India’s Trade Deficit Widens to $119.3 Billion in FY 2025–26 on Higher Imports

India’s trade deficit widened significantly in FY 2025–26, reflecting rising import costs and uneven global trade conditions. Official data showed the deficit rose to $119.3 billion, compared with $94.6 billion in the previous financial year.

This marked the 2nd highest annual trade gap recorded over the past 11 years. Import trends, particularly in precious metals, played a key role in the expansion.

Trade Deficit Trends in FY 2025–26

The trade deficit for FY 2025–26 stood at $119.3 billion, indicating a sharp deterioration from FY 2024–25 levels. This increase occurred despite merchandise exports recording incremental growth during the year.

The widening gap reflected stronger import demand relative to export expansion. Higher global commodity prices and supply-side disruptions influenced trade flows across several categories.

Impact of Gold and Silver Imports

Imports of gold increased during the financial year due to a rise in international prices. Silver imports also expanded, supported by both higher prices and increased physical volumes.

These precious metal imports added considerable pressure to India’s overall import bill. As a result, they emerged as a key contributor to the widening trade deficit.

Export Performance and Sectoral Growth

Merchandise exports rose by 1% year-on-year to $441.78 billion in FY 2025–26. Export growth was supported by sectors such as electronic goods, engineering goods, and meat, dairy, and poultry products.

Marine products, along with mica and mineral exports, also registered positive momentum. Despite this growth, export expansion was insufficient to offset the rise in imports.

Market-Wise Export and March 2026 Trends

Exports to China increased by $5 billion during the year, while shipments to Spain rose by $2 billion. Exports to the US and UAE also grew, although India’s trade surplus with the US narrowed.

In March 2026, merchandise exports declined to $38.92 billion from $42.05 billion in March 2025. This monthly contraction highlighted volatility in demand across key overseas markets.

Read More: India’s Russian Crude Imports Jump Sharply in March Amid Global Disruptions.

Conclusion

India’s trade deficit in FY 2025–26 reflected a challenging external trade environment shaped by price pressures and geopolitical factors. Stronger imports of gold and silver outweighed moderate growth in export earnings.

Trade disruptions linked to West Asia added further pressure, with sharp declines in both exports and imports from the region in March 2026. Overall, the data underscored structural sensitivities in India’s trade balance during the financial year.

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