India August trade gap narrows on easing commodity prices

INDIA’S trade deficit narrowed from a record high as easing global commodity prices lowered import costs, aiding the government’s efforts to reduce inflows through curbs on gold purchases.

The gap between exports and imports stood at US$28.6 billion last month, from a record high of US$30 billion in July, Trade Secretary BVR Subrahmanyam said at a press conference Saturday (Sep 3).

Imports jumped 37 per cent in August from a year ago to US$61.68 billion, while exports were US$33 billion, down 1.15 per cent.

Inbound shipments of petroleum products during the month are up 86 per cent to US$17.6 billion, and gold imports declined 47 per cent at US$3.5 billion. Coal imports stood at US$4.5 billion, while petroleum exports rose 5 per cent for last month standing at US$4.9 billion.

Global commodity prices have fallen from their peak seen earlier this year as hawkish central banks stir up market fears over rising rates, with slowdown talks threatening to stifle raw materials demand. Meanwhile, the federal government’s decision to raise import duty on gold in June and impose a levy on fuel exports also impacted the trade gap.

Though below record, a wider trade deficit is also putting pressure on current account gap - the broadest measure of the country’s external finances. Subrahmanyam said the current account deficit will be about 3 per cent in fiscal 2023, lower than Bloomberg Survey of 3.2 per cent. BLOOMBERG