India’s trade deficit widened to $30.4 billion in June as imports grew by 31%, driven largely by higher crude oil and fertilizer shipments. While exports rose 15.4% to $40.4 billion, the sharp increase in import costs highlights potential pressure on the country's current account balance for FY2027.
India’s trade deficit reached a five-month high of $30.4 billion in June 2026, driven by a sharp 31% year-on-year increase in total imports, which climbed to $70.8 billion. While exports also showed healthy growth of 15.4% to reach $40.4 billion, the pace of import expansion significantly outstripped export gains, creating the widest trade gap since early 2026.
Drivers Behind the Import Surge
The surge in imports was primarily led by a more than 40% rise in crude oil shipments, totaling $19.3 billion for the month. Higher global commodity prices and steady domestic demand were significant contributors to this trend. Additionally, fertilizer imports jumped threefold to $2.3 billion. In contrast, silver imports saw a sharp decline of 74% to $60 million, likely reflecting both cooling global prices and the impact of previously adjusted import duties. Gold imports remained relatively stable with a modest 7% rise, reaching just under $2 billion.
Export Performance by Sector
On the export front, engineering goods remained India's largest export category, growing 21% to $11.5 billion. Electronics exports continued their upward momentum, rising 19% to $4.9 billion. This performance allowed electronics to overtake petroleum products, which grew 9.2% to $4.8 billion, making it the second-largest export sector. Other sectors including gems and jewellery, pharmaceuticals, and chemicals also reported positive growth in June.
Economic Implications and Outlook
The trade data indicates a complex environment for India's external balance. While growth in engineering and electronics exports reflects a positive shift in the country's export basket, the heavy reliance on energy and commodity imports continues to weigh on the overall trade balance. Ratings agency ICRA noted that while the rise in imports was broad-based, specific items like oil and fertilizers were major factors. Aditi Nayar, Chief Economist at ICRA, stated that the agency expects the current account deficit to widen to at least 1.0% of GDP for FY2027. Investors will be watching how global crude oil prices evolve and whether the recent export growth trajectory can be sustained in the coming months, particularly amid fluctuating demand in key markets like the United States, where exports saw a marginal 1% dip in June.