India’s merchandise trade deficit widened to a record high in November, led by a sharp increase in gold imports even as exports contracted.
Official data released on Monday showed that the trade gap widened to $37.8 billion in November from $27.1 billion in October and $21.31 billion a year ago. Goods imports surged 331% year-on-year in November.
Goods exports shrank 4.9% year-on-year to a two-year low of $32.1 billion while imports increased 27% year-on-year to a record $69.95 billion.
“Unprecedented fall in petroleum products prices have pulled down goods exports in November,” said commerce secretary Sunil Barthwal, adding that petroleum prices impacted export growth. But he remained bullish on the export outlook.
“We are very positive that exports of non-petroleum products and services-will sustain in the next three-four months. We will cross $800 billion by a huge margin,” he said. “As long as exports and FDI (foreign direct investment) is growing, that will finance our imports.” Non-petroleum product exports increased 7.8%. Gold worth $14.8 billion was imported in November.
Officials attributed it to the festive and wedding demand, asset diversification towards gold amid global uncertainties, increasing demand from banks and reduction in customs duty to 6% from 15%. “Whenever there is geopolitical uncertainty, we see a rise in gold imports,” Barthwal said.Non-petroleum exports increased 7.8% to $28.4 billion, compared to $26.4 billion a year ago. Overall, trade continued to grow, led by services exports, which surged 26.9% to $35.7 billion in November, according to tentative figures released by the commerce and industry ministry. “Christmas demand was for non-petroleum products. Demand is growing for Indian products. A lot of inventory building happened in October,” Barthwal said on the 17.25% increase in goods exports in October.
Federation of Indian Export Organisations (FIEO) President Ashwani Kumar said that such a dip in exports was mainly on the back of continuing global economic uncertainties.
“The rising tensions between Israel-Iran have continuously led to logistical challenges with regard to international trade getting impacted as most of our trade to Europe, Africa, CIS and Gulf region are happening through the Red Sea route or the gulf region, prompting buyers to have large inventories,” he said.
During April-November, exports increased 2.17% year-on-year to $284.31 billion and imports 8.35% to $486.73 billion. Barthwal said that the government is focusing on 20 countries where the export potential is high, six manufacturing sectors where India has good production capacity and six services sectors including IT-ITeS. A retreat of commercial missions of these 20 focus countries is being planned to discuss ways to increase exports to them, he said.
