India’s merchandise trade deficit widened to an unprecedented $4168 billion in October, as gold imports rose sharply and outbound shipments recorded their steepest drop in over a year, according to fresh data from the commerce department.
Outbound shipments declined 118% to $3438 billion marking the lowest level in eleven months, while merchandise imports increased 1666% to an all-time high of $7606 billion.
Exports to the United States slipped 86% to $63 billion, following the introduction of a higher 50% tariff on several Indian goods.
Shipments to other major destinations also contracted, including the United Arab Emirates with a fall of 102% the Netherlands with a decline of 2275% and the United Kingdom with a drop of 2716%.
The merchandise trade deficit had stood at $2622 billion in the same month last year and had touched a thirteen-month high of $3215 billion, in September this year.
Gold imports surged 1992% year on year to %1472 billion driven by revived demand and the festive season.
Silver imports grew sixfold to $272 billion supported by increased arrivals of plain silver from a partner country, under a free trade agreement, as per government officials.
In the services sector, exports expanded by 119% to $3852 billion in October, while services imports increased by 81% to $1864 billion generating a surplus of $1988 billion.
The commerce department noted that the services figures for October, are preliminary estimates and will be revised after new data from the Reserve Bank of India.
The combined deficit from both merchandise and services widened to $218 billion in October, compared with $9 billion during the same period last year.
Commerce Secretary, Rajesh Agrawal explained that a reduction of about 25% in gold import volumes during the first half of the year contributed to the sudden jump in October as seasonal demand strengthened.
He stated that high prices earlier in the year had suppressed demand leading to a backlog that pushed up imports in October and consequently expanded the trade deficit.
Agrawal added, that exports fell due to a high base from last year, when October shipments touched $3898 billion. While, exports to the United States dropped to $63 billion from $69 billion in the previous year he pointed out that shipments to the US had improved from $58 billion in September suggesting some resilience.
Exports to Singapore declined 548% to $847 billion a trend he attributed mainly to lower petroleum prices rather than weak demand.
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