Rama Krishna Sangem
Gold imports widened India’s trade deficit to 41.66 billion US dollars in October. India’s exports contracted 11.8 per cent to USD 34.38 billion in October, according to government data released on November 17 Monday. At the same time, imports jumped 16.63 per cent to USD 76.06 billion. The country’s trade deficit stood at USD 41.68 billion during the reporting month.
Imports surged due to increased shipments of gold and silver. Gold imports jumped to USD 14.72 bn in the last month against USD 4.92 bn recorded in the same month last year. In spite of spike in gold prices, people bought gold for multiple reasons. They include festival season, marriages and as an investment.
The country’s exports to the United States declined to USD 6.3 bn in October as against USD 6.9 bn registered in the year-ago month, Commerce Secretary Rajesh Agrawal told reporters. During April-October this fiscal, exports increased marginally by 0.63 per cent to USD 254.25 billion. At the same time, imports rose 6.37 per cent to USD 451.08 billion, the commerce ministry data showed.
Urgent need for trade deals
If we take a longer view for the April–October period of the current fiscal, exports rose by 0.6 per cent to 254 billion US dollars while imports surged by 6.37 per cent to 451 billion US dollars. That means, Indian exports were hit by the US tariffs, but our imports are not stopped – gold and oil primarily. This trend is likely to continue in the coming few months too, as there are no signs of a trade deal with the US and our oil refineries have brought down concessional oil imports from Russia.
In these circumstances, Indian can only pin its hopes on two things: One, signing a deal with the US at the earliest, by December end or early January and clinch deals with the EU to expand our exports. In near term, we cannot do anything to rein in imports, especially gold. So, trade deals urgently needed.