Gold imports, which has been pushing up current account deficit (CAD) and putting pressure on Indian rupee, dipped to USD 0.65 billion in August from USD 2.2 billion in the previous month.
Exports, for the second month in a row, increased by 12.97 per cent to USD 26.14 billion, while imports declined by 0.68 per cent to USD 37 billion.
"Things are improving in Europe and in the US also economic condition is better. So signs of stability in the major economies including the UK and the positive growth in the US will lead to increase in demand," Commerce and Industry Minister Anand Sharma told reporters here.
He also said that new markets like Asia-Pacific, Africa and South America have helped in pushing India's exports.
The Minister expressed hope that shipments would continue to be in the positive zone for rest of the financial year. All the exporting sectors barring jewellery have shown positive growth in August.
Sharma said the government will further extend incentives to those exporting sectors which are lagging behind.
"...we will take a considered view and make intervention to support those sectors which are lagging behind, and that we shall do it after the review in October," he said.
During April-August, exports were up by 3.89 per cent at USD 124.42 billion. Imports too grew by 1.72 per cent to USD 197.79 billion, leaving a trade deficit of USD 73.36 billion.
Oil imports in August grew by 17.88 per cent to USD 15.1 billion.
The last time trade deficit had narrowed substantially was in March when it touched USD 10.3 billion.
Trade deficits have been fuelled by high imports of gold and crude oil, contributing to the widening CAD, which touched an all-time high of 4.8 per cent of GDP, or USD 88.2 billion, in 2012-13.