India reported a record high merchandise trade deficit of US$ 37.84 billion in November 2024, up from US$ 27.14 billion the previous month, driven by an uncertain global environment, soaring gold imports, and falling oil prices. The country’s services exports, however, remained a bright spot. While services exports reached a record monthly high of US$ 34.31 billion in October, they are expected to grow further to US$ 35.67 billion in November.
As per the government data, the Total exports from India, comprising both merchandise and services, for November 2024 are estimated at US$ 67.79 billion, reflecting a positive growth of 9.59% compared to November 2023. Meanwhile, total imports, including merchandise and services, for November 2024 are estimated at US$ 87.63 billion, showing a significant increase of 27.47% compared to November 2023.
The country’s trade deficit hit a record high of US$ 37.8 billion in November, up from US$ 27.1 billion in October, as the country’s import bill surged, and exports declined.
The November month experienced a sharp rise in imports, driven by a surge in merchandise imports, particularly a 4.3-fold increase in gold imports, according to data from the commerce department. Data shows that India imported gold worth US$ 14.9 billion in November, making up one-fifth of total merchandise imports. Commerce department officials attributed the surge in gold imports to a nearly 30% rise in its price. The deficit stood at US$ 27.14 billion in October.
Additional Secretary L Satya Srinivas stated, “Gold has been reflected as one of the best performing assets in 2024, till November. Higher import is also due to the investor confidence in gold as a safe asset.”
Trade ministry officials stated that the increase in demand can be attributed to the reduction in the import tariff from 15% to 6% in July, along with higher festival and wedding demand, and increased returns on gold investments.
Trade experts, however, suggest that a trade deficit is not always bad, especially if a country is importing raw materials or intermediate goods to enhance manufacturing and exports. However, it can place pressure on the domestic currency.
A look at the Merchandise Trade
The Merchandise exports in November 2024 stood at US$ 32.11 billion, down from US$ 33.75 billion in November 2023. However, Merchandise imports during November 2024 amounted to US$ 69.95 billion, up from US$ 55.06 billion in November 2023, (growing by 27%).
Exports declined by 4.8% in November to a 25-month low of US$ 32.1 billion. This decline followed a strong 17% year-on-year (Y-o-Y) growth in October, which government officials attributed to inventory buildup in Western markets ahead of the Christmas season.
“The merchandise exports have taken a hit mainly due to a fall in global crude prices,” according to Commerce Secretary Sunil Barthwal.
In November, petroleum exports dropped by 49.6% to US$3.7 billion. Similarly, exports of gems and jewellery saw a significant decline of 26% to US$ 2.06 billion. Commerce Secretary Sunil Barthwal informed that fluctuations in oil prices are impacting the exports. Petroleum product shipments fell by nearly 50% to US$ 3.71 billion last month. In the first eight months of this fiscal year, petroleum exports contracted by 19% year-on-year, amounting to US$ 44.6 billion.
As compared to the corresponding month last year, a positive growth in export during November 2024, was seen for the products including:
Rice (95.18%), Electronic Goods (54.72%), Tobacco (50.48%), Cashew (23.61%), Meat, Dairy & Poultry Products (21.38%), Marine Products (17.82%), Coffee (16.31%), Tea (15%), Other Cereals (7.4%), Spices (6.1%), , Cereal Preparations & Miscellaneous Processed Items (2.71%), Carpet (2.4%), Oil Seeds (2.19%); Engineering Goods (13.75%), Plastic & Linoleum (10.91%), Rmg Of All Textiles (9.81%), Man-Made Yarn/Fabs./Made-Ups Etc. (4.88%); Cotton Yarn/Fabs./Made-Ups, Handloom Products Etc. (2.02%), Drugs & Pharmaceuticals (1.12%), Leather & Leather Products (0.73%)
Meanwhile, imports of Leather & Leather Products (-41.59%), Coal, Coke & Briquettes, Etc. (-29.31%), Iron & Steel (-28.63%), Dyeing/Tanning/Colouring Mtrls. (-5.26%), Transport Equipment (-5.23%), Pearls, Precious & Semi-Precious Stones (-3.27%), Metaliferrous Ores & Other Minerals (-0.86%); witnessed a negative growth during November 2024 over the corresponding month of last year.
Cumulatively, from April to November this fiscal year, exports rose by 2.17% to US$ 284.31 billion, while imports increased by 8.35% to US$ 486.73 billion. The trade deficit, representing the difference between imports and exports, widened to US$ 202.42 billion during April-November 2024, up from US$ 170.98 billion in the same period of 2023.
In November 2024, the top 5 export destinations showing positive growth compared to November 2023 were the UAE (11.38%), Australia (64.38%), Italy (37.71%), Singapore (22.88%), and Malaysia (27.31%).
For the period April-November 2024, the top 5 export destinations with positive growth compared to the same period in 2023 were the UAE (15.25%), the Netherlands (23.04%), the USA (5.27%), Singapore (20.7%), and the UK (15.21%).
In terms of imports, the top 5 sources with significant growth in November 2024 compared to November 2023 were Switzerland (360.02%), the UAE (109.57%), South Africa (217.33%), Australia (71.91%), and Saudi Arabia (35.64%).
For the period April-November 2024, the top 5 import sources with growth compared to April-November 2023 were the UAE (60.84%), China (9.81%), Russia (9.22%), Switzerland (21.83%), and Taiwan (42.82%).
A silver lining- growth in services export
The services exports in November exceeded the value of merchandise exports. In November 2024, services exports are estimated at US$ 35.67 billion, up from US$ 28.11 billion in November 2023, while services imports are estimated at US$ 17.68 billion, compared to US$ 13.68 billion last year. The Services exports showed a growth of 26.8%, while imports increased by 29.2% during the month.
From April to November 2024, service exports are estimated at US$ 251.94 billion, up from US$ 220.08 billion in the same period of 2023. Service imports during this period are estimated at US$ 132.47 billion, compared to US$ 116.01 billion in 2023. As per the data released, the services trade surplus for April-November 2024 is US$ 119.48 billion, higher than the US$ 104.07 billion surplus in 2023. Services exports are estimated to grow by 14.48% during April-November 2024 compared to the same period in 2023.
India’s services exports have been boosted by its strong IT sector and the growth of global capability centres (GCCs), with India hosting about 40% of the world’s GCCs. This expansion in services exports has helped offset the impact of global challenges on the country’s external finances. The growth in services exports has played a key role in containing the country’s overall trade deficit
Commerce Secretary said that despite the fall in merchandise exports, the outlook for non-petroleum exports and services remains positive for the next four months, with total exports seen at over US$ 800 billion in the current fiscal year ending in March 2025.
He further informed that the ministry is focusing on 20 countries and six key sectors, including IT/ITeS, to further boost exports. These nations offer significant potential for increasing shipments, and to leverage this opportunity, the ministry is collaborating with Indian missions abroad.
