India’s Trade Deficit Widens to $26 Billion in April Despite Growth in Exports

India’s merchandise trade deficit widened to $26.42 billion in April 2025, a significant increase from $21.54 billion recorded in March. This marks the highest trade gap in the last 5 months. When compared to the same period last year, the gap was $19.2 billion, highlighting a sharp year-on-year increase.

Merchandise Exports Show Resilience

Merchandise exports grew 9% on a year-on-year basis to reach $38.49 billion in April. This performance reflects resilience despite challenges in the global economic environment. The government’s export strategy, which emphasises targeting 20 key countries accounting for 60% of India’s export volume, appears to be delivering consistent results.

Commerce Secretary Sunil Barthwal noted that India’s export momentum is likely to continue, even with external headwinds affecting the global trade environment.

Key Export Drivers in April

A closer look at export categories reveals that electronic goods were a major contributor, with a growth of nearly 40% year on year. Engineering goods followed with an increase of 11.3%, and shipments of gems and jewellery rose close to 11%. These segments played a crucial role in cushioning the trade deficit despite an overall surge in imports.

Read More:India's Exports Reach Historic High of $825 Billion in FY2024-25. 

Surge in Imports 

Imports rose by 19% year on year to $64.91 billion in April. This steep rise outpaced the growth in exports, contributing significantly to the widening trade deficit. The increase was largely due to higher imports of petroleum products, which rose to $20.72 billion in April from $19 billion in the previous month. This uptick reflects both global price dynamics and rising domestic energy demand.

Services Trade Continues Upward Momentum

On the services front, exports are estimated to have increased to $35.31 billion in April, compared to $30.18 billion in the same month last year. Imports in this segment are expected to reach $17.54 billion, up from $16.76 billion in April 2024.

The services sector thus continues to be a strong performer, contributing positively to the overall trade scenario.

Combined Trade Outlook for April

India’s total exports, including merchandise and services, are estimated at $73.80 billion for April 2025, reflecting a growth of 12.7% over the previous year. On the other hand, total imports rose 15.7% to an estimated $82.45 billion.

This brings the overall trade deficit to approximately $8.7 billion for the month, which is considerably lower than the merchandise-only gap, showing the cushioning effect of robust services exports.

Conclusion

While April witnessed a widening of the goods trade deficit, India’s export performance, particularly in key sectors like electronics and engineering, remained strong. The growing contribution from the services sector also helped balance the overall trade position. Continued focus on strategic markets and key export segments may play a vital role in stabilising the trade outlook going forward.

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