India’s goods trade deficit widened to a record $37.84 billion in November 2024 as goods imports spiralled, largely due to unprecedented gold imports during the month, according to data released by the Commerce Department on Monday.

Exports of goods, after showing promise in the previous month, slipped in November 2024, declining 4.83 per cent (year-on-year) to $32.11 billion. This was primarily due to a drop in petroleum exports as global prices fell , according to Commerce Secretary Sunil Barthwal who released the data at a press briefing. 

“Christmas demand in October is expected to be higher due to inventory building. If you look at November, Christmas demand (from India) has continued to grow as non-petroleum exports during the month increased 7.75 per cent to $28.40 billion. You have to distinguish between petroleum and non-petroleum,” Barthwal said.

Trade deficit

But what would be worrying for policymakers is the swelling of the trade deficit during the month, as imports of goods increased 27 per cent (y-o-y) in November to $69.95 billion. Gold imports, which touched an all-time high of $14.8 billion in November, doubling the previous month’s imports of $7.13 billion, accounted for more than 20 per cent of the total imports.

Such high levels of gold imports were likely driven by festival and marriage-related demand and are unlikely to be sustained in the ensuing months, which would help to cool the upcoming merchandise trade deficit prints, according to Aditi Nayar, Chief Economist & Head Research Outreach, ICRA Ltd.

“Nevertheless, the adverse trade deficit print for November 2024 will result in a sharper-than-expected widening in India’s current account deficit in Q3 FY25, to 2.8 per cent of GDP as against earlier expectations of 2 per cent which will be the highest level in over two years,” she said.

 In April-November 2024, goods exports grew 2.17 per cent to $284.31 billion, while imports increased by 8.35 per cent to $486.73 billion. The trade deficit during the period widened to $202.42 billion, compared to $170.98 billion in the same period last fiscal.

Exporters’ body FIEO made a case for deeper interest subvention support and extension of interest equalisation scheme for at least five years for a predictable business environment for exporters 

In November, while petroleum exports fell 49.69 per cent to $3.17 billion and gems & jewellery exports declined 26.26 per cent to $2.06 billion, an export decline was also registered in some sectors such as chemicals, iron ore and coal & mica.

However, exports from multiple major sectors also posted a significant increase during the month which include engineering goods, electronics, readymade garments and marine products, among many others.