A rise in gold imports, widens trade deficit of India for up to 11 months in June, adding to the uncertainty in the global oil prices could pile further pressure on the current account widened.
The trade deficit widened to $ 11.76 billion last month, an all time high level since July 2013, after a Reserve Bank of India takes tough rules to ease import of gold led to an annual further increased by 65 percent of shopping abroad of the yellow metal.
Exports from India rose by 10.22 percent to U.S. $ 26.4 billion in June this year, while imports amounted to USD 38.24 billion, up 8.33 percent, leaving a shortfall trade of U.S. $ 11.76 billion, according to the Department of Commerce and Industry of the data.
Exports amounted to USD 24 billion in June last year, while imports were $ 35.3 billion, according to data. May exports increased by 12,4 percent to USD 28 billion in the same month last year, whereas imports fell 11.4 percent to USD 39.23 billion.
In the April-June period, exports increased by 9.31 percent to $ 80.11 billion.
Imports, however, fell 6.92 percent to USD 113.19 billion for the first three months of this FY 2014 year.
The trade gap over the period amounted to USD 33.08 billion. Oil imports rose 10.9 percent in June to $ 13.34 billion.
Non-oil imports over the month under review rose 7 percent to $ 24.9 billion.
The country's gold imports rose 65.13 percent to $ 3.12 billion by June this year following USD 1.88 billion in the same month of the previous year.
A greedy appetite for gold among Indian consumers has caused bullion second largest single item of import after oil and was among the key factors in its development of a balance-scale payments crisis on last year.
In a desperate attempt to trim a current account deficit, India last year rose import duties on gold and imposed a rule that requires one-fifth of all imports of precious metals being re-exported.
Although such measures have slashed imports of gold and enhanced the current account, which also pushed up premiums on the national market, which caused an increase in smuggling.
However, picking up strongly gold imports could spell the curbs remain in place for a while as import bill of the country at large to rise on the back from an improvement in investment and activity is expected consumption, increasing the trade deficit.
"The industry has been calling for the disposal of restrictions on imports of gold, but a large trade deficit in the context of geopolitical tension and investment climate recovery could make the government a little more cautious," said commodity advisory 100McxTips.
Finance Minister Arun Jaitley shocked the bullion markets, keeping the import duty on gold and silver unchanged at 10 percent in his maiden budget last week.
"The government will be reconsider easing curbs import of gold once the fiscal situation becomes more comfortable." Finance Minister Arun Jaitley said last week.
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