India posts highest November exports in a decade as trade deficit narrows sharply

New Delhi: India recorded its highest merchandise exports for the month of November in at least a decade, helping narrow the trade deficit sharply as imports fell from October’s elevated levels, according to commerce ministry data released on Monday.

Driven by rising shipments to countries such as the US, UAE and China, the gap between imports and exports narrowed to $24.53 billion in November, a sharp improvement from $41.68 billion in October.

Merchandise exports rose month-on-month to $38.13 billion from $34.38 billion in October, while imports declined to $62.66 billion from $76.06 billion in October. In November 2024, merchandise exports stood at $31.94 billion.

Experts noted that several factors contributed to the trend. Trade economist Biswajit Dhar, who is also distinguished professor at Council for Social Development, New Delhi said the recent depreciation of the rupee has played a major part, as a softer rupee helps exports and can support the current account position.

“There is a clear trade-off at play, with the central bank conserving reserves while letting depreciation work as a buffer for the external balance,” Dhar said. “The recent pickup in exports appears to be more volume-driven than price-led, with sectors such as engineering goods and electronics adjusting after weakness in October.”

Policymakers, however, remained cautious. “A sustained improvement will depend on the durability of export demand and the trajectory of imports, particularly energy-related shipments and electronics,” commerce secretary Rajesh Agarwal said while adressing a media briefing in New Delhi on Monday.

The improvement in the trade deficit marks a correction after October’s spike — caused by a tripling of gold imports — and offers near-term relief on the external balance at a time of heightened global uncertainty. This makes November’s improvement partly a normalisation rather than a decisive trend shift, experts said.

“It is largely a base effect, as last year’s exports were at a low level,” another trade economist, who wished to remain anonymous, said. In the current situation, a growth of 19% is not realistic.”

India overcomes tariffs?

Experts pointed to a likely strategic shift by Indian exporters in the face of US tariffs that were implemented in August.

“This rebound suggests that exporters may have shifted toward products less affected by tariffs,” said Ajay Srivastava, co-founder, Global Trade Research Initiative (GTRI), a think tank. “Detailed product data for November are not yet available, but tariff-exempt items such as smartphones and pharmaceuticals may have helped cushion the blow.”

“The increase in exports to the US in November was likely driven by tariff-free sectors such as electronics and pharmaceuticals, while tariff-hit segments like gems and jewellery and marine products appear to have diverted shipments to alternate or trans-shipment markets such as China, Hong Kong and Vietnam,” said Madhavi Arora, chief economist, Emkay Global Financial Services Ltd. “This has helped overall export growth remain healthy despite the impact of punitive tariffs.”

“This outcome is far better than what was initially expected after the tariff announcements. While we are maintaining our CAD-to-GDP forecast at 1.4% for now, a continuation of these trends could create meaningful downside risks to the current account deficit,” added Arora.

Ajay Sahai, director general of Federation of Indian Export Organisations (FIEO) suggested that Indian industry is absorbing the tariff shock and continuing business despite pressure on margins.

“While higher duties are hurting profitability and squeezing the bottom line, companies appear to be protecting volumes and revenues, indicating that top-line performance is holding up—or even improving in some cases—despite the strain on earnings,” said Sahai.

On a year-on-year basis, merchandise imports declined modestly from $63.87 billion, indicating that November’s improvement was driven more by the unwinding of October’s surge than a sharp structural compression in demand.

According to Abhash Kumar, trade economist and assistant professor of economics at Delhi University, a moderation in petroleum trade played a key role in November’s improvement. Petroleum product exports declined during April–November even as crude prices remained volatile, pointing to lower refining margins and weaker price realisations rather than a sharp fall in export volumes.

“At the same time, moderation in petroleum imports reflects a combination of softer international prices during parts of the period and calibrated sourcing by refiners,” Kumar said.

Notably, petroleum product exports declined from $44.58 billion in April–November 2024 to $38 billion in the current fiscal period. Imports of petroleum products also moderated, falling from $127.84 billion to $121.03 billion, according to the data.

Experts also pointed to the impact on the current account deficit (CAD). “A narrower trade deficit does translate into lower pressure on the current account deficit, assuming services flows and remittances remain stable,” Dhar said. “Stronger exports do support the rupee by improving dollar inflows and reducing the need for frequent RBI intervention, especially at the margin.”

He added that from a policy point of view, a lower CAD gives the RBI and the government greater comfort and flexibility, allowing more focus on inflation management, growth and trade facilitation rather than defending the currency.

Another expert pointed out that the trade deficit situation signals strong domestic demand, especially for export production.

“Because of the trade diversification taking place, India’s export profile has become relatively more balanced,” said D.K. Srivastava, EY India’s chief policy advisor. “I do not think there is anything to worry about in the short to medium term. In fact, if anything, the trade balance should improve as time goes by.”

Meanwhile, the combined merchandise and services trade shows an improvement in November 2025 compared with November 2024. Total exports (merchandise plus services) rose to $73.99 billion in November 2025 from $64.05 billion a year earlier, while total imports eased to $80.63 billion from $81.11 billion. As a result, the overall trade deficit narrowed sharply to $6.64 billion from $17.06 billion.

Sectoral analysis

The single biggest driver in the rise in exports was engineering goods, which rose to $11.01 billion in November 2025 from $8.9 billion a year earlier, reflecting sustained overseas demand for machinery, transport equipment and auto components.

Electronic goods, too, recorded a sharp jump, climbing to $4.81 billion in November from $3.46 billion in November 2024. With cumulative exports up nearly 38%, experts said this rise is clearly capacity- and investment-led, driven by mobile phone and electronics manufacturing, making it a strong structural trend rather than a one-off spike.

Gems and jewellery exports rose to $2.64 billion from $2.07 billion in November 2024. However, cumulative exports for the period are flat, indicating that this surge is cyclical, driven by restocking and price movements rather than sustained volume growth.

Drugs and pharmaceuticals rose to $2.61 billion from $2.16 billion, a gain of about $450 million, while chemicals increased to $2.34 billion from $1.98 billion, adding roughly $365 million. These sectors show steady cumulative growth and reflect structural demand from regulated markets and contract manufacturing.

Among agri and food products, meat, dairy and poultry exports jumped to $596 million from $454 million, an increase of $142 million, while marine products rose by about $118 million to $878 million. These gains suggest a gradual shift toward higher-value food exports, though still sensitive to global demand cycles. In contrast, rice exports fell sharply, dropping to $792 million from $1.13 billion, dragging down overall agri performance despite gains in coffee, cashew and processed foods.

Petroleum product exports increased to $3.93 billion from $3.52 billion, but cumulative exports are down nearly 15%, while iron ore exports rose to $179 million from $105 million, even as cumulative shipments fell over 24%, showing price-driven volatility rather than durable gains.