Gold imports plunge 81% to 30-month low; ICRA sees CAD widening to 0.9% of GDP

India's gold imports plunged 81.3% year-on-year to $1.8 billion in September, their lowest level in 30 months, helping narrow the merchandise trade deficit despite a rise in crude oil and other imports, according to commerce ministry data.

Gold imports had declined 57.7% in August.

The sharp fall in gold imports pulled down the overall merchandise trade deficit to $30.2 billion in September from $33 billion in the year-ago month, even as the country's exports and imports recorded growth.

According to the provisional data, merchandise exports rose 23% year-on-year to $44.4 billion in September, while imports increased 8% to $74.6 billion.

The decline in gold imports helped offset higher spending on crude oil and other goods.

Oil imports rose to $18.3 billion in September from $14 billion a year earlier, while imports of electronic goods increased to $14.9 billion from $9.8 billion.

The value of gold imports fell to $1.8 billion from $9.6 billion in September last year, a decline of $7.8 billion. This more than offset the increase in oil and electronic goods imports, which rose by $4.3 billion and $5.1 billion, respectively.

Ratings agency ICRA said the easing in the merchandise trade deficit was entirely driven by the non-oil segment, with the non-oil trade deficit narrowing to $18.1 billion in September from $23.7 billion a year earlier.

Overall, the merchandise trade deficit widened to $177.6 billion in the first half of FY27 from $156.9 billion in the corresponding period last fiscal.

Merchandise exports rose 18.5% year-on-year to $259.9 billion during April-September, while imports increased 16.3% to $437.5 billion.

ICRA expects India's current account deficit (CAD) to widen to $13-15 billion in the July-September quarter from $4.2 billion in the preceding quarter, partly due to an expected moderation in remittance inflows.

“Assuming an average crude oil price of ~$90/barrel in H2 FY2027, we forecast the CAD to widen to 0.9% of GDP in FY2027 from 0.7% seen in FY2026, while remaining at manageable levels,” ICRA said.

The agency said sizeable capital inflows, supported by measures taken by the Reserve Bank of India to attract foreign funds, including FCNR(B) deposits, would be more than sufficient to finance the projected CAD.