Business News | India's Trade Deficit May Stay Elevated Amid Middle East Risks, Oil Prices: Report
Get latest articles and stories on Business at LatestLY. India's merchandise trade deficit is likely to remain under pressure in the coming months as renewed geopolitical uncertainty in the Middle East could keep oil prices and freight costs elevated, although softer crude demand from China may help limit any sharp rise in global oil prices, according to a report by Dolat Capital.
New Delhi [India], July 14 (ANI): India's merchandise trade deficit is likely to remain under pressure in the coming months as renewed geopolitical uncertainty in the Middle East could keep oil prices and freight costs elevated, although softer crude demand from China may help limit any sharp rise in global oil prices, according to a report by Dolat Capital.
"Looking ahead, renewed disruptions in the Strait of Hormuz could keep freight costs and oil prices elevated, although subdued crude demand from China and the absence of aggressive strategic reserve stockpiling by major economies are likely to limit any sharp rise in global oil prices," the report said.
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India's merchandise trade deficit widened to a five-month high of USD 30.4 billion in June 2026, compared with USD 19.1 billion a year ago, as imports grew much faster than exports. Merchandise imports rose 31 per cent year-on-year to USD 70.8 billion, while exports increased 15.5 per cent to USD 40.4 billion.
According to Dolat Capital, the sharp rise in imports was driven by inventory restocking after supply chain disruptions eased following the Strait of Hormuz closure, along with strong demand for petroleum products, fertilisers, electronic goods and key agricultural commodities. Petroleum imports remained elevated at USD 19.3 billion, well above the pre-war monthly average of around USD 13-15 billion, while fertiliser imports also increased significantly.
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Gold imports, however, moderated to USD 2 billion after import duty changes that came into effect in May 2026, while silver imports declined sharply to USD 0.1 billion, the report noted. On the export front, engineering goods, electronic goods, petroleum products and organic and inorganic chemicals remained the key growth drivers. Export demand stayed broad-based, supported by major markets such as the United States, the UAE, Singapore and China.
The report said that while India's exports have remained resilient, stronger import growth has widened the merchandise trade deficit. It added that any further disruption to oil supplies due to geopolitical developments in the Middle East could keep the country's import bill elevated and remain a key downside risk to the current account in the months ahead. (ANI)
(The above story is verified and authored by ANI staff, ANI is South Asia's leading multimedia news agency with over 100 bureaus in India, South Asia and across the globe. ANI brings the latest news on Politics and Current Affairs in India & around the World, Sports, Health, Fitness, Entertainment, & News. The views appearing in the above post do not reflect the opinions of LatestLY)