At a time when India's gold imports have moderated, buying of precious stones and pearls from foreign markets have increased. That hints at a capital flight, according to Credit Suisse.
India's trade deficit in March has widened on a yearly basis, and import of gems and jewellery have driven a large part of that increase, a Credit Suisse report authored by Neelkanth Mishra said. Sustained high stones/pearls imports when jewellery exports are struggling is a concern, the report added.
While gold import volumes have moderated, imports of precious stones and pearls have not. As the latter are hard to value objectively, they hint at capital flight, and are worryingly large now, particularly given the drop in jewellery exports.Neelkanth Mishra, Credit Suisse
Also Read: In Charts: What's Behind India's Widening Trade Deficit?
Import of pearls, precious and semi-precious stones marginally increased 0.78 percent to $3.03 billion in March. In contrast, exports fell 16.57 percent to $3.4 billion.
India's trade deficit almost doubled in 2017-18 from the previous fiscal as the country's import bill continued to inflate. The gap between exports and imports, widened 28.5 percent from a year ago to $13.7 billion in the month of March, taking the annual deficit to $87.2 billion, according to commerce ministry's data released on Friday.
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