Trade gap in April widens to a four-month high

India’s trade gap in goods widened to a four-month high of $19.1 billion last month on a surge in gold and oil imports, government data released this week showed.

Merchandise imports during the month jumped 10% to $54.09 billion from $49.06 billion a year ago, while exports rose to $34.99 billion from $34.62 billion a year ago.

The widening trade deficit comes in the wake of challenges including the Russia-Ukraine conflict, rising interest rates in developed countries, and disruptions in Red Sea shipping amid Israel’s war on Gaza.

Gold imports during the month almost trebled to $3.1 billion from a year ago, while petroleum imports rose 20% to $16.5 billion against $13.7 billion a year ago.

“Gold imports are well within the average trend. It is not an exception,” trade secretary Sunil Barthwal said, adding that “most central banks are buying gold because of conflicts. Gold prices have increased and in terms of value imports are appearing to be high.”

Electronic goods exports rose 26% from $2.11 billion last April to $2.65 billion, while exports of organic and inorganic chemicals increased by 16.75% to $2.50 billion.

India’s total exports, combining merchandise and services in April, were at $64.56 billion, a 6.9% increase over April last year, while total imports grew 12.8% to $71.07 billion.

India had seen a decline in trade in the past fiscal year, with exports falling by 3.1% and imports by 5.7% from the previous year.

Based on merchandise exports and imports in the past fiscal year, China was India’s top trading partner, with the US as close second.

A fresh trade war that began this week between the US and China is raising global concerns as experts warn that new US tariffs on China could lead to dumping of Chinese goods in other markets, including India.

The US administration on Tuesday announced a series of proposed tariff increases on imports from China including on electric vehicles (EVs), medical products, lithium ion batteries, semiconductors, solar cells, aluminum, and steel.

Think tank Global Trade Research Initiative (GTRI) cautioned that India may become a dumping ground for Chinese products, while nudging New Delhi to remain vigilant.

Some analysts said the new US tariffs on Chinese goods may present an opportunity for Indian manufacturers and exporters.