India’s merchandise exports reversed course in November with a 2.8% on-year contraction to $33.9 billion after a 6.1% growth in the previous month. The sudden broad-based decline was in part due to a high base of 10.4% growth in the year-ago period and was led by a decline in oil exports, which slipped 7.4%, in sync with the fall in oil prices (Brent spot averaged $83.2/bbl in November 2023 compared with $91.1/bbl in November 2022).

Core exports fell 2.8% on-year due to a dip in pharmaceuticals, engineering goods, electronic goods, ceramic products and glassware, among others. Gems and jewellery exports grew 12.0% on-year in November, albeit on a low base. Sequentially, gems and jewellery exports declined for the second consecutive month in November.

Cumulatively, India’s merchandise exports have declined 6.5% on-year to $278.8 billion in April-November 2023 from $298.21 billion in the year-ago period.

Merchandise imports, too, recorded a decline of 4.3% on-year in November, falling to $54.48 billion from $63.45 billion last month.

Oil and core imports fell 8.5% and 0.9% on-year, respectively, in November, but the magnitude of this fall had a very small effect on the overall merchandise import of India.

Import growth of gold softened to a meagre 6.2%, after increasing 95.4% on-year in October, indicating the impact of festive and wedding season spending is slowly wearing off. However, silver imports widened by 254.8% compared with the previous growth of 124.6% on-year. Imports of pearls, precious and semi-precious stones, meanwhile, declined 56.7% on-year compared with a 9.8% decline in October.

Imports of iron and steel, leather and leather products, metalliferous ores and other minerals saw an uptick. Poor demand in Europe and better acceptability in the domestic market saw imports from China zoom, making it the largest seller of steel to India. Huge amounts of steel imports from China on account of lower price offerings to trade, fast-moving consumer goods and auto sectors remain a cause for concern for domestic steel players.

A sharper decline in imports compared with exports, however, narrowed the merchandise trade deficit to $20.58 billion in November from $29.9 billion in October and $22.06 billion in November last year. This could be a reflection of declining imports of gold, pearls and precious and semi-precious stones, and oil.

Cumulatively, merchandise imports have contracted more than exports at 8.67% on-year in April-November this fiscal. The merchandise trade deficit so far this fiscal, stands at $166.35 billion, as against $189.21 billion in the year-ago period.

India’s services trade surplus increased in October1 compared with the previous month. Services exports grew amid weakening services imports.