India’s July trade gap widens as electronics, oil imports drive surge

India’s merchandise trade deficit widened to $31.98 billion in July, a six-month high, as imports rose faster than exports despite a broad-based pickup in shipments. Merchandise exports increased 19.6% year-on-year to $44.24 billion, while imports rose 17.5% to $76.22 billion.

The key takeaway from the July data is that the wider trade gap was driven by a sharp increase in high-value imports rather than weak exports. The $11.36 billion year-on-year increase in imports was led by electronic goods, petroleum, machinery and fertilisers. Electronic goods imports surged 46% to $14.37 billion, adding about $4.53 billion to the import bill. Petroleum, crude oil and products rose 17.6% to $18.31 billion, while machinery, electrical and non-electrical equipment increased 13.8% to $6.09 billion. Fertiliser imports jumped 55.4% to $2.48 billion.

Gold imports rose a more modest 4.8% to $4.16 billion, while silver imports plunged 66.1% to $172 million. The sharp fall in silver provides some relief, but it was outweighed by higher imports of electronics, energy and capital goods. Imports of non-ferrous metals also rose 19.8%, pointing to firm industrial demand.

On the export side, the $7.26 billion increase was concentrated in a few major categories. Petroleum product exports jumped 67.6% to $6.92 billion, contributing nearly $2.8 billion to the annual increase. Electronic goods exports rose 57.4% to $5.92 billion, adding about $2.16 billion, while engineering goods increased 17.7% to $12.24 billion. Organic and inorganic chemicals and marine products also posted double-digit growth.

This suggests India’s export growth is becoming increasingly manufacturing-led. Electronic goods exports rose 30.7% during April–July, while engineering goods were up 18.2%. Petroleum product exports increased 42.6% over the same period. Together, these sectors provided much of the momentum behind the 17% growth in merchandise exports during the first four months of 2026–27.

The geographical data also shows a significant shift in trade flows. July exports to the US rose 12.9%, while shipments to China surged 64.6% and those to Singapore jumped 83.7%. Exports to Malaysia and South Africa increased 73% and 50%, respectively.

Imports, meanwhile, were heavily concentrated among a few suppliers. Imports from China rose 34.4% to $14.67 billion, while those from Russia surged 83.9% to $8.91 billion. Imports from the US increased 18.1%, while Oman recorded a 150% jump. Over April–July, imports from Russia rose 59.7%, China 29.7% and Oman more than tripled.

For April–July, the merchandise deficit widened to $118.60 billion from $96.66 billion a year earlier. The services surplus, though, provides a substantial cushion, with services exports estimated at $142.64 billion and a surplus of $69.17 billion during the period.