India’s trade braces for an action-packed 2025
Subscribe to enjoy similar stories. India’s external trade, navigating a phase of uncertainty owing to the European Union's new carbon tax on imports and slowing consumption in Europe, is set face further pressure. The US will likely seek lower tariffs in the coming year as President-elect Donald Trump, who has charged New Delhi with imposing high tariffs, assumes office in January.
However, a silver lining is the border disengagement with China this year, followed by a bilateral meeting between Prime Minister Modi and President Xi Jinping. That coincides with optimism among government economists about more manufacturing investments coming from China to India, which could boost the country's exports to developed markets. Growing at 14.5% in the April-November period this year to $252 billion, India’s services exports is a stellar performer.
Services imports, too, have gone up by the same pace. Merchandise exports, however, rose 2% to $284 billion, while imports saw an 8% annual increase. A weakening rupee—the domestic currency depreciated by over ₹1.9 against the greenback since the beginning of the year, up to 23 December—augments export realisation of merchants in rupee terms, but also makes imports costlier.
Widening trade deficit, or the amount by which the value of imports exceeds exports, at a record $37.84 billion in November, compared with $21.31 billion a year earlier, and a slower economic expansion in the September quarter could test the rupee further. Moreover, renewed US-China trade tensions under Trump 2.0 are reshaping international supply chains. Initiated in 2018 during Trump's first term, the US-China trade war has disrupted global trade flows but achieved limited outcomes, presenting both challenges
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