India’s merchandise trade deficit widened to an 8 month high of USD 27.4 bn in Jul-25 from USD 18.8 bn in Jun-25
Download ReportQuantEco Research | Jul-25 Merchandise Trade - Uncertainty knocking
The widening of the trade deficit was driven by a faster sequential increase in imports vis-à-vis exports led by Gems and jewellery, Petroleum products, Miscellaneous items, Electronic items, and Chemical products. The first four months of FY26 (Apr-Jul) witnessed heightened geoeconomic uncertainty on account of the frenzy surrounding the announcement of the US tariff. Going forward, the export environment for India could potentially get extremely challenging. The US has imposed 25% reciprocal tariff on India along with a penalty tariff of 25% - the cumulative tariff of 50%, amongst the highest in the world for now, could render India’s exports uncompetitive in the US market. This will provide an upside risk to our FY26 current account deficit forecast of 0.8% of GDP. However, amidst multiple moving parts involving unresolved factors, it would be difficult to quantify the risk a priori. We remain watchful of the fast-changing geoeconomic and geopolitical developments.