India’s merchandise trade deficit narrowed to a five-month low of $24.53 billion in November, significantly below market expectations of $32 billion and sharply lower than October’s record $41.68 billion.
The improvement was driven by lower imports of gold, oil and coal, alongside a pickup in exports to the United States, according to government trade data analysed by Reuters.
Key Trade Numbers at a Glance (November)
- Merchandise trade deficit: $24.53 billion
- Exports: $38.13 billion (up from $34.38 billion in October)
- Imports: $62.66 billion (down from $76.06 billion in October)
- US-bound exports: $6.92 billion, up nearly 10% month-on-month
Economists had expected the deficit to remain elevated after October’s spike, making the November correction notable.
Exports to the US Show Resilience
India’s exports to the US rose:
- 21% year-on-year in November
- Nearly 10% month-on-month, despite ongoing tariff pressures
Commerce Secretary Rajesh Agrawal said India has “held fort” on US exports, indicating that Indian exporters have managed to maintain volumes even as tariff negotiations remain unresolved.
This resilience is important given that the US remains India’s largest export destination.
Imports Fall Back to Normal Levels
The sharp reduction in the trade deficit was largely due to cooling imports, not a demand collapse.
- Gold, crude oil and coal imports declined materially
- October’s deficit was inflated by unusually high gold imports
- November reflects a return toward trend levels
For policymakers, this suggests the October spike was transitory rather than structural.
Services Trade Continues to Support External Balance
While merchandise trade improved, services exports remained strong.
- Services exports: $35.86 billion
- Services imports: $17.96 billion
- Services surplus: ~$17.9 billion
This surplus continues to cushion India’s overall current account position and offsets volatility in goods trade.
Policy Context
The government has rolled out multiple measures to support trade performance:
- Export promotion incentives
- Select consumer tax cuts
- Labour reforms aimed at improving competitiveness
Prime Minister Narendra Modi recently spoke with US President Donald Trump following a US trade delegation visit, as India seeks relief on key export lines. At the same time, Washington continues to push for tariff reductions and market access for US farm products.
Why This Matters for Clients
- A narrower trade deficit reduces pressure on the rupee
- Lower import intensity helps contain imported inflation
- Stable US exports support sectors exposed to global trade
- Services surplus remains a structural strength
For businesses, exporters and investors, November’s data suggests external stress is easing at the margin, even though trade negotiations and global uncertainty remain ongoing.
Bottom Line
November’s trade data points to normalisation after an October shock, not a reversal of trend. With imports cooling, exports to the US stabilising, and services trade holding firm, India’s external position appears more balanced heading into year-end.