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Merchandise exports in December rose to $38.01 billion from November’s $32.11 billion, while imports fell to $59.95 billion from the $64.95 billion in November.
Economists in a Reuters poll had predicted that the country’s trade deficit in December would be $27.33 billion.
However, the trade gap widened from $18.76 billion in December 2023. December’s goods exports dropped about one percentage on year from $38.39 billion. Imports were up 4.8% from $57.15 billion in December 2023.
The government had earlier reported in December last year that India’s trade deficit widened to an all-time high of $37.84 billion but the number was revised to $32.84 billion after the gold imports revision. The government revised November’s data, slashing gold import estimates by a record $5 billion, reducing it from $14.86 billion to $9.84 billion.
India’s trade deficit will remain in focus in the next few months as US President-elect Donald Trump takes office on January 20. He is planning to create a new department called the External Revenue Service “to collect tariffs, duties, and all revenue” from foreign sources.He has warned of 100 per cent tariffs on BRICS nations — a bloc including India and China — if they create a rival to the US dollar.Indian officials are also allaying apprehensions for now, betting Prime Minister Narendra Modi’s good relations with Trump during his first presidency will continue and they have room to lower import duties for US goods as part of any forthcoming negotiations, says a Bloomberg report.
According to trade experts, a deficit is not always bad, if a country is importing raw materials or intermediary products to boost manufacturing and exports. However, it puts pressure on the domestic currency.
While the Indian rupee could see further weakness, as a result of a stronger US dollar, it is still expected to “outperform” other currencies in Asia’s emerging markets in 2025, said Aastha Gudwani, India chief economist at Barclays Bank Plc.
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