Imports surge widens India’s trade gap despite modest export rebound in December

India’s merchandise trade deficit edged higher to $25.04 billion in December 2025 as a strong rise in imports outstripped a modest improvement in exports, according to official data released.

Merchandise exports grew 1.8% year-on-year to $38.51 billion, reflecting a gradual recovery despite ongoing geopolitical uncertainty and tighter trade barriers in several major markets. Imports, however, rose sharply by 8.7% to $63.55 billion, resulting in a wider trade gap compared with $24.53 billion in November.

The deficit came in lower than market expectations, with economists surveyed by Reuters having projected a wider gap of around $27 billion. Commerce Secretary Rajesh Agrawal said exports remained in positive territory and added that India’s combined exports of goods and services are likely to exceed $850 billion in FY26.

Services trade continued to provide a buffer to the overall external balance. Services exports were estimated at $35.50 billion in December, while imports stood at $17.38 billion, yielding a surplus of $18.12 billion that helped offset pressure from the merchandise side.

For the April–December 2025 period, merchandise exports rose 2.44% to $330.29 billion, supported by higher shipments of electronics, pharmaceuticals, marine products and select engineering goods.

Exports to the United States stood at $6.89 billion in December, slightly below the level recorded a year earlier, as higher tariffs on some Indian products weighed on shipments. To reduce dependence on traditional markets, India has been intensifying efforts to expand exports to China, Russia and the Middle East, supported by incentive schemes and ongoing trade negotiations, including talks with the European Union.

New Delhi and Washington are also exploring ways to revive a bilateral trade agreement after negotiations stalled last year. Analysts said the faster growth in imports points to robust domestic demand and elevated global commodity prices, trends that could continue to exert pressure on India’s trade balance in the near term even as exports show steady growth.