India’s merchandise trade gap shrank sharply in November, touching its lowest level in five months, as easing imports and stronger shipments to the United
States reshaped the trade balance. The government data released on Monday showed that softer inbound demand for key commodities such as gold, crude oil, and coal played a decisive role, while exports gained momentum after a weak October. The merchandise trade deficit stood at $24.53 billion in November, significantly below market expectations. Economists surveyed by Reuters had projected a gap of around $32 billion, following a record shortfall of $41.68 billion in October. The sharper-than-expected improvement underscores the impact of cooling import volumes alongside a recovery in outbound trade. Imports Ease, US Exports Strong A notable contraction in imports helped compress the trade deficit. Total merchandise imports declined to $62.66 billion in November, down from $76.06 billion in the previous month. The reduction was largely attributed to lower purchases of gold, oil, and coal, which together account for a substantial share of India’s import bill. Commenting on the trend, Commerce Secretary Rajesh Agrawal said, "India has held fort on the US exports despite tariffs," adding that the easing of imports was linked to reduced demand for these commodities. Export Performance Strengthens On the export front, India recorded a healthy rebound. Overall merchandise exports climbed to $38.13 billion in November, compared with $34.38 billion in October. Shipments to the United States were particularly strong, rising nearly 10% month-on-month to $6.92 billion. Year-on-year figures painted an even stronger picture. Exports to the U.S. jumped more than 21% in November from $5.71 billion a year earlier. This marked a reversal from October, when exports to the U.S. had slipped nearly 9% compared with the same month last year, despite remaining higher than September levels. Policy Support And Services Surplus The government has introduced a mix of policy measures to support exporters, including consumer tax reductions, labour reforms, and an export promotion package aimed at offsetting the impact of higher US tariffs. Diplomatic engagement has also intensified, with Prime Minister Narendra Modi recently holding talks with US President Donald Trump after a U.S. trade delegation visited New Delhi. Meanwhile, services trade continued to provide a cushion. Services exports in November were estimated at $35.86 billion, while imports stood at $17.96 billion, translating into a services trade surplus of about $17.9 billion, according to Reuters calculations. This surplus further strengthened India’s overall external position during the month.
