India's merchandise trade deficit has narrowed significantly to $24.53 billion in November 2025, according to government data. This is a notable decrease from the record high of $41.68 billion in October. Economists had anticipated a trade deficit of around $32 billion for November.
Key Factors Contributing to the Narrowing Deficit
The contraction of the trade deficit in November was primarily driven by a fall in imports of gold, oil, and coal. Preliminary data also indicated a significant reduction in imports of precious metals.
Export Performance
India's merchandise exports are estimated to have risen by 15% in November, reaching approximately $36 billion. This represents a substantial increase from the nearly $32 billion recorded in November of the previous year. Sectors such as electronics and seafood have shown strong export growth. Electronic goods exports, in particular, jumped by about 37.9% in the first seven months of fiscal year 2025-26, reaching $26.29 billion. Seafood exports also saw an 11.66% increase, amounting to $4.69 billion during the same period.
Import Trends
The overall merchandise imports are expected to cool down from October levels in November and December, due to decreased gold imports following the end of the festive season and a pick-up in exports.
Global Context and Diversification
Despite global headwinds, including tariffs imposed by the U.S. on exports from India, the country has managed to recover to a great extent through trade diversification. While exports to the U.S. experienced a decline, shipments to other countries, such as China, Spain, the EU, the UAE, and Russia, have increased. In October, exports to China surged by over 42%. This diversification of export markets has helped to stabilize India's trade.
Government Measures and Future Outlook
The Indian government has implemented measures to support exporters and cushion the economy from the impact of U.S. tariffs, including consumer tax cuts, export promotion packages, and labor reforms. A support package of around $5 billion for exporters has also been announced, featuring an "Export Promotion Mission" and a new credit guarantee scheme.
Looking ahead, the trade deficit is expected to remain elevated due to continued reliance on imports of electronics and capital goods. However, a potential trade deal with the U.S. in the coming months could help offset the current drag on exports and support growth.
