Exports in December aggregated $22.5 billion, while imports contracted by 11.1 per cent to $25.1 billion, resulting in a narrow trade deficit of $2.6 billion, the lowest in three years.
"The US markets have been (doing) pretty good, even EU markets are good," commerce secretary Rahul Khullar said here while giving the trade figures.
A "remarkable job by exports" was also attributed to diversification of India`s export markets. For instance, 112 per cent rise in engineering exports was helped much by orders from Latin American countries like Columbia, he said.
Khullar said thanks to lowering of trade deficit, India`s worries on overall current account deficit would be abated. The overall trade gap may not be more than $120 billion for this year, against earlier apprehensions of $130-135 billion.
The government had set an export target of $200 billion for 2010-11.
"It is quite clear that the Indian exports are on a rebound," said Rakesh Mohan Joshi of Indian Institute of Foreign Trade (IIFT).
In December, the exporting sectors registered higher growth, which includes engineering (112 per cent), electronics (88 per cent), man made fibres (30 per cent), yarns (65 per cent) and drugs (810 per cent).