India's merchandise trade deficit swelled to $26.42 billion in April 2025, well above economist forecasts and a major spike from March's $21.54 billion shortfall. The increase in the deficit was led by a strong 19% year-on-year increase in imports to $64.91 billion, which exceeded the 9% expansion in exports to $38.49 billion, based on figures published by the Commerce Ministry on Thursday.
Trade Deficit Reaches $26.42 Billion:
April's trade deficit was much greater than the $20 billion projected in a Reuters survey and a sharp jump from $21.54 billion in March and $19.1 billion in April 2024.
Imports Rise 19% YoY
Merchandise imports increased to $64.91 billion, indicating high demand for products including gold, electronics, and crude oil. Gold imports alone reached $3.10 billion, compared to $2.95 billion the previous year, while import of electronic goods also increased significantly.
Exports Rise 9% YoY:
Exports reached $38.49 billion, driven by increased shipments of engineering goods (to $9.51 billion from $8.55 billion previous year) and electronic goods (to $3.69 billion from $2.65 billion). Exports to the US were higher at $8.42 billion in April compared to $6.61 billion during the corresponding period last year, amid continuing global trade volatility.
External Headwinds and Tariff Uncertainty:
The trade data follows global supply chain disruptions and US tariff policy uncertainty. The US in April imposed a 26% tariff on Indian goods lower than the China and other Asian peers, but subsequently suspended these tariffs for 90 days as trade talks remain ongoing.
Services Trade and Non-Oil Imports
India's service exports also improved, at $35.31 billion, with service imports growing to $17.54 billion. Non-oil imports jumped to $44.20 billion from last year's $37.99 billion, which was evidence of across-the-board demand for imports.
Government Response:
Government's Commerce Secretary Sunil Barthwal showed confidence, highlighting India's robust export performance and achievement of its focussed approach aimed at targeted markets. "India will be able to sustain this export drive even if there are problems owing to the external sector," he asserted.
Insight
The steep increase in India's trade deficit indicates sustained external sector pressures, with import demand outpacing export gains in the face of global economic uncertainty. Although export growth continues to be robust, the spurt in imports-particularly of gold, electronics, and crude-is testing the current account and the rupee. The outcome of the ongoing US-India trade negotiations and global tariff trends will be pivotal for India's trade prospects in the months ahead.
Source: Financial Express, Reuters, Economic Times, Moneycontrol, TradingView
