Oil, gold imports drive up India's trade deficit in April

Oil and gold imports have driven India’s trade deficit to a four-month high in April 2024, the monthly foreign trade data released by the Commerce Ministry shows.

India’s merchandise imports in April 2024 were $54.09 billion, as compared to $49.06 billion in April 2023. On the other hand, merchandise exports grew by just 1.08% at $34.99 billion in April 2024 as compared to $34.62 billion in April 2023 resulting in a jump in trade deficit for the month.

"India’s merchandise trade deficit widened sharply to $19.1 billion in April 2024 from $14.4 billion in the year-ago-month, amid an increase in the oil as well as the non-oil deficit. This was the highest merchandise trade deficit print in four months and was also much higher than ICRA’s expectations. Notably, the widening in the non-oil deficit in April 2024 vis-à-vis April 2023 was entirely driven by a tripling in gold imports, partly aided by the surge in gold prices. Overall, nearly half of the widening in the aggregate merchandise trade deficit between April 2023 and April 2024 was on account of the surge in the value of gold imports amid the rise in global prices”, Aditi Nayar, Chief Economist, Head Research and Outreach, ICRA Ltd said.

In merchandise imports, 14 out of 30 key sectors including pearls, precious & semi-precious stones (-21.12%), coal, coke & briquettes (-11.71%), fertilisers (-8.3%), organic & inorganic chemicals (-5.19%) and machinery, electrical & non-electrical products (-3.54%), exhibited a negative growth during the month.

In merchandise exports, 13 of the 30 key sectors including electronic goods (25.8%), organic & inorganic chemicals (16.75%), drugs & pharmaceuticals (7.36%) and petroleum products (3.1%) exhibited positive growth in April 2024 as compared to same period last year (April 2023).

Federation of Indian Export Organisations (FIEO) stated that the growth in merchandise exports, though 1%, is a good sign as it happened during challenging times. FIEO President Ashwani Kumar expressed confidence that even the increase in import of petroleum products and gold will lead to increase in exports of petroleum products and gems & jewellery with a time lag.