Source Money control
NEW DELHI — India’s merchandise trade deficit widened significantly to a five-month high of $30.43 billion in June, driven by a steep rise in the country’s import bill for crude oil, electronics, machinery, and precious metals.
According to data released by the Ministry of Commerce and Industry, the country’s merchandise imports surged by roughly 31% year-on-year to hit a record $70.84 billion for the month of June, up from $54.08 billion in the corresponding period last year. In contrast, merchandise exports experienced a more moderate growth of 15.5%, rising to $40.41 billion compared to $34.98 billion in June last year.
The widening gap highlights the growing pressure of global commodity price volatility and geopolitical uncertainties on India’s energy and industrial supply chains, even as domestic industrial demand remains strong.
Energy and Heavy Inbound Cargoes Drive the Surge
A primary catalyst for the widening trade gap was the spike in the cost of foreign energy. Geopolitical tensions in the Middle East and international trade restrictions have driven up the prices India pays for imported crude oil. Alongside crude, increased domestic industrial activity and strong consumer demand catalyzed heavier inbound shipments of electronics, heavy machinery, and precious metals.
Commerce Secretary Rajesh Agarwal noted that the increase in inbound shipments fundamentally reflects robust internal economic momentum. He also highlighted that exports to West Asian nations climbed by 7.29% to reach $5 billion during the month, showing bright spots of outbound trade diversification.
A Record Quarter for Combined Trade
Despite the widening gap in physical goods, India’s broader export ecosystem achieved a major milestone. When merchandise and services are combined, India recorded its highest-ever overall quarterly exports for the first quarter (April–June) of any financial year, reaching $232.73 billion—an 11.37% rise year-on-year.
For the first quarter of the fiscal year overall:
Merchandise Exports: Rose 15.92% to $129.32 billion.
Merchandise Imports: Increased 19.89% to $216.18 billion.
Gold Imports: Climbed sharply to $11.01 billion from $7.49 billion in the same period last year.
Resilient Outbound Destinations
India’s export growth managed to remain relatively broad-based despite slowing global trade indicators. The United States maintained its position as India’s single largest export destination during the April–June quarter, accounting for $25.47 billion in shipments. It was followed by the UAE ($7.95 billion), Singapore ($6.52 billion), and China ($5.60 billion). Notably, exports to China experienced a robust 27.5% year-on-year expansion, while shipments to Singapore more than doubled.
While the widening merchandise deficit is expected to exert near-term pressure on India’s current account balance, market analysts point out that India’s consistently strong services exports and steady foreign capital inflows should act as vital buffers to stabilize the country’s broader external economic sector.
