India’s merchandise trade deficit widened to a five-month high of $30.4 billion in June 2026, driven by a sharp 31% year-on-year increase in imports—the fastest pace of growth in nearly four years—even as exports continued to post healthy gains.
According to data released by the Ministry of Commerce and Industry, exports rose 15.4% to $40.4 billion, while imports surged to $70.8 billion, fuelled by higher purchases of crude oil, fertilisers, electronics and machinery.
The biggest contributor to the import bill was crude oil, with imports climbing more than 40% to $19.3 billion, reflecting elevated global oil prices. Fertiliser imports nearly tripled to $2.3 billion, supported by both higher prices and increased volumes. Imports of electronics and machinery also recorded strong growth.
Gold imports remained relatively stable, increasing 7% to just under $2 billion, while silver imports plunged 74% to $60 million as softer global prices and higher import duties curbed demand. Imports of precious stones, vegetable oils, chemicals and project goods registered declines during the month.
On the export side, engineering goods retained their position as India’s largest export category, rising 21% to $11.5 billion. Electronics exports continued their strong momentum, increasing 19% to $4.9 billion, overtaking petroleum products to become the country’s second-largest export segment.
Petroleum product exports grew 9.2% to $4.8 billion, while pharmaceutical exports increased 7% to $2.8 billion. Exports of chemicals also climbed more than 19% to $2.8 billion, and the gems and jewellery sector recorded a robust 35% growth to $2.4 billion, signalling improving global demand.
Commerce Secretary Rajesh Agrawal said India’s export performance remained resilient across most regions, with all major markets except West Asia recording growth. He noted that exports to West Asia have begun recovering, rising an estimated 7.3% to $5 billion in June.
However, exports to the United States, India’s largest trading partner, declined 1% year-on-year to $8.2 billion during the month.
Economists cautioned that rising imports, particularly of energy and industrial inputs, could widen India’s external deficit if geopolitical tensions continue to keep crude prices elevated.
ICRA Chief Economist Aditi Nayar said the increase in imports was broad-based, with oil, electronics, fertilisers and chemicals accounting for a significant share of the rise. She added that the evolving situation in West Asia and its impact on global crude prices remains a key risk, and projected India’s current account deficit to widen to at least 1% of GDP in FY2027.
Despite the widening trade gap, the sustained double-digit growth in exports—led by engineering goods, electronics, pharmaceuticals and chemicals—highlights the continued strength of India’s manufacturing and export sectors amid an uncertain global trade environment.
