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BW Businessworld

Trade Deficit Narrows From Seven-month High In June

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India's trade deficit narrowed in June to $12.24 billion from a 7-month high, helped by a slowdown in gold imports, which should ease pressure on the current account balance and the beleaguered rupee.

India's exports contracted by 4.6 per cent, for the second consecutive month, to $23.79 billion in June 2013 compared to that in the year-ago period.

Imports too declined marginally by 0.37 per cent to $36 billion in the month, leading to a trade deficit of $12.2 billion. In May, the trade gap stood at $20.1 billion.

The main reason for decline in imports and trade deficit was dip in gold and silver imports, Director General of Foreign Trade (DGFT) Anup Pujari told reporters here.

Gold and silver imports in June decreased to $2.45 billion from $8.4 billion in May.

Cumulatively, exports during April-May too dipped by 1.41 per cent to $72.45 billion. However, imports during the period were up by 5.99 per cent to $122.6 billion.

"Decline in gold and silver imports could be attributed to the steps taken by the government and the RBI," Pujari said.

Oil imports in June grew by 13.74 per cent to $12.76 billion from $11.22 billion in the same period last year.

On the other hand non-oil imports declined by 6.7 per cent to $23.2 billion.

Indians' hunger for gold has made it the second biggest item, after crude oil, in the country's import basket. To tamp down gold demand, Indian authorities last month took a slew of measures including a 2 percentage point hike in import duty.

Those measures appear to have worked as the growth in gold and silver imports slowed to 22.8 per cent year-on-year at $2.45 billion last month.

Gold and silver imports had jumped an annual 109 per cent in April and May combined as retail buyers tried to take advantage of sliding global prices.

Overall, merchandise imports rose about 0.73 per cent to $36.03 billion, the trade ministry said on Friday. Exports fell 4.57 per cent from a year earlier to $23.79 billion, their second straight monthly fall.