A report by ICICI Bank noted that India’s goods and services trade balance is relatively better placed during the last five months, despite external headwinds. In case of goods exports, the front-loading of goods exports to the United States supported the overall exports growth, while imports saw a relatively lower momentum, mainly due to lower gold imports.
“In the case of imports, the GST rates revisions (effective 22 September) along with normal monsoon implies that the domestic demand should improve further. Thus, the goods deficit is seen widening to USD 315 billion (25 per cent tariffs) to USD 330 billion (50 per cent tariffs),” the report highlighted.
The report emphasised that the ongoing tariff concerns are likely to weigh on capital flows, which should remain volatile in near-term. Thus, the outlook for balance of payments (BoP) is subdued. The near-term trajectory would depend on the US tariff concerns, with India-US trade deal working as a key driver for an appreciation bias.
Gold imports have seen a sequential pick-up by 37 per cent to USD 5.4 billion in August, the highest in the last 12 months. However, on a YoY basis, gold imports saw a sharp decline (-57 per cent) mainly due to a high base, as gold imports were sharply higher at USD 12.6 billion in August 2024.
Notably, gold imports have seen muted growth in the current fiscal year, which can be attributed to lower non-essential demand amid global concerns and higher international prices, However, the report mentioned that festive and wedding demand should lead to some increase in imports in coming months.
Source from: https://www.businessworld.in/article/imports-likely-to-pick-up-post-gst-tweaks-says-report-571751
