New Delhi, February 18, 2025 – India’s merchandise trade deficit decreased to $21.94 billion in December 2024, down from $31.86 billion in the previous month, according to data released by the Ministry of Commerce. The decline was primarily attributed to a reduction in gold imports, which fell by half to $4.7 billion.
Merchandise exports saw a slight decline of 1% year-on-year, totaling $38.01 billion, amid ongoing geopolitical uncertainties. However, electronics exports grew significantly by 35.11%, reaching a two-year high of $3.58 billion.
Total imports in December increased by 4.9% year-on-year to $59.95 billion but were down 6% compared to November’s revised figure of $63.86 billion. The trade data for April-November 2024 also underwent a downward revision, reducing total imports by $17.5 billion to $469.3 billion. This adjustment was mainly due to corrections in gold import figures, which were revised downward by $11.7 billion, along with reductions in silver and electronics imports.
Revised Data and Policy Adjustments
In November 2024, gold imports were reduced by $5 billion to $9.8 billion following the identification of a calculation error related to double-counting of shipments stored in warehouses. The Ministry of Commerce stated that the revisions were necessary due to a transition in data transmission mechanisms from the National Securities Depository Limited (NSDL) to the Indian Customs Electronic Gateway (ICEGATE).
Commerce Secretary Sunil Barthwal indicated that a standard operating procedure is being developed to improve coordination between the commerce and revenue departments to enhance data accuracy. The government’s review of trade data is ongoing and is expected to conclude by next month, with potential implications for macroeconomic indicators such as the current account deficit (CAD) and gross domestic product (GDP).
Sector-Wise Trade Trends
Despite the overall decline, gold imports in December rose 55% year-on-year to $4.7 billion. Other import categories also registered growth, including electronics (up 9.6%), petroleum products (up 2.2%), machinery (up 11.75%), organic and inorganic chemicals (up 7.59%), and vegetable oil (up 18.61%).
Aditi Nayar, Chief Economist at ICRA, noted that a customs duty reduction earlier in the financial year contributed to over half of the increase in the trade deficit. She further projected that the downward revision of trade data and the decrease in the December trade deficit could result in a more favorable CAD for the third quarter of FY25, estimated at 2% of GDP, with a full-year estimate of approximately 1% of GDP.
On the export front, petroleum shipments fell 28.6% year-on-year to $4.9 billion, while gems and jewelry exports declined by 26% to $2.5 billion. However, some sectors recorded growth, including engineering goods (up 8.35%), pharmaceuticals (up 0.63%), electronics (up 35.11%), and ready-made garments (up 12.89%).
Core exports, which exclude petroleum and gems and jewelry, grew 8% to $30.9 billion. For the April-December period, cumulative merchandise exports increased by 1.6% to $321.71 billion, while imports rose by 5.1% to $532.48 billion.
Services Trade Performance
In the services sector, exports grew 3.2% year-on-year to $32.66 billion in December, while imports rose 11.9% to $17.5 billion, resulting in a services trade surplus of $15.16 billion. However, these figures remain provisional and will be subject to revision based on updates from the Reserve Bank of India.
The trade data adjustments and shifting import-export trends are expected to shape India’s economic outlook in the coming months, with policymakers closely monitoring developments in global trade and domestic demand.
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