Services Surplus Cushions India Amid Rising Imports
December Trade Data Show Widening Balance Gap
New Delhi: India’s latest trade numbers underscore a widening imbalance in its external sector, with faster import growth offsetting steady gains in exports and pushing the balance of trade further into deficit. Official estimates released by the Ministry of Commerce and Industry show that cumulative exports of merchandise and services during April to December 2025 rose to 634.26 billion United States dollars, marking a year-on-year growth of 4.33 per cent. Over the same period, imports increased at a sharper pace of 4.95 per cent to $ 730.84 billion, resulting in an overall trade deficit of $96.58 billion, wider than the $88.43 billion recorded in the corresponding period last year.
The pressure on the trade balance was particularly visible in December 2025. Total exports of goods and services for the month were estimated at $74.01 billion, marginally lower than in December 2024, while imports climbed to $80.94 billion. The divergence between export contraction and import expansion led to a monthly trade deficit of $6.92 billion, compared with a much smaller gap a year earlier. The December figures point to short-term stress in trade flows even as cumulative exports for the financial year to date remain on a growth path.
Merchandise trade continued to be the main source of strain. Goods exports in December were valued at $38.51 billion, up modestly from the previous year, but imports surged to $63.55 billion. For April to December 2025, merchandise exports stood at $330.29 billion, registering a growth of 2.44 per cent, while imports rose to $578.61 billion. This widened the merchandise trade deficit to $248.32 billion, substantially higher than the level recorded in the same period of the previous year. The data indicate that domestic demand and input requirements have kept import volumes elevated despite a challenging global trade environment.
Within merchandise exports, non-petroleum shipments provided relative support. Non-petroleum exports during April to December were valued at $288.16 billion, reflecting growth of more than five per cent over the previous year. Exports excluding petroleum, gems and jewellery also increased, suggesting some diversification in India’s export base. However, petroleum product exports declined on a year-on-year basis in December, and several traditional segments such as rice, oil meals, carpets and jute manufactures registered contraction, moderating the overall export momentum.
December’s export performance was driven by strong growth in select sectors. Electronic goods exports rose sharply to $4.17 billion from $3.57 billion a year earlier, while shipments of meat, dairy and poultry products expanded by over 30 per cent. Drugs and pharmaceuticals, engineering goods and marine products also recorded positive growth, helping cushion the impact of weakness in other categories. Over the longer April to December period, electronic goods and pharmaceuticals remained among the more resilient export segments.
On the import side, non-petroleum and non-gems and jewellery imports remained high, reflecting demand for intermediate goods, capital equipment and industrial inputs. Imports of electronic goods, fertilisers, machinery and non-ferrous metals increased, underscoring their role in supporting domestic production but also contributing to a structurally higher import bill. At the same time, imports of gold declined on a year-on-year basis in December, and categories such as leather products, transport equipment, iron and steel and chemical materials recorded negative growth for the month. Despite these declines, cumulative imports of gold and other precious metals rose during April to December, continuing to influence the overall trade deficit.
Services trade remained a key stabilising factor for India’s external accounts. Services exports for December 2025 were estimated at $35.50 billion, slightly lower than in December 2024, while services imports eased to $17.38 billion. For the April to December period, services exports grew by 6.46 per cent to $303.97 billion, outpacing the rise in services imports, which stood at $152.23 billion. This resulted in a services trade surplus of $151.74 billion, higher than the surplus recorded a year earlier, and helped partially offset the widening merchandise trade deficit. The December services figures are provisional, as the latest actual data from the Reserve Bank of India are available only up to November, and revisions may follow.
Geographically, export growth during December was supported by higher shipments to markets such as China, the United Arab Emirates, Malaysia, Hong Kong and Spain. On a cumulative basis from April to December, the United States, China, the United Arab Emirates, Spain and Hong Kong emerged as the top destinations showing an increase in export value. On the import front, higher inflows from China, Saudi Arabia, Brazil, Peru and Chile contributed to the expansion of the import bill during December, while China, the United States, Hong Kong, the United Arab Emirates and Ireland were among the leading sources of import growth over the nine-month period.
Overall, the latest trade data for the 2025–26 financial year to date highlight a familiar pattern in India’s external sector: steady export growth supported by services and select manufacturing segments, alongside faster-growing imports driven by domestic demand and commodity requirements. While the services surplus continues to provide a buffer, the widening merchandise deficit has led to a larger overall trade gap, with implications for the current account balance and external sector stability in the months ahead.
– global bihari bureau
