India merchandise trade gap hits a 5-month high in June on oil bill surge amid war, exports rise 15.5%

New Delhi: India's merchandise trade deficit widened to a five-month high of $30.43 billion in June, as a sharp rise in imports—led by higher bills for crude oil, electronics and chemicals purchases amid the West Asia war—outpaced the robust export growth, data released by the commerce ministry on Monday showed.

Import of petroleum, crude oil and its products surged a tad over 40% year-on-year to $19.33 billion in June, from $13.79 billion a year ago, making it the single largest imported item during the month, the data showed.

Merchandise exports rose 15.5% year-on-year to $40.41 billion in June from $34.98 billion a year earlier, while imports jumped 31% to $70.84 billion from $54.08 billion, the ministry said.

Including services, India's total exports rose 9.5% to $73.45 billion in June from $67.09 billion a year ago, while total imports rose 26.8% to $88.76 billion from $69.98 billion, taking the overall trade deficit to $15.32 billion, compared with $2.89 billion in June 2025. The services numbers for June are provisional estimates based on data from the Reserve Bank of India.

The ministry said merchandise export growth in June was driven by gems and jewellery, engineering goods, organic and inorganic chemicals, electronic goods and rice.

Among major sectors, exports of gems and jewellery rose 34.6% to $2.41 billion, engineering goods by 20.7% to $11.48 billion, organic and inorganic chemicals by 19.4% to $2.77 billion, electronic goods exports grew 18.9% to $4.93 billion, while rice saw a 16.5% rise to $1 billion.

Other segments that saw a healthy export growth included other cereals (244.3%), handicrafts excluding handmade carpets (59.7%), meat, dairy and poultry products (54.6%), iron ore (49.9%), plastics and linoleum (21.2%), tobacco (19.8%), marine products (14.5%), petroleum products (9.2%), and drugs and pharmaceuticals (7.1%).

On the import side, project goods, silver, pearls and precious stones, chemical materials and products and vegetable oils registered a decline compared with the year-ago period.

Quarter show

For the April-June quarter, merchandise exports rose 15.9% to $129.32 billion from $111.57 billion a year ago, while imports increased to $216.18 billion from $180.31 billion, widening the merchandise trade deficit to $86.86 billion from $68.75 billion.

The quarter's import bill was widened by the rise in petroleum, electronic goods and gold imports. Petroleum, crude and products imports rose to $60.62 billion during April-June from $49.24 billion a year earlier, electronic goods were up at $38.46 billion from $26.75 billion, while gold climbed to $11.01 billion from $7.49 billion a year ago, according to the commerce ministry.

Total exports, including services, grew 11.4% to $232.73 billion during the first quarter of FY27 from $208.98 billion a year earlier. Total imports rose 17.6% to $270.15 billion from $229.82 billion, resulting in an overall trade deficit of $37.42 billion, compared with $20.85 billion in the corresponding period last year.

Non-petroleum exports during April-June were at $106.30 billion, up 12.4% from $94.54 billion a year ago, while non-petroleum and non-gems and jewellery exports rose to $99.04 billion from $87.88 billion, indicating broad-based export momentum beyond petroleum and precious metals.

Services exports are estimated to have grown 6.2% during April-June to $103.41 billion, while the sector's imports rose to $53.97 billion, leaving a services trade surplus of $49.43 billion, marginally higher than $47.90 billion a year ago.

Trade takeaways

The ministry said the export destinations showing the strongest increase in June were South Africa, Singapore, China, Oman and Malaysia, while imports recorded the sharpest growth from Russia, China, the US, UAE and Taiwan.

Madan Sabnavis, chief economist at Bank of Baroda, said the latest trade numbers reflected resilient external demand, with engineering goods, electronics and gems and jewellery continuing to support exports. However, stronger import growth, driven by elevated commodity prices and firm domestic demand, resulted in a wider merchandise trade deficit.

Aditi Nayar, chief economist at Icra Ltd., said India's merchandise trade deficit widened by over 50% year-on-year to $30.4 billion in June from $19.1 billion in the year-ago month, as elevated commodity prices pushed up the import bill by 31%.

"While the uptick in imports in June 2026 was largely broad-based, select items such as oil, electronics, fertilizers and chemicals witnessed a sizeable year-on-year expansion in the month, albeit partly on account of a low base. While exports also rose by a healthy 15.5% year-on-year in June 2026, this sharply trailed the expansion seen in imports during the month," she said.

Nayar said that the situation in West Asia and its impact on crude oil prices remains a key monitorable risk, and Icra expects India's current account deficit to widen to at least 1% of GDP in FY27. The deficit was 0.6% of GDP in the last fiscal year.

Pankaj Chadha, chairman of EEPC India, highlighted the standout show of the engineering sector that registered strong exports in June despite a challenging external environment.

India's engineering goods exports were at $11.48 billion in June, up 21% year-on-year, while in April-June they were at $34.14 billion, up 18%.

“The strong performance of the engineering goods sector reflects collective efforts of the industry and the government, and the resilience of the engineering community,” Chadha said.

The key factors that bolstered exports included free trade pacts with key partner countries, exporters' product and market diversification strategy and the rising competitiveness of Indian products, he said.