Rising Imports Seen Pushing India’s 2025-26 Trade Deficit to Nearly $120 Billion: GTRI

India’s exports continued to grow in the fiscal year through February, led by services, while imports rose faster, widening the country’s trade deficit and highlighting its increasing reliance on Chinese industrial inputs, GTRI said in a report, quoting data from the commerce department.

Total exports of goods and services reached $790.9 billion during April–February 2025–26, up 5.8% from the same period a year earlier. Merchandise exports rose modestly to $402.9 billion, reflecting weak global demand, while services exports climbed 10.2% to $387.9 billion, continuing to drive India’s export growth.

If current trends hold, India’s total exports are expected to reach about $862.8 billion in the full fiscal year, including $439.6 billion in merchandise exports and $423.2 billion in services exports, the trade thinktank said.

Imports grew faster, reaching $900.5 billion during April–February, a 7.4% increase from the previous year. Merchandise imports rose to $713.5 billion, driven by strong demand for energy, electronics and intermediate goods, while services imports increased more moderately to $187 billion, it said.

Remittance Inflows
The rise in imports is expected to push India’s overall trade deficit to about $119.6 billion in the full fiscal year, compared with $91.1 billion a year earlier, said Ajay Srivastava, founder of GTRI.

Yet the impact on the broader external balance may be cushioned by large remittance inflows. Overseas Indians sent home about $135 billion in 2024-25, and if remittances remain at similar levels, they would more than offset the merchandise trade deficit and help India maintain a modest current-account surplus, he said.

India’s exports to the US reached $79.3 billion during April–February, up 3.8% from a year earlier, despite relatively high tariffs on several products. At the current pace, exports to the US—India’s largest export market—are expected to reach about $86.5 billion in the fiscal year ending March 2026, GTRI said.

By contrast, India’s trade deficit with China continued to widen sharply, underscoring growing dependence on Chinese industrial supplies. Exports to China totaled $17.5 billion during April–February, while imports surged to $119.6 billion, leaving a $102.1 billion deficit. GTRI expects the to widen further to about $111.4 billion for the full year.

The imbalance reflects India’s reliance on Chinese components and industrial inputs, including electronics parts, electric-vehicle batteries and components, solar cells and modules, machinery, organic chemicals and pharmaceutical ingredients, which remain difficult to source domestically, said Ajay Srivastava.

Fertilizer & Precious Metals
Fertilizer imports rose to $15.9 billion, a 64.5% jump, reflecting higher global prices and India’s dependence on imported agricultural inputs. Gold imports climbed to $66.9 billion, up 28.7%, while silver imports surged 142.9% to $11.4 billion, driven partly by demand from electronics and solar industries, GTRI said. In contrast, imports of crude petroleum and petroleum products edged down 3% to $161.8 billion, reflecting softer oil prices and supply constraints.