India's trade gap widens as crude imports surge due to Mideast war
- India ships in more than 80% of its crude needs and 60% of cooking gas
NEW DELHI: India’s merchandise trade deficit expanded to a wider-than-expected $28.38 billion in April, as a surge in crude shipments boosted imports with the Middle East conflict sending energy prices higher while disrupting supplies.
Concerns that the energy shock from the months-long Iran war could slow growth, raise inflation, and hit India’s balance of payments have led to a raft of interventions from policymakers as the rupee plummets to record lows, making it Asia’s worst-performing currency this year.
India, the world’s third-largest oil importer and consumer, ships in more than 80% of its crude needs and 60% of cooking gas, with the Middle East accounting for a large chunk of the supply.
Economists had pegged the April trade deficit at $26.5 billion, according to a Reuters poll. The trade gap was at $20.67 billion in March.
Merchandise exports rose to $43.56 billion in April from $38.92 billion in the previous month, government data showed on Friday, while imports rose to a six-month high of $71.94 billion against $59.59 billion in March.
Exports hit a two-decade high in April, driven by electronics, engineering goods and higher-value petroleum shipments, federal trade secretary Rajesh Agrawal told reporters, curbing the trade gap.
The rise in imports was led by a jump in oil shipments, which surged 53% to $18.63 billion in April from $12.18 billion in March, underscoring a sharp escalation in the import bill.
Global crude prices have spiked to as much as $120 per barrel since the Iran war started at the end of February.
Gold imports rose 84% from the previous month to $5.63 billion, despite banks scaling back purchases during the month, as refiners increased imports of gold dore.
The Indian rupee fell to an all-time low after the trade data was released, falling past the 96-to-dollar level for the first time.
Indian Prime Minister Narendra Modi has urged a spate of measures including fuel conservation, work-from-home practices, and limits on travel and imports, to conserve foreign exchange reserves.
The South Asian country, the world’s second-largest gold consumer, has more than doubled tariffs on gold and silver and tightened rules for duty-free gold used for jewellery exports.
On Friday, state-run fuel retailers raised gasoline and diesel prices for the first time in four years by more than 3%.
The government estimates that services exports stood at $37.24 billion in April and imports at $16.66 billion, partly offsetting the merchandise trade deficit.