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Informist, Monday, Dec. 16, 2024

NEW DELHI – Record high imports and a fall in exports pushed India's merchandise trade deficit to an all-time high of $37.84 billion in November. The trade deficit was $27.14 billion in October and $21.31 billion a year ago.

Goods exports fell 4.8% on year to $32.11 billion last month, while imports jumped 27.0% to an all-time high of $69.95 billion. In October, merchandise exports had risen at a 28-month-high pace of 17.3% on year to $39.20 billion, while merchandise imports were up 3.9% on year at $66.34 billion, the then all-time high.

For Apr-Nov, India's merchandise trade deficit was $202.42 billion, higher than $170.98 billion a year ago. Exports in the first eight months of 2024-25 (Apr-Mar) totalled $284.31 billion, up 2.2% on year, while imports rose 8.3% to $486.73 billion during this period. 

Commerce Secretary Sunil Barthwal at a press conference Monday said that goods exports fell in November because of a fall in petroleum exports. Petroleum exports fell to $3.7 billion last month from $4.6 billion a month ago due to "price effect", Barthwal said while detailing the trade data on Monday. Barthwal, however, added that he would not like to comment on the outlook for petroleum exports.

While exports in November were lower compared to the year-ago period, non-oil exports rose to $28.40 billion last month compared to $26.36 billion in November 2023. The high non-oil exports suggest that there is a "pre-Christmas" demand, a commerce ministry official said at the press conference. Barthwal said he was positive high non-oil exports will sustain in coming months.

For Apr-Nov, exports of petroleum products were down at $44.60 billion compared to $55.02 billion a year ago. Electronic goods exports, on the other hand, rose to $22.54 billion in Apr-Nov from $17.66 billion last year.

Imports were at a record high in November mainly because of higher gold shipments, the official said. Gold imports hit an all-time high of $14.8 billion last month, compared to $7.13 billion in October. Barthwal said that gold imports were high in November due to "price effect". Gold imports rose to $49.08 billion in Apr-Nov, as against $32.93 billion a year ago. 

Non-oil imports rose to $53.84 billion in November from $40.13 billion a year ago and $48.04 billion a month ago. In Apr-Nov, oil imports rose to $123.26 billion from $115.03 billion a year ago. 

Barthwal said that he expects total exports, which include goods and services, to surpass $800 billion in FY25. According to data detailed by the commerce ministry on Monday, overall exports were $536.25 billion in Apr-Nov compared to $498.33 billion in the corresponding period last year. 

"Such high levels of gold imports were likely driven by festive and marriage-related demand and are unlikely to sustain in the ensuing months, which would help to cool the upcoming merchandise trade deficit prints," ICRA Chief Economist Aditi Nayar said in a note. "Nevertheless, the adverse trade deficit print for November 2024 will result in a sharper-than-expected widening in India's current account deficit in Q3 FY2025 (Oct-Dec), to around 2.8% of GDP as against earlier expectations of around 2.0%, which will be the highest level in over two years," Nayar said. ICRA has also raised its forecast for the FY25 current account deficit to around 1.4% of GDP from around 1.0% earlier.

The following tables detail trade data for November and Apr-Nov, in billion dollars, and the percentage changes:

End

US$1 = INR 84.86

Reported by Shubham Rana and Krity Ambey

Edited by Tanima Banerjee

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