It is likely that the protectionist measures taken by the government have led to compression of non-oil imports
India’s merchandise trade deficit narrowed to a 10-month low in December 2018. One reason, of course, is the lower price of crude oil.
But not all the improvement in the deficit is due to crude oil prices. The deficit in the non-oil, non-gold and silver trade was also at its lowest since April 2018.
Is that good news? Not really, because non-oil exports in December 2018 were lower by 1.6 percent from a year ago. It was the 2.2 percent fall in non-oil, non-gold and silver imports that led to a narrower non-oil deficit. Add to that the fact that gold and silver imports fell by 20.3 percent from a year ago.