Trade Deficit In April Rises To Over $28 Billion As Oil, Gold Import Bill Inflates
· Free Press Journal
India’s trade deficit widened sharply in April as imports grew faster than exports, mainly due to higher crude oil and gold imports.
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India’s merchandise trade deficit stood at $28.38 billion in April, compared to $15.6 billion in March, according to a Reuters report. The rise came as imports increased significantly while export growth remained relatively slow.
According to government data, merchandise exports in April rose 9 percent year-on-year to $38.49 billion. Imports increased at a much faster pace of 19.1 percent to $66.87 billion.
Iran War Risks Widening Current Account Deficit, GCC Trade Talks: Niti AayogThe sharp increase in imports was mainly driven by higher purchases of crude oil, gold, electronics, and machinery.
Rising global commodity prices and stronger domestic demand also contributed to the higher import bill.
Oil imports rose significantly as crude prices remained elevated due to geopolitical tensions and supply concerns linked to the conflict in West Asia. Gold imports also surged sharply during the month.
The widening trade gap could put additional pressure on the Indian rupee and the country’s current account deficit if the trend continues in the coming months.
Gold Duty Hike May Help India’s Current Account, Higher Crude Prices Still Remain Biggest RiskBoth commodities contribute significantly to the country’s import bill.
A larger trade deficit means more dollars are leaving the country to pay for imports than are coming in through exports.
This can weaken the domestic currency and increase external sector risks.
However, services exports continued to provide support to India’s external trade position. India remains a major exporter of IT and business services.
The government is closely monitoring global developments, especially energy prices and geopolitical tensions, because they could further affect India’s import bill.
The Centre has hiked taxes on the import of precious metals like gold and silver to control the widening current account deficit.
Analysts believe export growth may remain under pressure due to slowing demand in major global markets, even as imports stay elevated because of India’s dependence on energy and commodity imports.