India Trade Gap Widens More than Expected

The Indian goods trade deficit widened to $30.43 billion in June of 2026 from $19.12 in the corresponding period of the previous year, above market expectations of a $26.5 billion gap. It was the widest deficit since January and the largest on record for the month of June. Imports surged by 31% to $70.84 billion, also the highest on record for the month, as the war in the Middle East and US tariffs aimed at preventing India from importing Russian oil lifted the price that India must pay for foreign energy. Imports rose despite the continuous pressure on the Indian rupee, which prevents a higher volume of foreign purchases. Meanwhile, exports rose by a softer 15.5% to $40.4 billion. Exports to the US were likely high, as the current trade deal between the US and India expires in July and risks higher levies for domestic manufacturers.

The trade deficit in India widened to $28.4 billion in April of 2026 from $27.1 billion in the corresponding period of the previous year, the highest on record for the period and above estimates of a $27 billion gap amid a surge in imports. Imports jumped by 10% annually to $71.9 billion, the highest on record for the period, lifted by the surge in oil, fuel, and coal prices due to the war in the Middle East. The jump in foreign purchases continued to pressure the rupee, forcing the RBI to tame the currency's decline. Meanwhile, higher goods prices also lifted exports, with foreign sales rising 13.8% to $41.6 billion, the second highest reading on record and the highest for the period.

India’s trade deficit shrank to $20.67 billion in March 2026, down from $27.1 billion in February and $21.69 billion a year earlier. This figure was significantly below market expectations of $32.75 billion, marking the smallest trade gap since June 2025. The improvement came as exports rose to $38.92 billion, up from $36.61 billion in February, while imports fell to $59.59 billion, down from $63.71 billion. However, the outlook remains uncertain due to escalating geopolitical tensions in West Asia. The US military recently halted maritime trade linked to Iran, though President Donald Trump suggested that negotiations with Tehran could resume. Unlike export-driven economies such as Japan, South Korea, and Taiwan, India’s heavy reliance on Gulf shipping routes makes it particularly vulnerable to disruptions and rising costs from the ongoing conflict.