Dip in gold imports may knock down India's June trade gap by 25%

NEW DELHI (Scrap Monster) : Research report published by Standard Chartered Bank forecasts  a significant drop in India’s June trade deficit number, mainly on account of the narrowing gold imports. The report sees a fall of 25% in June trade deficit owing to the tight controls on gold imports imposed by the Government and the Reserve Bank of India (RBI).

The country had yesterday announced the May trade deficit figures which were at record highs. The country added another $20.14 billion to its trade deficit in May, taking the total deficit during the initial two months of the current fiscal year (2013-’14) to $37.93 billion. The surge in trade deficit was mainly due to heavy imports of gold and silver.

StanChart believes that the series of measures taken by the government and the RBI would help bring down gold imports to $4-5 billion from $8 billion in May. The government had hiked import duty on gold to 8%. The RBI also had come up with several curbs on gold import by banks. The month of June would see the policy actions delivering their results, thereby moderating the quantum of gold imports.

Standard Chartered sees the headline trade deficit number coming down to $15 billion and the gold imports diminishing to $4 billion in June.