India’s July Trade Deficit Hits $31.98 Billion as Imports Outpace Exports

India’s merchandise trade gap expanded in July even as exporters shipped more goods than a year earlier. Commerce Ministry data showed imports rose faster than exports during the month, keeping pressure on the goods trade balance.

July 2026 Merchandise Trade: Key Numbers

The deficit widened both year-on-year and month-on-month. Exports grew from $40.41 billion in June to $44.24 billion in July, while the import bill moved up from $70.84 billion to $76.22 billion over the same period.

Which Sectors Powered India’s 19% Export Jump in July 2026?

Commerce Secretary Rajesh Agarwal said the increase came from higher shipments across several categories:

• Petroleum products
• Electronics
• Engineering goods
• Marine products

Geographic spread was also broad, with shipments to nine of India’s top 10 destinations rising during July. The UAE was the only exception among those top destinations. Exports to West Asian countries grew 8.62% to $5.7 billion, even as disruptions around key shipping routes and elevated energy prices complicated the trade backdrop.

Gold and Energy: Why India’s July Import Bill Remained Elevated

India’s merchandise trade account remains sensitive to big-ticket import categories. Even a solid export month can widen the deficit when energy and gold imports remain elevated.

Gold imports rose to $15.17 billion in the first four months of FY27, compared with $11.46 billion in the year-ago period. Agarwal said gold imports softened in July and noted that the increase so far looked more pronounced in value terms. He said volume data would give a clearer picture of the underlying trend.

Energy imports also stayed significant, with the government highlighting their role in shipments from the US.

Which Export Segments Stayed Under Pressure?

The 19% export jump was not uniform across sectors. The Commerce Ministry flagged that ready-made garment exports across textiles declined during the first four months of FY27.

Stronger petroleum, electronics, engineering, and marine shipments supported the headline figure, while parts of the textile sector remained under pressure through the April-July period.

India-US Bilateral Trade Agreement: Latest Update From Commerce Ministry

The July trade data arrived while India and the US continued discussions on a broader bilateral trade agreement.

Here are the key developments from the Commerce Ministry briefing:

• The US imposed an additional 10% ad valorem duty on select imports from India under Section 301, lower than the earlier proposed 12.5% rate
• Agarwal said India remained engaged with US authorities on outstanding trade issues
• Both countries remained committed to the trade deal outlined in their February 2026 joint statement
• Discussions on the excess-capacity probe were continuing
• On reports of higher US tariffs linked to Russian oil imports, Agarwal said the legislative process was still underway and declined to comment on US internal processes

Final Outlook

Source: CNBC-TV18