NEW DELHI, Sept 17 (Askume) – India’s goods trade deficit widened to a 10-month high of $29.65 billion in August, mainly due to higher gold imports, rising transportation costs and lower exports amid sluggish global economic demand.
According to a Askume poll, economists had earlier estimated that the country’s trade deficit would reach $23 billion in August. The deficit was $23.5 billion last month.
“In the current global situation, exports are facing big challenges,” Trade Minister Sunil Barthwal told reporters, referring to the monthly trade data.
Rising transportation costs, China’s economic slowdown and recessionary trends in Europe and the United States are also impacting exports, he said.
Data showed that exports from the world’s fifth-largest economy fell 9.3% for a second consecutive month last month to $34.71 billion, while imports rose 3.3% to $64.36 billion.
Monthly gold imports in August tripled to $10.06 billion from the previous month, partly due to rising domestic demand, a senior commerce ministry official said.
Gold imports in August were the highest by value since March 2021, when imports reached $8.5 billion, according to Askume calculations.
Gold imports through official channels also increased after the import duty was reduced from 15% to 6% in the July Budget, thereby curbing gold smuggling, the official said.
Services exports are expected to be US$30.69 billion and imports at US$15.7 billion in August, as against US$28.71 billion and US$15.09 billion, respectively, in the same period last year.
India’s total exports of goods and services stood at around US$776 billion in the 2023/24 financial year that ended in March, while imports stood at around US$855 billion during the same period.
rising transportation costs
Besides falling global commodity prices, the escalating trade war between China and the United States and rising freight costs have also hit Indian merchandise exports, exporters said.
Ajay Srivastava, founder of the Delhi-based think tank Global Trade Research Project, said: “Freight rates for Indian exporters shipping goods to Europe and the United States have doubled in the last year due to the chaos in the Red Sea. Many.”
The think tank urged the government to take steps to strengthen domestic shipping lines and container production, noting that more than 90% of India’s cargo exports are handled by Maersk [RIC:RIC:APMOLM.UL], MSC and COSCO [RIC].
The World Bank, in a report earlier this month, urged the Indian government to reduce import duties and integrate into global value chains to boost exports. It has said that the country’s manufacturing industry has failed to take full advantage of the opportunities created by China’s withdrawal from these industries.
The Commerce Minister said that trade deficit is not a matter of concern for an emerging economy like India.
“The economy has generated huge consumer demand and is growing twice as fast as other countries,” Butwal said.
