India’s merchandise trade deficit widened to a six-month high of $31.98 billion in July, driven by a sharp rise in imports, according to official data released by the Ministry of Commerce on Thursday.
Merchandise imports surged 17.5% year-on-year to $76.22 billion in July, the highest in nine months, while exports rose 19.6% to $44.24 billion.
The Commerce Ministry, however, emphasised that the merchandise trade deficit as a proportion of total trade has declined with the expansion in trade volumes. The deficit stood at 26.5% of total merchandise trade in July, compared with 27.3% a year earlier.
“As a percentage of total trade, the trade deficit in merchandise is lower this year, but in quantum terms it is higher,” Commerce Secretary Rajesh Agarwal said.
India’s total exports, including merchandise and services, stood at $80.14 billion in July, up 13.31% from $70.72 billion a year earlier. Total imports rose 15.83%, widening the overall trade gap to around $15 billion during the month.
Petroleum product exports emerged as a major driver of merchandise exports, rising 67.64% to $6.92 billion in July from $4.13 billion a year earlier.
The US remained India’s largest export destination. However, merchandise exports to the US rose only 3%, while imports from the US increased more than 22%, driven largely by higher energy imports.
A key development was the recovery in India’s exports to West Asia, which rose 8.62% year-on-year to $5.7 billion in July from $5.2 billion a year earlier.
“Our exports to West Asia went down in March 2026 and picked up slightly in April. They picked up more in May, and in June we were more or less equal. West Asia exports are now also showing growth in July,” Agarwal said.
The recovery comes despite disruptions to trade routes in the region and has been supported by exporters shifting to alternative ports and shipping lines to maintain cargo movement.
“Some new ports have started becoming more operational and they have started handling more cargo,” Agarwal said, adding that ports in Oman outside the conflict zone were handling increased cargo.
The rise in imports, particularly energy-related imports, continues to exert pressure on the merchandise trade balance even as robust growth in exports provides some support.
