India's exports rise 1.8% to $38.51 bn in Dec; trade deficit widens

Total exports for the month hit $38.51 billion despite geopolitical challenges, says government

India’s merchandise exports rose 1.8 per cent year-on-year to $38.51 billion in December amid global economic uncertainties, according to data released by the commerce department.

 

Inbound shipments grew 8.8 per cent to $63.55 billion. The trade deficit widened to $25 billion, compared with $20.63 billion in December 2024 and $24.53 billion in November.

 

Exports to the US contracted 1.8 per cent to $6.89 billion in December. However, on a cumulative basis, outbound shipments to the US stood at $65.87 billion during April–December, marking 9.7 per cent growth over the same period last year.

 

Commerce Secretary Rajesh Agrawal said that India has managed to “hold on well” in exports to the US despite the imposition of 50 per cent tariffs affecting 55 per cent of exports. “One of the key reasons has been electronics exports to the US, as they are not covered under the additional tariffs. Going forward, we hope to remain in positive territory,” Agrawal told reporters in a briefing on Thursday.

 

He acknowledged, however, that the 50 per cent tariff would “stress” sectors such as textile and leather. “The government will closely examine sectoral data when it becomes available in the coming weeks,” he added.

 

“High tariffs must be putting strain on supply chains to the US… To mitigate challenges in our export supply chain, we need to make them more resilient. The best way to do this is to reduce dependence on one particular geography. That is what textile manufacturers are doing, which is why they can increase numbers despite the tariffs,” he said.

 

Services exports contracted 3.97 per cent to $35.5 billion in December, mainly due to a high base. Services imports also declined 2.35 per cent to $17.38 billion, resulting in a surplus of $18.12 billion. December’s services trade data is an “estimate” and will be revised based on the Reserve Bank of India’s subsequent release.

 

Cumulative exports, including merchandise and services (April–December), rose 4.33 per cent to $634 billion, while cumulative imports grew 4.94 per cent to $730.84 billion, leading to a total trade deficit of $96.58 billion.

 

Agrawal told reporters that goods and services exports are expected to exceed $850 billion in 2025-26 (FY26). Of this, merchandise exports are expected to surpass $450 billion for the financial year. During April–December, merchandise exports grew 2.44 per cent to $330.29 billion.

 

Rahul Agrawal, senior economist at Icra, said the merchandise trade deficit widened sharply to a higher-than-expected $25 billion in December, amid sustained double-digit growth in non-oil, non-gold imports, even as export growth remained muted at 1.9 per cent for the month.

 

“With the significant widening of the merchandise trade deficit in the third quarter (October-December/Q3) of FY26 relative to the year-ago period, Icra expects India’s current account deficit (CAD) to surge to 2.3 per cent of gross domestic product (GDP), the highest level in 13 quarters. Nevertheless, the CAD is likely to remain at a benign 0.8 per cent of GDP in FY26,” he said.

 

Non-petroleum and non-gem and jewellery exports, an indicator of export health, grew 3.42 per cent to $32 billion in December. Among key sectors, electronic goods (16.78 per cent), marine goods (11.73 per cent), drug and pharmaceutical (5.65 per cent), readymade garment (2.89 per cent), engineering goods (1.28 per cent), and organic and inorganic chemicals (1.08 per cent) registered growth.

 

S C Ralhan, president of the Federation of Indian Export Organisations, said India’s top export destinations — the US, the United Arab Emirates, China, the Netherlands, the UK, Germany, Bangladesh, Singapore, Saudi Arabia, and Hong Kong — reflect a well-diversified and resilient export footprint. “This diversification is particularly critical at a time when global trade routes are being reshaped by geopolitical conflicts, sanctions, shipping disruptions, and strategic realignments,” he said. 

 

India-US trade deal ‘very near’ finalisation

 

Commerce secy says announcement will come when both sides agree

 

India and the US are “very near” to finalising a trade agreement, which will be announced when both sides are ready, Commerce Secretary Rajesh Agrawal said, adding that nearly all pending issues are under discussion.

 

“It is very near, but we cannot set a deadline because it will happen when both sides are ready and feel it is the right time to announce,” he said.

 

In the last week of December, Commerce and Industry Minister Piyush Goyal held a virtual meeting with US Trade Representative Jamieson Greer. [BS REPORTER]