India’s goods exports up 1% in April, merchandise trade deficit widens to 5-month high of $19.1 billion

Driven by a sharp surge in gold imports, total imports in April surged 10.25 per cent to $54.09 billion compared to $49.06 billion during the year ago period.

“India’s merchandise trade deficit widened sharply to $19.1 billion in April 2024 from $14.4 billion in the year-ago-month. The widening in the non-oil deficit in April 2024 compared to April last year was entirely driven by a tripling in gold imports, partly aided by the surge in gold prices,” Aditi Nayar, Chief Economist, Head Research and Outreach, ICRA Ltd said.
According to official data, gold imports jumped 208.99 per cent to $3.11 billion in April this year compared to $1 billion in April last year.

Imports in the ‘petroleum, crude & products’ category also jumped by 20.22 per cent to $16.46 billion in April this year compared to $13.69 billion last year.

Nayar said that nearly half of the widening in the aggregate merchandise trade deficit between April 2023 and April 2024 was on account of the surge in the value of gold imports amid the rise in global prices.

“The main drivers of export growth have been electronic, organic and inorganic chemicals, drugs and pharmaceuticals and petroleum products have done well. These four sectors have done extremely well,” commerce secretary Sunil Barthwal said.

“Gold imports are well within the average trend. It is not an exception and it is not alarming. Because of conflicts and geo-politics, central banks are buying gold. There is a price effect too. Since gold prices have increased, it may appear very high in terms of value but it isn’t in terms of volume,” Barthwal added.

On a sequential basis, imports in April declined by $3.19 billion while exports shrunk by $6.71 billion, the official data showed. While exports in March stood at $41.7 billion, import came in at $57.28 billion.

As far as services exports are concerned, India registered a sharp 14 per cent jump in April to $29.57 billion compared to $25.78 billion in April 2023. Imports also jumped 21.56 per cent to $16.97 billion compared to $13.96 billion.

Data showed that electronic goods exports continued their upward trend with a sharp 25.80 per cent jump to $26.51 billion in April compared to $21.07 billion exports last April. India’s petroleum products exports also jumped 3.10 per cent to $6.61 billion compared to $6.42 billion.

However, engineering goods, which is among the biggest export categories, slipped by 3.17 per cent to $8.66 billion compared to $8.94 billion. Weak export trend in the gems and jewelry category continued as exports slipped by 6.90 per cent to $22.57 billion in April 2024 compared to $24.25 billion in April last year.

“After recording positive growth for four consecutive months despite global challenges, engineering exports from India dipped 1.54 per cent year-on-year in April 2024 to $8.66 billion. The decline could be attributed to weak demand from some key markets and logistics issues arising from the Red Sea crisis,” Engineering Export Promotion Council of India (EEPC) India Chairman, Arun Kumar Garodia.

Garodia said that in recent weeks there have been some signs of improvement in global economic outlook and as a result trade should rebound. While the exporting community continues to grab emerging opportunities and penetrate new markets, some of the latest developments suggest demand scenarios from traditional markets would improve, he added.