New Delhi: India’s trade deficit shot up to a three-year high in December as imports of gold, precious stones and crude oil surged during the month.

Data released by the commerce ministry showed merchandise exports rose 12.4% in December while merchandise imports rose 21.12%. Import of precious stones rose 94%, and those of gold and petroleum rose by 71.5% and 35%, respectively.

During the first nine months of the financial year, the trade deficit expanded to $114.8 billion against $78.4 billion during the same period a year ago as imports grew faster than exports.

In December, exports of gems and jewellery (2.4%), drugs and pharmaceuticals (7%), chemicals (31.4%), engineering goods (25.3%), and petroleum products (25.2%) rose while shipments of readymade garments declined by 8.1%.

Exporters had complained that the imposition of integrated goods and services tax (GST) and delays in refund of input tax credits were hurting overseas shipments, prompting the GST council to continue two pre-GST era schemes that allow duty-free sourcing of materials for export production until March 2018. Exporters insist duty refunds under GST have been tardy.

Growth in non-oil, non-gems and jewellery imports that reflects the state of economic activity in the country rose 9%, led by an increase in imports of machine tools (9%), electrical and non-electrical machinery (11.2%). Import of transport equipment declined by 24.3%.

Imports of coal (18.5%), chemicals (21%), plastics (11%), precious stones (94%), non-ferrous metals (30%) and electronic goods (19.2%) also expanded in December.

The WTO’s latest world trade outlook indicator (WTOI) also suggests that global merchandise trade growth likely moderated in the December quarter of 2017. For 2017, WTO has projected trade expansion at 3.6% following stronger-than-expected trade growth in the first half of the year.

Services exports growth picked up sharply to a 44-month high at 15.4% in November from 7.9% in October, leading to services surplus to $5.7 billion during the month.

Aditi Nayar, principal economist at ICRA Ltd, said the rating company expects the current account deficit to record considerable deterioration in forthcoming quarters.

“Overall, the current account deficit is likely to widen nearly three-fold to $ 42-44 billion in FY2018 from $15 billion in FY2017," she said.

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