New Delhi: The surge in trade deficit in the month of August was primarily driven by record Gold imports totalling USD 10.1 billion, according to a report by Emkay. As per the report, the spike in gold imports was due to the reduction in customs duty and increased demand ahead of the festive season.

“The import surge was led by gold, which rose to a record level of USD10.1bn after averaging USD3.2bn in the first four months of FY25. This was likely due to the sharp cut in customs duty on gold, along with higher demand ahead of the festive season,” the report added. India’s trade deficit in August surged to a ten-month high of USD 29.7 billion. Emcay also noted that the growth in services exports is slowing. 

The IT sector could see a decline to single-digit growth in FY25 says the report.It added that the non-IT services are expected to grow steadily, offsetting the slowdown in the IT sector.”We continue to expect robust services exports growth in FY25, led by higher growth in non-software services; software services growth may slow to low single-digits,” the report added.

“Growth in non-IT services could spill over to FY25 as well, even as IT services exports growth could moderate to low single-digits and remittances may also see a slowdown,” according to the report.India’s current account deficit (CAD) for FY25 is projected to remain at 1.1-1.2 per cent of GDP, similar to FY24 levels, the report added.

According to the report, the balance of payments (BoP) surplus is likely to be around USD 28-30 billion, supported by strong services exports and moderated capital inflows. Overall merchandise imports rose by 12 per cent month-on-month (MoM) to USD 64.4 billion, while exports grew at a slower pace of 2.4 per cent MoM to USD 34.7 billion.

The core (non-oil, non-gold) goods deficit also widened, as core imports increased by 6.9 per cent MoM, outpacing a 0.3 per cent decline in core exports. Electronic goods imports continue to show strong sequential and year-on-year (YoY) growth, signalling a recovery in domestic demand.

Meanwhile, the oil trade balance improved, with oil exports increasing by 13.9 per cent MoM, while oil imports fell 20.6 per cent, helped by lower global crude prices.In the services sector, India’s trade surplus rose to USD 15 billion.