Record Deficit in Indian Foreign Trade: Gold Imports and Declining Exports in Focus

India faces a historical trade deficit in goods, characterized in November by a significant rise in gold imports, while goods exports declined due to weaker global demand. According to the published data from the Ministry of Commerce, the trade balance deficit reached 37.84 billion USD in November. This significantly exceeded the economists' forecasts, which, according to a Reuters survey, were at 23.9 billion USD. In October, the deficit amounted to 27.14 billion USD. This larger trade balance gap is likely to widen India's current account deficit and put additional pressure on the Rupee, which fell to a record low on Monday. India's goods exports fell in November by 4.9% year-on-year to 32.11 billion USD, while imports rose by over 27% to 69.95 billion USD. Incoming gold shipments reached a record value of 14.8 billion USD last month, doubling from 7.13 billion USD in October. The decline in global gold prices in November encouraged many importers to stock up to meet rising demand. Madhavi Arora, chief economist at Emkay Global Financial Services, emphasized that gold imports significantly contributed to exceeding the trade deficit, with an increase of nearly 50% year-on-year. Both consumption and investment demand for gold have increased, and the global gold price has risen significantly compared to 2023. Officials from the Ministry of Commerce pointed out that a reduction in the import duty from 15% to 6% in July this year, demand due to festivals and weddings, and higher returns on gold investments boosted demand. Overall, exports of goods and services in November were estimated at 67.79 billion USD, imports at 87.63 billion USD, compared to 73.21 billion USD in exports and 83.33 billion USD in imports the previous month. The decline in exports is mainly attributed to the falling global crude oil price, explained Sunil Barthwal, India's commerce secretary, during the announcement of trade figures. India imports crude oil and exports petroleum products derived from it. While crude oil imports rose in November by 7.9% year-on-year to 16.1 billion USD, exports of petroleum products fell by nearly 50% to 3.7 billion USD. Barthwal highlighted that despite the declining goods exports, the outlook for non-petroleum-related exports and services remains positive for the next four months, with an expected total export of over 800 billion USD in the current fiscal year, ending in March 2025.