India’s merchandise trade deficit expanded to $22.99 billion in January 2025, surpassing market forecasts of $21.0 billion, reported ANI.
This represents a rise from $21.94 billion in December 2024 and $16.56 billion in January 2024 and was largely driven by a fall in exports and a modest increase in imports amidst global economic uncertainty.
Despite a narrowing oil and gold deficit, the surge in the non-oil, non-gold (NONG) deficit contributed significantly to the overall trade gap.
With oil prices reaching $78 per barrel, close monitoring of price trends and global economic developments will be crucial in shaping India’s trade outlook.
Exports declined by approximately $2 billion to $36 billion in January, following an improvement in December.
Meanwhile, imports dropped marginally by $0.5 billion, totalling $59.42 billion.
Gold imports also fell sharply to 30.8 tonnes, down from 40 tonnes in December 2024 and 100 tonnes in November 2024, largely due to surging gold prices.
While the goods trade deficit widened, India’s services trade surplus provided some relief, rising to $20.33 billion in January 2025 from $19.08 billion in December 2024, a notable increase from $16.17 billion in January 2024.
The resilience of the services sector in a slowing global economy is expected to bolster India’s current account balance for FY25.
With positive seasonality in the final quarter of the fiscal year, the NONG deficit could return to single-digit levels in the coming months.
However, uncertainties surrounding historical trade data revisions, geopolitical risks, and tariff-related issues present downside risks to the projected 1.2 per cent current account deficit for FY25.