New Delhi [India], December 16 (ANI): India’s trade deficit is expected to remain around November levels in the near to medium term, with a weaker rupee likely to help keep the gap between exports and imports under control, according to a report by Nuvama.
The report noted that overall export performance in FY26 so far has continued to soften, while moderation in global trade could place additional pressure on India’s export outlook in the coming months. In this context, developments related to a potential India–US trade deal will be an important factor to watch, as it could influence the future direction of exports.
“Deficit may settle around current levels; INR weakness to help,” the report said. Despite the slowdown in exports, depreciation of the Indian rupee is expected to provide some support, as a weaker currency makes Indian goods cheaper for foreign buyers and can discourage imports by raising their cost. As a result, the underlying trend in India’s trade deficit is expected to remain in check over the near to medium term.
The report also highlighted that while exports may continue to move at a slower pace, imports are likely to remain moderate due to persistently weak domestic demand. This suggests that although a sharp rebound in exports may not materialise immediately, the trade deficit is also unlikely to widen significantly.
November trade data showed a sharp improvement in India’s goods trade balance. The deficit narrowed by USD 17 billion to USD 25 billion, largely due to a steep decline in gold imports. The core trade deficit, which excludes oil and gold, also improved, falling by USD 4 billion to USD 10 billion.
A key driver of the improvement was the sharp drop in gold imports, which declined to USD 4 billion in November from USD 15 billion in October, playing a major role in narrowing the overall deficit.
Merchandise exports rebounded strongly, rising 19 per cent year-on-year in November after contracting 12 per cent in October. Merchandise imports, meanwhile, slowed sharply, growing just 2 per cent year-on-year in November compared with 17 per cent in October. However, on a three-month moving average basis, imports grew 11 per cent year-on-year, with core imports rising 12 per cent, reflecting continued demand for electronics, chemicals and machinery.
Overall, the report concluded that while exports remain under pressure, moderation in imports and a weaker rupee could help keep India’s trade deficit stable in the coming months.
About The Author
