India’s goods trade deficit widened to $22.99 billion in January—a two-month high

New Delhi: India’s merchandise trade deficit rose to a two-month high of $22.99 billion in January on the back of higher imports.

Economists had expected the January trade deficit to be $22.35 billion, according to a Reuters poll.

Merchandise exports declined to $36.43 billion in January by value from $38.01 billion in the previous month, and from $37.32 billion a year earlier, data released by the commerce ministry on Monday showed.

Meanwhile, goods imports rose steadily annually at $59.42 billion, up from $53.88 billion in the year-ago period. Merchandise imports in December stood at $59.95 billion.

The merchandise trade deficit—the difference between exports and imports—stood at $21.94 billion in December. The goods trade deficit had widened to $32.8 billion in November, and stood at $27.4 billion in October, and $20.78 billion in September.

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Last month, the commerce ministry revised April-November import figures downward after discovering a mismatch in gold shipment data due to a data-transmission transition. The error stemmed from double counting of imports routed through special economic zones and cleared to domestic markets.

The cumulative value of merchandise exports for April 2024-January 2025 stood at $358.91 billion, marking a 1.39% increase annually, while goods imports stood at $601.90 billion, up 7.43% annually.

Services exports rise

Services exports rose to $38.55 billion by value in January, up from $32.66 billion in December, and $31.01 billion a year earlier.

Services imports stood at $18.22 billion in January, rising from $14.84 billion in the year-ago period, and $17.50 billion in December.

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The combined value of merchandise and services exports touched $74.98 billion in January, up from $70.67 billion in December, and $68.33 billion in the year-ago period.

Global headwinds

India’s foreign trade has been hit by weak demand in major markets, geopolitical tensions and volatile commodity prices.

Sluggish growth in key markets has lowered demand for exports while rising global fuel costs have increased expenses.

In October, the WTO raised its 2024 global trade growth forecast to 2.7% from 2.6% but lowered its 2025 projection from 3.3% to 3.0%. It expects trade growth in both years to align with real global GDP expansion of 2.7% at market exchange rates.

India’s export drivers

Electronic goods, engineering goods, rice, readymade garments, and handloom products were key drivers of merchandise exports in the April-January period, while major imports included crude oil, petroleum products, electronic goods and gold.

Non-petroleum exports in January were valued at $32.86 billion, reflecting a 14.5% increase annually.

For the April-January period, cumulative non-petroleum exports stood at $305.84 billion, up 7.9% annually.

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India’s major export destinations during the April-January period were the US, the UAE, the Netherlands, the UK and China. Meanwhile, China, Russia, the UAE, the US and Saudi Arabia remained the top suppliers, reflecting the country’s dependence on oil imports.

India has added about $22 million in non-petroleum exports, driven primarily by electronic goods, trade secretary Sunil Barthwal said after releasing the latest monthly trade data.

Drugs and pharmaceuticals, and rice exports--due to the removal of embargo --and the gems & jewellery sector, whose exports had been falling earlier, have registered solid growth, Barhwal said. "We believe that, despite conflicts, despite tariff variations happening around the world, we have been able to do extremely well in January."