India’s merchandise trade deficit saw a significant spike in July 2025, reaching its highest level in recent months. This widening gap comes amid strong import growth, outpacing the gains in exports, and against a backdrop of global trade uncertainties.
Key Trade Data – July 2025
| Indicator | July 2025 | June 2025 | Change (MoM) | July 2024 | Change (YoY) |
|---|---|---|---|---|---|
| Exports (USD Billion) | 37.24 | 35.14 | +6.0% | 34.70* | +7.3% |
| Imports (USD Billion) | 64.59 | 53.92 | +19.8% | 59.47* | +8.6% |
| Trade Deficit (USD Billion) | 27.35 | 18.78 | +45.6% | — | — |
| Market Expectation for Deficit | 20.35 | — | — | — | — |
| Trade Deficit – May 2025 | 21.88 | — | — | — | — |
*Approximate July 2024 export/import values derived from percentage changes provided.
Key Highlights
- Sharp Increase in Trade Deficit
- The deficit widened to $27.35 billion in July from $18.78 billion in June, significantly overshooting the market expectation of $20.35 billion.
- Imports Growing Faster than Exports
- Imports surged by 19.8% month-on-month to $64.59 billion, driven by higher demand for commodities, intermediate goods, and possibly pre-emptive stocking amid tariff uncertainties.
- Exports also rose, reaching $37.24 billion, a 6.0% monthly increase.
- Year-on-Year Trends
- Compared to July 2024, imports were 8.6% higher while exports grew by 7.3%, indicating robust but uneven trade growth.
- Impact of Global Trade Policies
- Exporters are closely watching the proposed U.S. tariff hikes, which could impact shipments in the coming months.
- Strong Trade Ties with the U.S.
- Shipments to the U.S. grew to $33.53 billion, up from $27.57 billion a year ago, highlighting the country’s role as a key export destination.
- Recent Trend
- The June trade deficit had narrowed compared to May’s $21.88 billion, but July’s surge reversed this trend.
Outlook
The July 2025 trade data underscores a growing imbalance in India’s external sector, largely driven by robust import growth. While export demand remains solid—especially from the U.S.—looming tariff changes and global economic volatility could pose risks in the coming months. Policymakers may need to keep a close watch on currency stability and trade facilitation measures to manage the widening deficit.
Glottis Limited 
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