India’s Trade Deficit Widens As Gold Imports Continue To Rise

• May trade deficit widens to $13.84 billion after hitting a 29-month high in April.
  
• Imports rise 33.1 percent year-on-year to $37.9 billion.
  
• Gold imports rose 236.7 percent from last year to $4.9 billion.
  
• Exports rise 8.3 percent year-on-year to $24 billion.
  

India's trade deficit continued to widen in May after hitting a 29-month high in April as import of precious metals like gold and silver, and petroleum products rose significantly.

The gap between imports and exports increased to $13.8 billion from $13.2 billion in April, according to data released by the Ministry of Commerce on Thursday. The deficit stood at $6.2 billion in May 2016. The trade deficit was at its highest in November 2014 at $16.8 billion.

Imports in May rose 33.1 percent, in dollar terms, to $37.8 billion compared to the same month last year. The value of gold imports rose 236.7 percent from last year to $4.9 billion, continuing the reversal which began in January after a slowdown during demonetisation. Value of silver imports multiplied more than 11 times over last year to $442.9 million.

Import of precious metals continued on an upward trend as jewellers stocked up in anticipation of a demand recovery due to the upcoming festive season.

Other Highlights

• Oil imports too increased 29.6 percent from last year to $7.6 billion after Brent crude prices gained 8 percent in May over the same period.
• Coal imports stood at $1.8 billion, higher by almost 30 percent from May last year.
• Imports of pearls and precious stones to increased over 37 percent.

Muted Growth In Exports

Exports continued their climb for the ninth straight month, rising 8.3 percent in May to $2.4 billion. Engineering goods, the largest contributor to Indian exports by value, grew 8.3 percent to $6.2 billion. Exports of gems and jewellery followed with a 6 percent growth to $3.9 billion. Almost three-fourths of India's export basket registered a positive growth.