India's merchandise trade deficit is expected to have narrowed in January, falling to $20.88 billion from $21.94 billion in December, according to a report by Union Bank of India.
The improvement was primarily attributed to a decline in gold imports, driven by rising prices and the end of the festival and wedding season.
The report suggested that demand for gold moderated in January as global market uncertainties led to a surge in prices, making imports more expensive.
With the seasonal demand for gold subsiding, India's import bill for the precious metal saw a decline, contributing to the lower trade deficit.
However, the narrowing of the overall trade gap was offset by a rise in crude oil imports. The report noted that India's oil trade deficit widened slightly as global crude prices increased.
Brent crude oil prices averaged $78.35 per barrel in January, up from $73.13 per barrel in December, pushing India's import bill higher.
India's crude oil imports from Russia rose by 13 pc in January compared to the previous month, reaching 1.67 million barrels per day.
Saudi Arabia also increased its crude shipments to India, with exports rising 12 pc month-on-month.
The United States saw the most significant jump in crude oil exports to India, surging 322 pc to 279,000 barrels per day in January from 66,000 barrels per day in December. Additionally, Kuwait and Brazil also recorded an uptick in oil exports to India.
Conversely, oil imports from Iraq declined by 8 pc in January compared to the previous month. Overall, India's total crude oil imports increased by 6 pc, reaching 4.98 million barrels per day, up from 4.70 million barrels per day in December.
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