India’s merchandise trade performance in November 2025 offers a measure of cautious optimism, pointing to a partial normalisation of the external sector after the sharp deterioration recorded in October. The data suggest that some of the pressures discernible earlier, particularly those arising from elevated commodity imports, have eased, resulting in a more balanced monthly trade configuration. This improvement was driven primarily by a moderation in the import bill, especially for oil, gold and coal, alongside the continued resilience of services exports and select manufactured export segments.
While the November figures are directionally reassuring, they do not yet constitute evidence of a decisive or durable structural turnaround. Instead, they underscore the episodic nature of India’s recent trade dynamics, where month-to-month improvements can be quickly offset by renewed volatility. As such, the data warrant close and continuous monitoring rather than complacency.
Drivers of the November Improvement
October had witnessed a pronounced surge in imports, driven largely by front-loaded purchases of gold, crude oil and coal. This import spike significantly widened the trade deficit and raised concerns about the sustainability of India’s external position, particularly in an environment of global uncertainty and elevated commodity prices.
In November, this trend reversed. Global crude oil prices softened amid easing geopolitical risk premiums and adequate supply conditions, leading to a more measured energy import profile. Gold imports declined sharply, reflecting both price considerations and the unwinding of festival-related and speculative demand seen in earlier months. Coal imports also moderated as domestic inventories improved, power demand stabilised, and the seasonal surge in imports subsided.
On the export side, performance remained mixed but showed pockets of resilience. Electronics exports continued to post strong numbers, supported by large consignments linked to mobile phones, semiconductors and electronics assembly. This reflects India’s increasing integration into global electronics and manufacturing supply chains, aided by production-linked incentive (PLI) schemes and multinational supply-chain diversification strategies.
Equally important, services exports once again acted as a stabilising anchor. IT and IT-enabled services, along with professional and business services, remained robust despite slowing global growth. Services receipts helped offset softness in several traditional merchandise export categories, reinforcing the structural importance of services in India’s external accounts. This service’s strength remains India’s most reliable external-sector buffer.
Shifts in Agricultural and Edible Oil Trade
Within agricultural and edible-oil trade, notable compositional adjustments were evident. Importers rebalanced their sourcing toward relatively cheaper palm oil, reducing dependence on higher-priced soya oil and sunflower oil amid unfavourable international price differentials. As a result, overall edible-oil import volumes declined on a month-on-month basis.
Base effects and timing distortions also played a role. The bunching of imports in earlier months, combined with inventory adjustments, exaggerated the apparent improvement in November. These factors reinforce the need for caution when interpreting single-month data, particularly in commodities where procurement is lumpy and sensitive to price expectations.
External Policy Environment and Geopolitics
Looking ahead, the medium-term export outlook will increasingly be shaped by developments in global trade policy and geopolitics. Ongoing tariff discussions and trade negotiations, especially under the U.S.–India framework talks, carry potential upside for Indian exporters. The Commerce Secretary’s indication that a U.S. framework trade deal is “near” has raised expectations of improved market access, reduced trade frictions and greater certainty for exporters.
However, any tangible gains from such agreements are likely to materialise only gradually. Their ultimate impact will depend on the depth of commitments, the scale of tariff reductions, the treatment of non-tariff barriers, and the extent to which services trade and digital commerce are meaningfully addressed. In the interim, global trade fragmentation and geopolitical tensions remain key sources of uncertainty.
Risks and Structural Constraints
Despite the improvement in November, several vulnerabilities continue to cloud the outlook:
- Commodity-price exposure: India remains highly sensitive to swings in global crude oil prices. A renewed surge in oil prices, or a rebound in gold and coal imports, could quickly reverse recent gains and re-widen the trade deficit.
- Global demand uncertainty: Slowing growth in key markets such as the United States, Europe and China poses risks to discretionary consumption and intermediate goods demand, weighing on merchandise exports.
- Exchange-rate and capital-flow risks: A sharply weaker rupee would inflate the oil and gold import bill and exacerbate inflationary pressures, while excessive appreciation could undermine export competitiveness. Maintaining exchange-rate stability and adequate foreign-exchange reserves therefore remains critical.
- Structural trade imbalance: Cumulative data for April–November highlight the scale of the challenge—merchandise imports (around US$515 billion) continue to far exceed exports (approximately US$292 billion). This persistent gap underscores that monthly improvements can be fleeting unless supported by sustained export expansion and credible import-substitution efforts.
The Road Ahead
Policy focus must therefore extend beyond short-term relief to longer-term structural reform. Priorities include reducing volatility in the import bill, especially for energy and precious metals; providing targeted support to export segments where competitiveness and scale are improving; and sustaining a strong push on services exports.
Market diversification, value-chain upgrading and deeper integration into global electronics, advanced manufacturing and digital-services ecosystems are essential to strengthening export capacity. Equally important is a comprehensive energy strategy aimed at reducing oil import intensity through renewable energy expansion, efficiency gains, electrification and alternative fuels.
There are no shortcuts to moving up the value chain. Improvements in trade logistics, digital trade corridors, skills and human capital development, and the scaling of high-value services are indispensable if episodic monthly gains are to translate into a durable narrowing of the external gap.
Key Variables to Monitor
Going forward, policymakers and market participants should closely track movements in crude oil and gold prices, trends in services receipts, particularly software and IT exports, foreign-exchange reserves, exchange-rate dynamics, and progress on trade negotiations, including the U.S. framework and other free trade agreements.
Given that the underlying structural trade imbalance remains intact, a calibrated mix of short-term measures to manage volatility and medium-term industrial, energy and trade strategies is essential. Without such a coordinated and concerted approach, the recent improvement in trade data could prove transitory, and external-sector pressures could re-emerge with renewed intensity.
ABOUT THE AUTHOR
Dr. Manoranjan Sharma, Chief Economist, Infomerics Ratings is a globally acclaimed scholar. With a brilliant academic record, he has over 350 publications and six books. His views have been published in Associated Press, New York; Dow Jones, New York; International Herald Tribune, New York; Wall Street Journal, New York.
