India’s gold imports surge, while exports recover in November 2014

The Dollar Business Bureau

Gold imports in November 2014 accounted for around 13% of total imports by India

  Lower oil prices have failed to make a difference to India’s trade deficit, which stands at around $100.6 billion during April – November 2014, up about 4% from around $96.8 billion recorded during the corresponding period last year. After declining in October, India’s merchandise exports recovered to around $25.96 billion in November 2014, which is up about 7.27% y/y thanks to a recovery in key export sectors. According to the Ministry of Commerce, India’s gems and jewellery exports increased around 44% y/y to $3.69 billion in November, while pharma exports grew 10% y/y to $1.2 billion and exports of engineering goods increased around 30% y/y to around $6.6 billion in November 2014. Exports of readymade textiles grew around 17% to around $1.2 billion in November 2014. India's total exports during April – November 2014-14 stand at around $215.75 billion, which is up about 5% compared to around $205.4 billion recorded in the same period last year. The improvement in exports has emboldened exporters who now think that the $340 billion target is achievable. M. Rafeeque Ahmed, President, Federation of Indian Export Organisations (FIEO) said that the positive growth in exports is very encouraging. He added that a little push in the next four months would help meet the $340 billion target. Reintroduction of Interest Subvention Scheme with effect from 1st of April, 2014 will help boost exports by small exporters, he reiterated. However, the real worry is the pace of imports which is nearing the export target India has set for FY2014-15. Burgeoning gold imports have caused India’s imports to zoom to $42.8 billion in November 2014, up about 26.8% y/y, with cumulative imports during April-November 2014 standing at around $316.4 billion which is up about 4.65% y/y. While oil imports declined around 9.7% y/y to around $11.7 billion in November 2014, higher imports in the month were mainly due to non-oil imports which grew to around $31.1 billion, up 49.6% from $20.8 billion in November, 2013. Relaxation of gold imports rules led to a surge in gold imports which stood at around $5.6 billion in November 2014, up about 571% y/y. Fertiliser demand has shot up in India with the onset of the kharif season, which led to high fertiliser imports of around $1.1 billion in November 2014,  up about 136% y/y. Other imports which grew significantly y/y in November 2014 include: pulses (up 56%), chemicals (up 16%), precious stones (up 36.6%), iron and steel (up 62.8%), and silver (up 143%).      

This article was published on December 15, 2014.