India Trade Deficit Widens To $25 Billion In December
India’s merchandise trade deficit widened to around $25 billion in December as imports rose faster than exports, according to official data. The increase marked a reversal from the previous month, when the trade gap had narrowed.
Imports Outpace Exports
Merchandise exports recorded marginal growth during the month, supported by sectors such as engineering goods and electronics. However, imports climbed at a much quicker pace, driven by higher purchases of electronics, fertilisers, machinery and other industrial inputs. The sharper rise in imports led to the wider trade deficit.
Key Factors Behind The Trend
Economists said sustained domestic demand and higher global commodity prices contributed to the increase in imports. At the same time, slower global growth and softer demand in some overseas markets continued to weigh on export momentum.
Services Sector Provides Support
India continued to post a surplus in services trade, led by IT and business services exports. This surplus helped cushion the impact of the wider merchandise trade deficit on the country’s overall external balance.
Outlook
Officials said steps to diversify export markets and strengthen trade agreements are ongoing. While seasonal and global factors may keep the goods trade deficit elevated in the near term, services exports are expected to remain a key stabilising factor.
