India’s Trade Rebound in November 2025 Signals Resilience Amid Global Headwinds

India’s external trade performance showed a marked improvement in November 2025 as merchandise exports rebounded strongly and the trade deficit narrowed to its lowest level in five months, reflecting a combination of easing import pressures and resilient overseas demand. Official government data released in mid-December shows India’s merchandise trade deficit contracted sharply to USD 24.53 billion, down from USD 41.68 billion in October 2025, driven by a significant rise in exports alongside moderated imports.

Record Exports Help Narrow Deficit

Merchandise exports surged to USD 38.13 billion in November, marking the highest November export figure in at least a decade and a year-on-year increase of over 19 percent. This performance was broad-based, with engineering goods, electronics, gems and jewellery, pharmaceuticals and petroleum products all contributing to the uptick. Exports to key markets such as the United States climbed robustly despite continued tariff pressures.

The improvement in export performance came after a steep decline in October, when merchandise exports dropped sharply and the trade deficit ballooned. Analysts attribute November’s turnaround to a combination of global demand recovery, improved supply-chain fluidity after festive season normalisation and targeted export incentives by policymakers.

Import Moderation Supports Improved Balance

On the import side, a noticeable contraction in inbound shipments supported the narrower trade gap in November. Merchandise imports fell to USD 62.66 billion from October levels, partly due to sharp declines in gold, crude oil and coal purchases. The government’s data indicates that gold imports alone fell by nearly 60 percent on a year-on-year basis, significantly reducing the import bill.

The combined effect of rising exports and softer imports resulted in India’s overall trade balance improving even further when services are included, with total trade (goods and services) exports rising to approximately USD 73.99 billion, while total imports moderated, driving the overall trade deficit down sharply year-on-year. 

Resilience Despite Tariff Headwinds

India’s strong export performance in November is particularly noteworthy given ongoing tariff pressures from major markets such as the United States, which has imposed punitive duties on a range of Indian products. Despite these challenges, shipments to the U.S. remained resilient, with many sectors shifting toward tariff-neutral or tariff-exempt products, cushioning the impact of higher duties.

Economists argue that this resilience not only underscores India’s diversified export base but also strengthens New Delhi’s negotiating position in ongoing trade talks with the United States and other partners. A sustained export rebound could provide strategic leverage to secure more favourable tariff terms and broader market access. 

Policy and Sectoral Drivers

Domestic industry bodies also attribute the improved export performance to proactive government policies, including the Export Promotion Mission (EPM), market diversification initiatives, and enhanced logistics facilitation. Key commodity sectors such as iron ore, cashew, oil meals and coffee delivered robust year-on-year growth in November, highlighting the broadening of India’s export basket.

Engineering goods exports registered steady year-on-year increases in the April-November period, a sign that manufacturing competitiveness is underpinning sustained trade momentum. Sectors that have embraced quality standards, market intelligence and global compliance norms are reported to be outperforming, even under tariff headwinds.

Macro Implications and Outlook

While November’s data provides a positive signal, economists caution that broader structural challenges require continued policy focus. The current account deficit (CAD) is expected to widen in Q3 FY2026 compared to the previous year, largely due to import dynamics and global economic conditions. A wider CAD can exert pressure on external balances, making export diversification and import management critical policy priorities.

Nevertheless, the narrowing of the trade deficit and the rebound in exports suggest that India’s external sector retains underlying strength despite global headwinds. As 2025 draws to a close, this performance milestone offers a constructive backdrop for India’s trade strategy in 2026, reinforcing the value of export diversification, trade facilitation reforms and resilient supply-chain integration in an increasingly contested global trading environment.