The country's exports edged up 1 per cent to USD 38.45 billion in December 2023 while the trade deficit narrowed to a three-month low of USD 19.8 billion, official data released on Monday showed.
Imports declined by 4.85 per cent to USD 58.25 billion in December last year due to a dip in crude oil shipments.
The previous low in trade deficit - the difference between imports and exports - was recorded in September at USD 19.37 billion. In December 2022, it was USD 23.14 billion.
Crude oil imports declined by 22.77 per cent to about USD 15 billion during the month under review.
However, gold imports jumped 156 per cent in December 2023 to USD 3 billion. Crude oil imports in April-December 2023-24 declined by about 19 per cent to USD 128.6 billion while gold imports surged by 26.64 per cent to about USD 36 billion in April-December 2023.
Exports during April-December this fiscal dipped by 5.7 per cent to USD 317.12 billion. Imports contracted by 7.93 per cent to USD 505.15 billion, leaving a trade deficit of USD 188.02 billion in the first three quarters as against USD 212.34 billion in April-December 2022.
Briefing reporters on the data, Commerce Secretary Sunil Barthwal said that despite a global slowdown, "we are in the positive zone and the trade deficit has also come down".
The exports are struggling on account of demand slowdown in Western countries, besides geopolitical tensions.
The Red Sea crisis will also hurt exports in the coming months as exporters are holding up consignments.
India's merchandise exports have lingered in the last several months except for October.
"The whole globe is facing an adverse condition. Globally the picture is quite bad, but India is doing well. We hope to beat the global trends in the January-March quarter also. Yes, we are waiting and watching what is happening in the Red Sea," he told reporters here and expressed confidence that the country's goods and services exports would cross last year's figure of USD 776 billion.
He added that the Red Sea crisis would have an impact on exports on account of increase in transportation cost. The ministry is holding an inter-ministerial meeting to take stock of the situation.
The situation around the Bab-el-Mandeb Strait, a crucial shipping route connecting the Red Sea and the Mediterranean Sea to the Indian Ocean, has escalated due to attacks by Yemen-based Houthi militants.
Due to these attacks, the shippers are taking consignments through the Cape of Good Hope, resulting in delays of almost 14 days and also higher freight and insurance costs.
The commerce ministry has also asked the ECGC not to increase the export credit interest rates.
State-owned ECGC is an export promotion organisation, seeking to improve the competitiveness of Indian exports by providing them with credit insurance covers.
During December 2023, key export sectors that have recorded negative growth included petroleum products, ready-made garments of all textiles, chemicals, and leather products. Sectors which are in the positive zone include plastic, electronic goods, engineering items, and gems and jewellery.
According to the data, the estimated value of services export has contracted to USD 27.88 billion, as compared to USD 31.19 billion in December 2022.
During the nine-month period, however, these exports rose to USD 247.92 billion as compared to USD 239.5 billion in April-December 2022.