India’s Trade Deficit Widens to $25 Billion as Imports Surge 9% in December
India’s trade deficit expanded sharply to $25 billion in December as a faster rise in imports outpaced modest export growth. Latest data released by the commerce department shows that total imports increased 9% year-on-year to $63.6 billion, driven mainly by higher shipments of electronics, fertilisers, silver, and crude oil.
On the other hand, exports recorded a relatively muted rise of 1.9% to $38.5 billion, reflecting uneven global demand and persistent trade-related challenges in key overseas markets.
Imports Rise on Electronics, Fertilisers, and Oil
The sharp expansion in the trade gap was largely due to a strong pickup in imports. Electronics imports remained robust as domestic demand for consumer devices and components stayed firm. Fertiliser imports also rose significantly amid seasonal agricultural requirements.
A notable contributor was crude oil, with oil shipments registering a 40–50% jump in value terms. Overall imports from the United States were estimated at $4 billion, marking a 7.6% increase compared with the same period last year.
Exports to the US Remain Flat Amid Tariff Pressures
Exports to the United States, one of India’s largest trading partners, remained largely unchanged in December. Shipments were valued at around $6.9 billion, marginally lower than $7 billion recorded a year earlier.
This stagnation comes at a time when certain Indian goods continue to face steep tariffs of up to 50%, impacting competitiveness. Despite these headwinds, overall exports managed to stay in positive territory.
Services Trade Shows Mixed Trend
During December, services exports were estimated to have declined 4.2% to $37 billion, while services imports edged up 2% to $17.4 billion. This moderation in services exports weighed on the overall trade balance, even as goods exports showed selective strength.
Commerce officials remain optimistic about the broader outlook. According to government estimates, India could close the financial year with total exports exceeding $850 billion. Services exports alone are expected to cross the $400 billion mark for the first time.
Sectoral Performance: Electronics and Apparel Shine
On the goods front, exports of electronics, gems and jewellery, engineering goods, and apparel recorded healthy growth during the month. In contrast, oil product exports declined due to lower global prices.
The readymade garment (RMG) sector showed resilience, with exports growing around 2.9% in December. Industry representatives highlighted that diversification, better compliance standards, and a shift towards value-added products helped exporters withstand global uncertainties.
Need for Diversification and Policy Support
Export bodies have stressed the importance of market diversification as global trade routes undergo structural changes due to geopolitical tensions, sanctions, and shipping disruptions. Industry leaders believe that while diversification has supported growth so far, continued government support will be critical to sustain momentum.
Overall, while the widening trade deficit underscores near-term pressures from rising imports, policymakers remain confident that steady services exports and diversification strategies will support India’s external trade position over the longer term.
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