A rise in gold and non-oil non-gold imports and subdued growth of exports are expected to have widened the merchandise trade deficit to a five quarter high USD 38.8 billion in Q2FY15 from USD 33.3 billion in Q2FY14 (on a Balance of Payments or BoP basis), according to ICRA, a credit rating agency. ''Despite an improvement in the services trade surplus to USD 18.7 billion in Q2FY15 from USD 17.8 billion in Q2FY14, the current account deficit is likely to print at a larger USD 10.0-11.0 billion in Q2FY15 as compared to USD 5.2 billion in Q2FY14 (and USD 7.8 billion in Q1FY15),'' it added.

''Going forward, non-oil non-gold import growth is expected to ease somewhat in H2FY15 from ~11% in Q2FY15, on account of the decline in commodity prices, dampening the pressure on the overall import bill. Following the sharp correction in the price of the Indian crude oil basket, we expect net oil imports to decline to ~USD 90-92 billion in 2014-15 from ~USD 101 billion in 2013-14, barring a price spike on account of factors such as resurgence in geopolitical tensions,'' ICRA, said.

''Notably, gold imports surged in September-October 2014 spurred by the impending festive season and falling prices, despite the optical moderation in inflation and weak kharif harvest. Based on the prevailing import norms and assuming gold prices in the range of USD 1,100-1,200 per ounce in the remainder of FY15, it appears that the gold import bill in FY15 be similar to the level of USD 29 billion in FY14, which has increased the likelihood of a tightening of gold import norms by the GoI and the RBI.''

''On balance, we expect merchandise imports to record a low rise from USD 466 billion in 2013-14 to USD 470-475 billion in 2014-15. The chief risks that may inflate the import bill include a sharp revival in domestic consumption or investment demand in Q4FY15, although the likelihood of the same is receding, and higher agricultural imports following the weak monsoon,'' it added.

''Notwithstanding improved growth in the US, a bleak growth outlook for the Euro Zone and Japan and a y-o-y strengthening of the INR against a broad range of currencies, suggest a muted real growth of Indian exports in the remainder of this fiscal, dulling a key engine of India’s growth for the previous four quarters.''