India's merchandise trade printed its widest deficit in 6 months at USD 32.0 bn in Jul-26 vis-à-vis USD 30.4 bn in Jun-26.
Download ReportQuantEco Research | Merchandise Trade | Jul-26 | Maintains resilience
India’s exports and imports registered a sequential expansion in July -26, with relatively higher pace of expansion in imports resulting in sequential widening of the trade deficit. The widening in the headline deficit was core-led. A USD 3.1 bn narrowing in the oil trade deficit was almost offset by a USD 2.9 bn widening in the gems & jewellery deficit on normalizing gold imports, leaving a record core import bill to push the headline higher. That said, the value-led strength masks a sober volume picture, with ~40% of export items and ~46% of import items at a principal commodity level contracting during Apr-Jun FY27 — a reflection of demand compression from elevated commodity prices alongside supply disruptions. On the geopolitical front, while the extreme risk surrounding the Middle East conflict has ebbed, uncertainty remains until a durable de-escalation is attained. Over the medium-term, FTAs concluded with the UK, Oman, New Zealand, and the EU, alongside a relatively favorable US tariff of 10% vis-à-vis 12.5% for key Asian nations, are expected to bolster India's export potential and mitigate the concentration risk. Assuming an average Brent price of USD 80-85 pb for FY27, we project India's current account deficit at 0.9% of GDP.