Trade deficit at a record $38bn as gold imports rise

NEW DELHI: India's merchandise trade deficit widened to a record $37.84 billion in November, driven primarily by surging gold imports and falling exports, a trend experts said threatens to add pressure on the rupee which is already strained by three months of portfolio outflows.

- Rajeev Jayaswal

Trade deficit in October stood at $27.1 billion and experts polled by news agencies Reuters and Bloomberg had estimated November's figure to be around $23 billion. The rupee closed at a record low on Monday, falling 0.1% to 84.8712 per dollar.

Overall, the data released on Monday showed, goods exports in November declined 4.85% to $32.11 billion from $33.75 billion a year ago. Imports, however, surged by 27% to $69.95 billion compared to $55.06 billion in November 2023, mainly due to record gold imports.

Gold imports jumped a staggering 332% to $14.86 billion in November 2024 compared to $3.44 billion in the same period last year. This surge came despite a 26.26% fall in gems and jewellery exports to $2.06 billion, suggesting gold imports were mainly for domestic consumption rather than value addition for exports, according to an expert who requested anonymity.

Petroleum product exports contracted sharply by 49.7% to $3.72 billion in November 2024, on account of softening international oil prices, though India's petroleum exports grew in quantitative terms.