India’s merchandise trade deficit narrowed sharply to USD 21.9 bn in Dec-24 from its record high level of USD 32.8 bn in Nov-24.
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India’s merchandise trade deficit narrowed sharply to USD 21.9 bn in Dec-24 from its record high level of USD 32.8 bn in Nov-24. The narrowing was led by sequentially lower deficits on account of gems and jewellery, petroleum products, as well core items.
The highlight was the stark revision to the last few months of import data for gems and jewellery. The statistical reconciliation has pruned the cumulative merchandise trade deficit by approximately USD 9 bn between Apr-Nov FY25. While this clearly imparts a downside risk to both our FY25 and FY26 current account deficit forecast of 1.3% of GDP each, we refrain from outright adjustment as the commerce ministry’s data reconciliation process is still underway and is likely to be completed by Feb-25.
Moving beyond statistical issues, two developments that could potentially impinge upon India’s trade deficit in 2025 would be the impact of fresh sanctions by the US on Russian crude and the anticipated imposition of tariffs by the Trump administration on key trade partners.