India’s merchandise trade deficit widened sharply in December 2025 to $25.04 billion, up from $20.63 billion a year earlier, as import growth continued to outstrip exports, according to data released by the Commerce Department on Thursday.
Goods exports rose a modest 1.86 per cent year-on-year to $38.51 billion during the month, while imports surged 8.8 per cent to $63.55 billion, driven by higher inbound shipments of electronics, machinery, gold and non-ferrous metals.
Exports to the United States, India’s largest overseas market, declined 1.83 per cent in December to $6.89 billion, reflecting the impact of 50 per cent tariffs imposed by Washington on most Indian exports at the end of August.
Despite the tariff shock, Commerce Secretary Rajesh Agrawal said Indian exporters were managing to stay afloat by shifting focus to segments with lower duties. “In the US we are still holding on as there is more focus on areas where tariffs are low. Where tariffs are higher, exporters are showing more resilience and holding on to supply chains,” he said at a media briefing.
Regarding the proposed India–US bilateral trade agreement (BTA), Agrawal stated that negotiations were ongoing in a virtual mode and efforts were underway to resolve the remaining issues.
For the April–December 2025–26 period, India’s goods exports grew 2.44 per cent to $330.29 billion, supported by strong performance in electronics, pharmaceuticals, engineering goods, meat and dairy products, and marine exports.
“Despite all the challenges we have been facing, we have maintained positive growth,” Agrawal said, adding that total exports of goods and services are likely to cross $850 billion in the current fiscal year, compared with $824 billion last year.
The US remained India’s top export destination during April–December 2025–26, with shipments increasing to $65.88 billion from $60.03 billion the previous year. The UAE ranked second with exports of $28.9 billion, while China emerged as the third-largest market, with Indian exports increasing sharply to $14.25 billion from $10.42 billion in the same period last fiscal.
Agrawal said the rise in exports to China was encouraging, though not the result of any targeted policy push. “The overall recalibration of global supply chains is helping India increase its exports to China,” he noted.
On the import front, India’s goods imports during April–December 2025 rose 5.9 per cent to $578.61 billion, led by electronics, gold, machinery and non-ferrous metals.
Responding to a query on US President Donald Trump’s warning of 25 per cent tariffs on countries doing business with Iran, the Commerce Secretary said the government was awaiting details of the proposed measure before assessing its potential impact on India’s trade.
