion, 6.32 percent higher than $168.7 billion registered in the corresponding month of last fiscal.

Imports have dropped by 3.8 percent to $270.05 billion in the first seven months of the current fiscal year-on-year.