- Trade deficit widens to three-month high of $34.68 bln
- Higher gold, silver imports drive deficit
- Exports to U.S. fall 4.5% m/m to $6.58 bln in Jan
- US may cut tariffs to 18% this week, says trade secretary
- India trade delegation to visit Washington next week for talks
NEW DELHI, Feb 16 (Reuters) - India's merchandise trade deficit widened to a three-month high of $34.68 billion in January, marking the final month impacted by around 50% U.S. tariff on Indian exports, which government officials said will be pared to 18% this week.
The wider-than-expected goods trade deficit was driven by a sharp rise in gold and silver imports, which pushed up total imports by 12% month-on-month to $71.24 billion, while exports fell 5% to $36.56 billion, data from the commerce ministry showed on Monday.
U.S. President Donald Trump earlier this month said he would slash tariffs on Indian goods to 18% from 50%, sparking relief among exporters and policymakers. Trump said that India has agreed to cut Russian oil purchases and intends to more than double its annual imports of U.S. goods.
A trade delegation will travel to Washington next week to finalise a trade agreement, Rajesh Agrawal, India's trade secretary, told reporters on Monday.
The two nations are currently working on a trade pact on the basis of an interim framework, concluded earlier this month.
Merchandise exports to the U.S., India's largest export market, fell 4.5% month-on-month to $6.58 billion in January. Shipments to the U.S. rose to $72.46 billion in the first ten months of the fiscal year, data showed.
Economists had expected the overall trade deficit to be $26 billion in January, according to a Reuters poll, compared to a deficit of $25.04 billion in the previous month.
RISE IN GOLD IMPORTS
The rise in imports was driven by gold and silver shipments, a trade ministry official said.
Gold imports in January rose to $12.07 billion from $4.13 billion in December.
Inflows into Indian gold exchange traded funds, which need to be backed by physical gold, nearly doubled in January to 240.4 billion rupees ($2.65 billion).
"Continued large inflows into gold ETFs, and consequent purchase/import of gold by ETFs, along with unabated imports of physical gold, may pose challenges to India's current account deficit", Kotak Institutional Equities said in a note on Monday.
Government data showed that services exports in January were estimated at $43.90 billion and imports at $19.60 billion, suggesting a services trade surplus of $24.30 billion, according to Reuters' calculations.
India's central bank releases detailed monthly services trade data about two weeks after the government's initial estimates.
Reporting by Shivangi Acharya, Manoj Kumar and Sarita Chaganti Singh; Editing by Mrigank Dhaniwala
Source: Reuters