India's merchandise trade deficit swells to $19.1 billion in April as gold imports triple
India's trade deficit swells to $19.1B in April 2024 as exports drop and imports rise, driven by a surge in gold imports, affecting multiple sectors.
In the opening month of fiscal year 2024-25, India saw its trade deficit widen to $19.1 billion, marking a notable increase from $15.6 billion in March 2024. This expansion primarily stemmed from a significant decline in exports. Comparatively, in April 2023, the deficit figure stood at $14.44 billion. On a month-to-month basis, the outbound shipment of goods in April plummeted by 16.1 percent, while imports experienced a smaller decline of 5.6 percent during the same period. Despite a slight uptick of 1.1 percent in exports from the previous year, amounting to $34.99 billion in April, imports surged by 10.3 percent, reaching $54.09 billion, as reported by the commerce ministry on May 15. The notable factor contributing to the widened trade deficit in April 2024, in comparison to the same period the previous year, was a significant increase in gold imports, soaring to $3.11 billion from $1.01 billion.
Aditi Nayar, the chief economist at ICRA, highlighted that this was the highest merchandise trade deficit recorded in four months, surpassing ICRA’s expectations. Nearly half of the widened goods deficit between April 2023 and April 2024 was attributed to the surge in the value of gold imports amidst a global price hike. In terms of merchandise exports, 13 out of 30 key sectors exhibited positive growth in April 2024 compared to the same period in the previous year. This included electronic goods with a growth rate of 25.8 percent and tea with a growth rate of 25.74 percent. Conversely, 14 out of 30 sectors witnessed a contraction in imports, notably pearls, precious, and semi-precious stones (-21.12 percent), and fertilizers - crude and manufactured (-8.3 percent). Engineering exports also experienced a decline of 3 percent year-on-year in April 2024, amounting to $8.66 billion, following four consecutive months of positive growth. Arun Kumar Garodia, the Chairman of EEPC India, attributed this decline to subdued demand from key markets and logistical challenges arising from the Red Sea crisis. Despite these setbacks, Garodia expressed optimism, noting recent signs of improvement in the global economic outlook. He anticipated a rebound in trade, particularly in the engineering sector, over the course of the current year.
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