July 2025 trade deficit widens sharply to $27.35 billion

18 Aug 2025 , 02:53 PM

INDIA JULY 2025 TRADE – DATA CHECK

After narrowing for 2 months in a row, the merchandise trade deficit widened sharply in July 2025. Trade deficit had tapered from $26.42 Billion in April, to $21.88 Billion in May, and to $18.78 Billion in June 2025. However, in July, it jumped to $27.35 Billion. The month of July 2025 witnessed a sharp spike in the imports of silver, crude oil, and fertilizers. Exports were higher in July 2025 compared to June; but exports were sharply higher.

Key contributors to exports in July 2025 were Engineering Goods $10.43 Billion (+13.8%), Petroleum Products $4.34 Billion (-25.1%), Electronic Goods $3.77 Billion (+33.9%), Drugs & Pharmaceuticals $2.66 Billion (+14.1%), Organic & Inorganic Chemicals $2.47 Billion (+7.2%), and Gems & Jewellery $2.39 Billion (29.0%). Key import contributors were crude & petroleum products $15.58 Billion (+7.5%), Electronic Goods $9.84 Billion (+12.8%), Machinery $5.36 Billion (+20.0%), Gold $3.97 Billion (+13.8%), Transport Equipment $2.80 Billion (+2.3%), and Chemicals $2.53 Billion (+0.5%).

Top export destinations for July 2025 were United States $8.01 Billion, United Arab Emirates (UAE) $2.98 Billion, the Netherlands $1.67 Billion, China $1.35 Billion, and United Kingdom $1.26 Billion. Top import originating nations were China $10.92 Billion, United Arab Emirates (UAE) $4.94 Billion, Russia $4.85 Billion, United States $4.55 Billion, Saudi Arabia $2.87 Billion, and Singapore $2.29 Billion.

HOW MERCHANDISE TRADE EVOLVED IN LAST 1 YEAR

Here is the monthly data of merchandise exports, imports, and trade deficit.

Monthly Data	Exports ($ Billion)	Imports ($ Billion)	Total Trade ($ Billion)	Trade Deficit ($ Billion)
Jul-24	33.98	57.48	91.46	-23.50
Aug-24	34.71	64.36	99.07	-29.65
Sep-24	34.58	55.36	89.94	-20.78
Oct-24	39.20	66.34	105.54	-27.14
Nov-24 #	32.03	63.86	95.89	-31.83
Dec-24	38.01	59.95	97.96	-21.94
Jan-25	36.43	59.42	95.85	-22.99
Feb-25	36.91	50.96	87.87	-14.05
Mar-25	41.97	63.51	105.48	-21.54
Apr-25	38.49	64.91	103.40	-26.42
May-25	38.73	60.61	99.34	-21.88
Jun-25	35.14	53.92	89.06	-18.78
Jul-25	37.24	64.59	101.83	-27.35

Data Source: DGFT (# – All time high trade deficit)

How do trade figures compare with 12-month averages. Over last 12 months, the average merchandise exports stood at $36.68 Billion, while average merchandise imports stood at $60.06 Billion. For July 2025 exports and imports were higher than the 1-year average. The average trade deficit in last 12 months stood at $(23.38) Billion; with the July 2025 trade deficit sharply higher at $(27.35) Billion. In July 2025, total trade at $101.83 Billion was well above the previous 12-month average of $96.74 Billion.

TRADE GAP – EXPORT BOOSTERS AND IMPORT TRIMMERS

Here are star export performers in July 2025, on percentage increase in exports yoy. Cereals (+72.0%), Coffee (+67.5%), Electronic Goods (+33.9%), Meat / Dairy / Poultry (+31.2%), Gems & Jewellery (+29.0%), and Mica / Coal / Ores (+27.1%) were the key export growth drivers in July 2025.  Major import trimmers in July 2025 were Pulses (-51.6%), Leather Products (-41.1%), Newsprint (-25.7%), and Coal / Coke / Briquettes (-20.9%).

TRADE DATA BREAK-UP FOR JULY 2025

Here is a break up of the merchandise and services export and import data for July 2025, with comparable figures.

Macro Variables (Trade Related)	Jul-25 ($ Billion)	Jun-25 ($ Billion)	Jul-24 ($ Billion)	Change YOY (%)
Merchandise Exports	37.24	35.14	34.71	7.29%
Merchandise Imports	64.59	53.92	59.48	8.59%
Total Merchandise Trade	101.83	89.06	94.19	8.11%
Merchandise Trade Deficit	-27.35	-18.78	-24.77	10.42%
Services Exports	31.03	32.84	30.60	1.41%
Services Imports	15.40	17.58	15.94	-3.39%
Total Services Trade	46.43	50.42	46.54	-0.24%
Services Trade Surplus	15.63	15.26	14.66	6.62%
Combined Exports	68.27	67.98	65.31	4.53%
Combined  Imports	79.99	71.50	75.42	6.06%
Overall Trade Volume	148.26	139.48	140.73	5.35%
Overall Trade Deficit	-11.72	-3.52	-10.11	15.92%

Data Source: DGFT and RBI

What is the big picture? For July 2025 the net deficit at $11.72 Billion is 15.9% higher than the year ago period and nearly thrice the previous month figure. The services surplus has offset just 57.1% of the merchandise trade deficit in July 2025,  compared to 81.3% in June. The widening of the overall deficit can be attributed to a widening of the merchandise trade deficit, largely due to a spike in the imports of oil, silver, and fertilizers.

CUMULATIVE TRADE DATA FOR FY26 (APR-JUL)

Having seen the monthly picture of July 2025, here is a cumulative picture of Q1FY26.

Macro Variables (Year-to-Date)	FY26 (Apr-Jul)	FY26 (Apr-Jun)	FY25 (Apr-Jul)	Change YOY (%)
Merchandise Exports	149.20	112.17	144.76	3.07%
Merchandise Imports	244.01	179.44	231.59	5.36%
Total Merchandise Trade	393.21	291.61	376.35	4.48%
Merchandise Trade Deficit	-94.81	-67.27	-86.83	9.19%
Services Exports	128.43	98.13	119.07	7.86%
Services Imports	64.90	51.18	64.72	0.28%
Total Services Trade	193.33	149.31	183.79	5.19%
Services Trade Surplus	63.53	46.95	54.35	16.89%
Combined Exports	277.63	210.30	263.83	5.23%
Combined  Imports	308.91	230.62	296.31	4.25%
Overall Trade Volume	586.54	440.92	560.14	4.71%
Overall Trade Deficit	-31.28	-20.32	-32.48	-3.69%

Data Source: DGFT and RBI (Trade data in Billion $)

The overall trade deficit, combining merchandise deficit and services surplus, at $(31.28) Billion; which is marginally lower than last year. The current account deficit data for FY25 came in quite encouraging at just 0.6% of GDP for the full year, thanks to a strong trade surplus in the fourth quarter. For FY26, we will get the first signals only when the Q1FY26 current account deficit is announced by the RBI and the DGFT in end of September 2025.