India’s merchandise trade deficit rises to a four-month high of $19.1 billion in April

New Delhi:India’s merchandise trade deficit widened to a four-month-high in April mainly due to a surge in gold and oil imports, official data showed on Wednesday. Imports rose strongly, while exports rose only marginally as compared with the comparable period of the previous year.

The merchandise trade deficit stood at $19.1 billion during April 2024, up from $14.44 billion during April 2023. The goods trade deficit had stood at $15.6 billion in March 2024.

The April figure fell short of economists' expectations of the merchandise deficit coming in at $17.23 billion, according to a Reuters poll.

Exports stood at $34.99 billion in April, up slightly from the $34.62 billion reported in the same period of the previous year. During March 2024, merchandise exports stood at $41.68 billion. A senior commerce ministry official, who spoke under the condition of anonymity, said both exports and imports have had seasonal impacts, doing well in some months and staying relatively muted during others.

According to the official, April saw such a seasonal impact on exports.

The official added that the latest merchandise exports, imports and deficit data should be compared with April 2023, and not with March 2024.

To be sure, Indian exports have been impacted by a slowdown in global growth. The tightening of interest rates due to nagging inflation, especially in advanced western economies, has led to a slowdown in business, investment and trade.

A slow pace of pickup in global trade during 2024, following a contraction in 2023, driven by the lingering effects of high energy prices and inflation, also impacted exports. 

Geopolitical challenges like conflicts in West Asia and Ukraine and the Red Sea crisis have also impacted global trade.

The total value of merchandise imports stood at $54.09 billion in April, higher than the $49.06 billion imports recorded during the same period of the previous year. During March 2024, merchandise imports stood at $57.28 billion. 

In April gold imports more than doubled to $3.11 billion, compared with $1.53 billion in March and $1.01 billion in April 2023.

India, the world's third-biggest consumer of oil, imported $16.46 billion of oil in April compared with $17.23 billion in March and $13.69 billion in April 2023.

Meanwhile, services exports stood at $29.57 billion, up from $25.78 billion in the previous month. Service exports had stood at $28.54 billion in March 2023. Services imports rose to $16.97 billion in April 2024 from $13.96 billion in the same period of the previous year. Service imports had stood at $15.84 billion in March 2024.

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During April, the main drivers of merchandise export growth included electronic goods, organic and inorganic chemicals, petroleum products, drugs and pharmaceuticals, cotton yarn and handloom products, the commerce ministry said in a presentation.

However, overall export of engineering goods, iron-ore, gems and jewellery, and marine products declined during the month.

Import of crude products, gold, electronic goods increased

On the import front, imports of petroleum and crude products, gold, electronic goods, pulses and vegetable oil increased during April, while imports of pearl and precious stones, coal and coke, iron & steel, and machinery, electrical and non-electrical goods declined.

“This was the highest merchandise trade deficit print in four months and was also much higher than ICRA’s expectations. Notably, the widening in the non-oil deficit in April 2024 vis-à-vis April 2023 was entirely driven by a tripling in gold imports, partly aided by the surge in gold prices,” said Aditi Nayar, chief economist, head research and outreach, ICRA Ltd.

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