India’s Trade Deficit Falls to Five-Month Low as Exports to the US Recover

Post by : Saif Nasser

India’s trade deficit narrowed to a five-month low in November, giving a positive signal about the country’s external trade position. Government data released on Monday showed that lower imports of gold, oil, and coal helped reduce the gap, while exports to the United States showed a strong recovery.

The merchandise trade deficit fell to $24.53 billion in November. This was much lower than the $41.68 billion recorded in October and also better than economists had expected. Many analysts had predicted the deficit would be closer to $32 billion, making the actual figure a welcome surprise.

One of the main reasons for the improvement was a sharp drop in imports. India’s total merchandise imports fell to $62.66 billion in November from $76.06 billion in October. Lower purchases of costly items such as gold, crude oil, and coal played a major role in easing pressure on the trade balance.

At the same time, exports showed a clear rebound. India’s total merchandise exports rose to $38.13 billion in November, up from $34.38 billion in the previous month. Exports to the United States, India’s largest overseas market, were especially strong.

Shipments to the US increased by nearly 10% compared to October and jumped more than 21% from a year earlier. Commerce Secretary Rajesh Agrawal said India has managed to hold its ground in the US market despite higher tariffs. He added that talks with Washington are moving forward.

According to Agrawal, India and the United States are close to finalising a framework agreement that could lead to lower tariffs on both sides. While he did not give a clear timeline, he said discussions are positive and both countries want to reach an understanding sooner rather than later.

Trade teams from both sides met in New Delhi last week, including talks with the US Deputy Trade Representative. These discussions come at a time when India is trying to protect key export sectors, while the US is asking for lower tariffs and easier access for American farm products.

The Indian government has also taken steps to support exporters. Measures such as tax cuts for consumers, export promotion schemes, and labour reforms have been rolled out to reduce the impact of global trade pressures and US tariffs on Indian businesses.

In addition to goods trade, India continues to perform well in services. Preliminary estimates suggest that services exports stood at $35.86 billion in November, while imports were $17.96 billion. This resulted in a healthy services trade surplus of nearly $18 billion, which helps balance the overall trade account.

Overall, the latest trade numbers suggest that India’s economy is showing resilience. With exports picking up and talks with the US moving closer to a deal, policymakers are hopeful that trade conditions will remain stable in the months ahead.