NEW DELHI: India’s merchandise exports rose 6.21% year-on-year to $33.57 billion in October, while the trade deficit swelled to a record as imports surged, buoyed by strong consumer spending ahead of the festival season. Gold imports almost doubled.
The gap between exports and imports widened to $31.46 billion on the back of a jump in gold imports, official data released Wednesday showed. It was at $19.37 billion in September and $26.3 billion in October last year. Gold imports rose 95% to $7.23 billion last month.
Strong festive demand ahead of Diwali drove up overall imports by 12.3% to $65.03 billion with an increase in the inbound shipments of electronic items and crude oil, apart from gold.
The trade figures back up the government’s optimism on exports. “This shows that the green shoots are stabilising,” said commerce secretary Sunil Barthwal. “We hope to cross last year’s high (export) figures.”
In October, exports grew in 22 of the 30 key sectors. Electronic goods exports rose 28.23% to $2.38 billion from $1.85 billion a year ago.
“The gap in exports from the previous year is narrowing down and we hope the growth will sustain,” Barthwal said. The full year’s export growth projection depends on several factors such as interest rates and commodity prices, he said.
To be sure, for the April-October period, exports contracted 7% to $244.89 billion while imports fell 8.95% to $391.96 billion.
Federation of Indian Export Organisations president A Sakthivel said the exports sector is on the road to recovery despite weak demand. There’s been a moderation in commodity prices, which spiked last year after the Russia-Ukraine war began, he said.
“Demand is still an issue in many markets due to high inventory and growth reflects that we may be eating into the share of some other countries,” he said.
The tension in West Asia has also made businesses and markets sceptical and nervous but the conflict will have a limited impact unless it escalates and spreads to more countries. Besides exploring new markets, the government is looking at non-tariff barriers in sectors such as marine products. The government is also examining sectors that face barriers imposed by importing countries. “We are waiting and watching as many things are happening around the world,” Barthwal said.
Electronics goods imports rose 26.25% in October while oil imports were up 8.09% on year in October.
Non-oil, non-gems and jewellery imports, a measure of domestic demand, rose 36.87% in October from 35.12% a year ago.
The high gold imports were driven by high consumption demand, officials said.
“A satiation of demand post the festive season may moderate imports in November 2023, helping to curtail the merchandise trade deficit from its record high in October 2023. Nevertheless, the trade deficit would remain elevated at $22-25 billion in the ongoing month,” said Aditi Nayar, chief economist at ICRA.
Source: The Economic Times