India's trade deficit hits record high in October as gold imports double

Weak global demand has been hurting demand for India’s exports, with continued purchase of foreign goods keeping the merchandise trade deficit wide.

India's merchandise trade deficit rose to a record high in October, propelled by a 95 percent increase in gold imports, the commerce ministry said on November 15.

According to latest data released by the ministry, India's goods trade deficit increased to $31.46 billion in October compared to $26.3 billion in the same month last year and a five-month low of $19.37 billion in September. Gold imports in October amounted to $7.2 billion, up from $3.7 billion a year ago.

According to Commerce Secretary Sunil Barthwal, the huge year-on-year jump in gold imports last month was down to the difference in the festival calendar in 2023, with Diwali falling in November this year as opposed to October in 2022.

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India, the world's largest importer of gold, sees an increase in the purchase of the yellow metal ahead of Diwali. So far in 2023-24, gold imports are up 5.5 percent at $29.48 billion.

While the merchandise trade deficit hit an all-time high in October, exports rose 6.2 percent year-on-year to $33.57 billion, while imports rose twice as much by 12.3 percent to $65.03 billion.

For April-October, merchandise exports were down 7 percent year-on-year at $244.89 billion, while imports were down 8.95 percent at $391.96 billion.

Commerce Secretary Barthwal added that China continues to be India's top source of imports, with Russia, UAE, US, and Saudi Arabia making the rest of the top five.

According to Barthwal, India's exports are facing hurdles from high global interest rates, which is affecting demand for Indian goods. However, he expressed satisfaction at the export performance in October, saying the green shoots that had become visible in August were now taking hold, with data for the first week of November showing merchandise exports were up compared to the same period last year.

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On the way forward, the government was looking at less-explored regions to grow India's exports.

"We have done an analysis and are looking to increase our exports to new regions. We have categorised these areas into three: totally new, new, and promising," Barthwal said.