India's merchandise trade deficit surged to a record high in November, driven by a sharp rise in gold imports, despite a contraction in exports. Official data released on Monday revealed that the trade gap widened to $37.8 billion in November, up from $27.1 billion in October and $21.31 billion a year earlier.
Goods imports rose by 331% year-on-year in November. Goods exports, however, shrank by 4.9% year-on-year, dropping to a two-year low of $32.1 billion, while imports climbed 27% year-on-year, reaching a record $69.95 billion.
Commerce Secretary Sunil Barthwal attributed the dip in goods exports to an unprecedented fall in petroleum product prices. "Petroleum prices have impacted export growth," he noted but remained optimistic about the export outlook.
"We are very positive that exports of non-petroleum products and services will sustain in the next three to four months. We will exceed $800 billion by a significant margin," Barthwal added. He emphasised that as long as exports and foreign direct investment (FDI) continue to grow, they will help finance imports.
Exports of non-petroleum products rose by 7.8%. Gold imports, which totalled $14.8 billion in November, were attributed to increased demand during the festive and wedding seasons, asset diversification amid global uncertainties, heightened demand from banks, and a reduction in customs duty from 15% to 6%.
Barthwal commented, "Whenever there is geopolitical uncertainty, we see a rise in gold imports."
Non-petroleum exports increased by 7.8%, reaching $28.4 billion, up from $26.4 billion a year ago. Services exports continued to show strong growth, surging by 26.9% to $35.7 billion in November, according to preliminary figures from the Ministry of Commerce and Industry.
Barthwal highlighted that the Christmas season had driven demand for non-petroleum products, and growing demand for Indian goods had led to inventory building in October.
Federation of Indian Export Organisations (FIEO) President Ashwani Kumar attributed the drop in exports to ongoing global economic uncertainties. "Rising tensions between Israel and Iran have continuously led to logistical challenges, with international trade impacted as much of our trade to Europe, Africa, the CIS, and the Gulf region relies on the Red Sea route or the Gulf, prompting buyers to stock large inventories," he explained.
From April to November, exports rose 2.17% year-on-year to $284.31 billion, while imports increased by 8.35% to $486.73 billion.
Barthwal said the government is focusing on 20 countries with high export potential, as well as six manufacturing sectors where India has strong production capacity and six services sectors, including IT-ITES. A retreat of commercial missions from these 20 focus countries is being planned to discuss strategies for boosting exports.
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