Rising gold imports widens trade deficit to $15 billion in Jan

India’s trade deficit widened in January pushed by a rise in gold imports, while exports growth remained low, deepening concerns for Prime Minister Narendra Modi who wants to accelerate economic expansion ahead of elections.

Modi, who has set a target of doubling India’s share of world exports and reducing its dependence on imports to create jobs, faces criticism from businesses for not doing enough in the last five years. India’s goods exports have shown little growth since Modi took charge in 2014, as small exporters—contributing nearly 35% to total exports—have been hit hard by rising input costs after the chaotic launch of national sales tax in 2017.

In January, merchandise exports rose 3.74% from a year earlier to $26.36 billion, while imports were up 0.01% to $41.09 billion, data released by the com- merce ministry on Friday showed.

The gold imports in January rose 38.16% year-on-year to $2.31 billion, widening the trade deficit to $14.73 billion compared to $13.08 billion in the previous month. Indian exports of textiles, agricultural products and engineering items have been hit hard due to a shortage of bank credit and delay in refund of input credit under the goods and services tax, exporters said.

“Exports by small companies could have done much better if supported by flow of bank credit,” said Ajay Sahai, director general of the Federation of Indian Export Organisations. He said Indian exports face a tough time in 2019 following a slowdown in global economic growth and trade. India’s total April-January exports, including goods and services, are estimated to touch $440 billion, up 9.07% from a year ago, while imports were estimated at $530.55 billion, up 10.74%, the government statement said.